Non-compete clauses to be limited to 3 months
Restrictive covenants are contractual clauses that employers use in order to control the activities of employees post-termination with a view to protecting confidential information, business connections and the stability of their workforce. You will have seen restrictive covenants in contracts talk about an employee not being able, for a specified period of time after termination, to do things like deal with clients or suppliers they dealt with when employed by you or poach an employee that they line manged in your business to go and work for them in a competing business.
Because restrictive covenants can impose restraints on trade and competition, they are not enforceable unless they go no wider than is reasonably necessary to protect a legitimate business interest.
Non-compete clauses are the most draconian form of restrictive covenant (and the hardest to enforce as a result). They seek to prevent an employee working in competition with the business for a period of time after they have left.
The Government has previously consulted about reforming the law around restrictive covenants with the aim of avoiding over-stifling employee activity post-termination and boosting the economy.
How could this impact your business?
The policy paper explains that the Government plans to legislate to limit the length of non-compete clauses to 3 months for employees. This will not impact though on your ability to keep other longer restrictive covenants in place (e.g. for non-solicitation, non-dealing, non-interfering and/or non-poaching). Nor will it prevent you from utilising notice periods and garden leave to keep an employee out of the market.
It is unclear when this intended legislation will be drafted or come into effect as it requires primary legislation to be enacted and this is only indicated to take place 'when parliamentary time allows'. The fact it is intended to come into effect however, and the reference to this in the press, will mean it is sensible to look now at your current restrictive covenants and notice/garden leave clauses so that you are ready for when this change does come into effect and/or get less pushback from employees on agreeing your covenant clauses.
There is no detail yet on what the impact would be on existing longer non-compete clauses in contracts, but it would be sensible to ensure (particularly in new contracts for new staff or promotions) that your non-solicit and non-dealing clauses may provide sufficient cover should any non-compete over 3 months later become unenforceable.
Changes to holiday
The policy paper described the proposals in relation to this aspect of the Working Time Regulations to be made with a view to "reducing the administrative burden and complexity of calculating holiday pay". Hurrah – we can all rejoice at this being the aim! The detail of the proposals shared so far don't explicitly suggest how they will achieve this fully – or even how it will work.
The brief description provided explains that the Government intend to: