The Government’s view is that the UK thrives on innovation. It recognises that innovation enables businesses to develop new ideas, products and services and create new jobs and export opportunities.
With this in mind, the Government has launched a call for evidence to look at whether post-termination restrictions in employment contracts act as a barrier to employment, innovation and entrepreneurship. A post-termination restriction can prevent former employees from working for a competitor, contacting former clients or employing or engaging former work colleagues. The duration of such clauses may be as long as 12 months.
While the contractual clauses protect businesses, they can be restrictive on employees and considered anti-competitive if the clauses are wider than is necessary to protect the business.
It is difficult to see how banning the use of post-termination restrictions would generate innovation. The damaging effect on employers is clearer to see. An employer that has invested time and money in an employee who is then allowed to go off and immediately compete has lost any chance to protect its business and client relationships from that competition.
The consultation closes on 22 May 2016.