In sectors such as technology, finance, and insurance, non-compete clauses are common due to the specialized skills and intellectual property involved. While employees may welcome the change, some businesses in the City express concern about retaining staff and proprietary information.

City lawyers have been preparing for this shift, advising clients on alternative strategies. Experts suggest that companies may increase their reliance on gardening leave, a practice where employees remain on payroll during their notice period but are instructed not to work or contact colleagues.

This development comes as businesses are already navigating significant changes to UK employment laws. The government's move follows a consultation on restrictions for non-compete clauses, with feedback closing earlier this year.

Alternatives to non-compete clauses being considered by firms include financial incentives to retain staff and restructuring bonus payments. Legal professionals anticipate that while the government may seek to limit long notice periods, employers will continue to find ways to manage employee transitions to competitors.