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The government has announced their intention to introduce legislation that will limit the duration of non-compete clauses in employment contracts to just three months. does this mean for your existing non-compete clauses and post-termination restrictions (PTRs)? Here’s what you need to know:

Only non-compete clauses – the proposals will not affect your ability to use other PTRs (such as non-solicitation or non-poaching clauses), garden leave periods, or confidentiality provisions. It’s only going to be non-competes that are time-limited to three months.

Existing clauses – we don’t know if the three-month limit will apply retrospectively to non-competes in existing contracts (effectively cutting short any longer clauses by default), or whether the limit will only apply to contracts entered into after the legislation comes into force.

Restrictions in other documents – the announcement only refers to non-competes in “employment contracts”. We’ll need to wait for further detail on the legislation to know whether you’ll be able to use longer non-competes in other documents such as shareholder or settlement agreements.

Test for enforceability – irrespective of the proposed time limit, non-competes will still only be enforceable if they go no further than necessary to protect your legitimate business interests. They’ll still need careful drafting!

Timescales – legislation will be introduced “when parliamentary time allows”. We’ll update you when we know more and when the legislation will be introduced.

I always advise clients to review their PTRs annually. Your business and individuals’ roles change frequently so your PTRs need to keep pace. Get in touch to discuss how we can support you to ensure your PTRs keep up with business interests and remain enforceable. 
This update is accurate on the date it was published, but may be subject to change which may or may not be notified to you. This update is not to be taken as advice and you should seek advice if anything contained within affects you or your business.