Burnham unveils new law to stop non-compete clauses that 'trap' workers

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Non-compete clauses which create barriers for start-up firms looking to hire will be prevented under new legislation, Andy Burnham has revealed, in a bid to boost UK innovation.

The Prime Minister said some companies have gone "too far" in their use of restrictive practices, such as non-compete clauses, with workers caught in a "trap".

Speaking from the Innovation Nation Summit in Manchester on Friday, he described it as the “Bosman ruling for the innovation sector”.

Mr Burnham said: "I believe some businesses have gone too far in their use of restrictive practices such as non-compete clauses, a view I know shared by many in this room and across the sector.

"Non-compete clauses stop workers from joining a rival organisation, or indeed, setting up one of their own after they have left their role, and I think that's a drag on innovation and prevents the best really being energised and bringing that dynamism to the economy.

"So we are looking at changing this. They are often held back and unpaid during the time they have to sit out on the sidelines, and it does, as I say, stunt innovation and traps workers.

"So I can confirm today we will legislate to make sure that non-compete clauses will no longer be a barrier to hiring for our most promising start-ups and scaling firms.

"Call it, if you like, the Bosman ruling for the innovation sector, but I think it's needed and long overdue.

“And we will ensure, by the way, that workers in the foundational economy, the everyday economy, are not prevented from moving jobs too.”

The Bosman ruling was a European Court of Justice case which paved the way for out-of-contract footballers to move freely between clubs.

Mr Burnham had earlier set out plans to make the UK a world-leading “innovation nation”.

He announced three measures, including devolving funding for innovation, identifying the clusters around the UK with the potential to become truly world-leading, and pressing for more collaboration between clusters.

Mr Burnham said these measures could lead to the UK beginning to “punch above its weight”.