The United Kingdom’s proposed reforms restricting the duration of UK noncompete clauses for employees and some workers may have unintended consequences, including changing how companies share and manage information internally, McGuireWoods London associate Adam Penman wrote in a Sept. 15, 2023, article in People Management.
In May 2023, the UK government confirmed its intention that noncompete post-termination restrictions will be capped at a maximum of three months. The cap is intended to generate greater competition and innovation and allow businesses to fill vacancies while striking a fairer balance with employers’ interests to protect themselves.
But the proposed rules may inhibit competition in the long term if they impair companies’ ability to manage commercially sensitive information with confidence, Penman wrote. Businesses should audit how such information is accessed and shared internally now to mitigate potential future risk, he added.
“There is a range of potential options for employers to react to the blunting of non-compete clauses to protect their legitimate business interests. They should take this opportunity to audit their current post-termination restrictions and conduct an assessment to consider the effectiveness and enforceability and whether additional restrictions or other measures are needed,” Penman wrote.