Non-Competes: Back On The Agenda In The UK

Introduction

On 9 October, during an appearance at the Innovation Nation Summit in Manchester, UK Prime Minister Andy Burnham put reform of non-compete clauses back on the agenda. Describing non-compete clauses as a ‘drag on innovation’ and stating that some businesses have ‘gone too far’ in their use of restrictive practices, the Prime Minister confirmed that the Government ‘will legislate’ so that non-compete clauses ‘will no longer be a barrier to hiring for our most promising startups and scaling firms’ and that it will also look to ‘address the wider use of restrictive practices’.

While the timing and detail of any legislation remain uncertain, any such reforms could have significant implications for asset managers, including private equity sponsors, hedge funds and credit funds, where non-competes are commonly used to protect investment strategies, fundraising efforts, investor relationships and deal pipelines and manage the risks arising when key personnel or teams are