Prime Minister Andy Burnham has confirmed the UK will legislate to curb non-compete clauses, after months of pressure from AI startups including ElevenLabs and Synthesia.
He made the pledge on Friday 9 October 2026 at the Innovation Nation Summit in Manchester. Around 5 million employees in Great Britain work under a contract with a non-compete clause, according to the Department for Business and Trade's working paper.
The detail will arrive with the Autumn Budget on 28 October, followed by a consultation and then a bill. Bloomberg reported that the Labour government is planning new hiring laws on an issue that has angered Britain's technology startups.
Burnham told the summit that some employers had gone too far with restrictive contract terms.
He said non-competes stop people joining a rival or starting their own company, and that this holds back innovation. He promised the clauses would no longer block hiring at the country's most promising startups and scaling firms.
He also compared the change to football's Bosman ruling, the 1995 judgment that let players move clubs freely once their contracts ended. The Startup Coalition, which has campaigned on the issue for months, said he called it the "Bosman ruling for the innovation sector".
The government has not committed to an outright ban yet, so the final rules are still open.
Law firm Gibson Dunn said the announcement was light on specifics. Options include a cap on how long a non-compete can last, a salary threshold below which they cannot be used, a requirement to pay staff during the restriction, or a partial ban aimed at startups and scaleups.
Ministers will also look at long notice periods and gardening leave. The Startup Coalition said it will push for reform that covers the whole set of terms used to hold back talent, not a single clause.
This is not the first attempt. The previous government proposed a three-month cap in 2023, but it never became law. Today there is no statutory limit on the length of a non-compete, although courts refuse to enforce clauses that go further than a business reasonably needs.
The case for reform rests on evidence that non-competes slow job moves and new company formation.
The working paper, published in November 2025, said the clauses restrict employee movement, limit knowledge spillovers and can weaken the incentive to innovate. It put the typical length at around six months.
The Competition and Markets Authority found in 2024 that non-competes affect around 30% of UK workers. That rises to over 40% in ICT and in professional and scientific services, the same pool of engineers and researchers AI startups are trying to hire.
After the working paper closed in February 2026, the CMA backed a middle route: a ban below a salary threshold, with a statutory time limit for higher earners.
The latest push came from Britain's AI founders.
On 29 September, 22 founders and executives signed an open letter called Free to Start and Scale, City AM reported. They included chief executive Mati Staniszewski of ElevenLabs, now valued at $11 billion, and Victor Riparbelli of Synthesia, the $4 billion AI video company.
Senior figures from Recursive Superintelligence, Latent Labs, Metis Reasoning and Inherent Laboratories also signed. Investors Index Ventures, Entrepreneurs First, Plural and Kindred backed the letter.
London AI lab Inherent coordinated the campaign and has removed non-competes from its own contracts, Sifted reported. A few days later, the startups told ministers that reform had to go further and faster, according to MLex.
Alexandru Voica, head of global affairs at Synthesia, told City AM that AI moves too quickly for year-long restrictions: "you can't wait 12 months to hire someone." Fuse Energy chief executive Alan Chang said that in California, a new hire can start within two weeks.
Founders say non-compete clauses are only part of the problem.
City AM also reported that some finance and big tech employers ask for notice periods of up to 18 months, which can leave staff on gardening leave and out of work for months. Several former Google DeepMind staff have complained about the lab's non-competes.
A study by Enterprise Britain, the group set up by Ovo founder Stephen Fitzpatrick and lastminute.com co-founder Brent Hoberman, found 87% of scaleup bosses saw non-competes as a barrier to hiring. Three quarters said they could create at least 10% more jobs if those barriers were removed.
For British startups, the clearest gain is how fast they can hire.
An engineer leaving a large lab today may have to sit out six months or more before joining a rival or starting a company. With shorter limits or a ban, a seed-stage startup could make an offer and have that person working within weeks.
Some UK founders have recruited from the US because it was quicker than hiring from British rivals, City AM found. Faster domestic hiring would give them a reason to build their teams here instead.
It should also make spinouts easier. Startup Coalition chief executive Dom Hallas told Tech.eu the decision was "a huge move", and pointed to the companies already built by alumni of firms such as Revolut.
The bigger test is whether the change helps the UK keep its AI talent.
London already hosts frontier research teams, and companies such as Isomorphic Labs, the DeepMind drug design spinout, show what that talent can produce. When researchers cannot move for a year, some take their ideas abroad or simply wait.
California has long treated most non-competes as unenforceable. The Startup Coalition points to Sebastian Mallaby's claim in The Power Law that 70% of publicly traded tech firms could trace their history to Fairchild Semiconductor, itself founded by engineers who left another company.
The national US picture is less settled. The Federal Trade Commission voted to ban most non-competes in 2024 but stepped back from that position in September 2025, law firm Hausfeld noted. A clear national UK rule could give British AI startups a hiring pitch that many US states cannot match.
Voica also urged ministers to make it easier for talented people to come to the UK and stay. For founders already using a sponsor licence to hire skilled workers, freer movement at home would add a second hiring channel.
Not every founder supports the plan.
Anthony Rose, co-founder and chief executive of SeedLegals, called the proposals "an incredibly bad idea" on LinkedIn, Pathfounders reported. He warned that heavily funded AI companies could use the change to poach developers from smaller startups and push salaries up.
The CBI has previously argued there is little evidence that the clauses hold back innovation. Gibson Dunn expects pushback from financial services, where non-competes are seen as essential for protecting confidential information and trade secrets.
What should founders do before the Budget on 28 October?
Review your own employment contracts now. If you rely on non-competes, check what your confidentiality and IP assignment terms already protect, because the consultation may reach beyond non-competes to notice periods and other restrictions.
If you are hiring from a large lab or bank, ask candidates about their notice period and any restrictions early. Until a new law passes, existing clauses still apply, and a court will decide whether each one is reasonable.
This is a news report, not legal advice, so speak to an employment lawyer before changing contracts. Bizztor will update this story when the Budget detail is published.
Related news:
OpenAI Just Closed $110B in Funding and London Is at the Centre of What Comes Next
Olix: 25-Year-Old Founder Raises $220M for UK AI Chip Startup Now Valued at $1 Billion
Sunak Calls for National Insurance Abolition as AI Reshapes UK Jobs Market
UK Holds Its Ground as World's Second-Most Attractive Investment Destination
