UK government under pressure to change non-compete rules

Pressure is growing on the UK government to modify non-compete regulations, with researchers, founders and investors calling on policymakers to adjust the rules to permit garden leave on a case-by-case basis for employees. The Department of Business, Innovation, Science and Trade (BIST) has been seeking input on the matter since last year, but has not yet determined if or how to proceed.

In November, the government released a working paper proposing reforms to non-compete clauses, which prohibit leavers from joining competitors or launching rival businesses, arguing that such restrictions can hinder UK startup competitiveness in labor markets. Industry leaders have taken to social media to warn that the UK risks losing top talent due to restrictive non-compete clauses, often requiring departing employees to work for lengthy periods.

AI researcher Nando de Freitas, a former Google DeepMind employee, highlighted California's more permissive approach as a model for the UK to follow. He noted that in California, individuals can start a company the day after leaving their previous employer, while in the UK, senior AI researchers may face one-year garden leaves and junior researchers six months.

This can make it difficult for researchers to start new companies or hire talent. Founders, such as Ian Hogarth of the government's AI Safety Institute and Humanoid's Jarad Cannon, have echoed this sentiment, emphasizing the impact on hiring speed and competitiveness. Others, like Evantic founder Matt Miller, have pointed out the slower hiring process in the UK compared to cities like London, Paris and Zurich.

The government's November working paper suggested alternatives, including an outright ban on non-compete clauses or a three-month statutory limit, but no action has been taken. A BIST spokesperson declined to comment on when a decision on potential reforms will be made.