Prime Minister Andy Burnham has revealed that non-compete clauses which create barriers for start-up firms looking to hire will be prevented under new legislation, in a bid to boost UK innovation.
Speaking from the Innovation Nation Summit in Manchester on Friday, he said some companies have gone “too far” in their use of restrictive practices, such as non-compete clauses, with workers caught in a “trap”.
Prime Minister's announcement
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.”
He described the move as the “Bosman ruling for the innovation sector”, adding: “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.
Legislative plans
The Prime Minister confirmed: “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.”
Innovation nation measures
Mr Burnham had earlier set out plans to make the UK a world-leading “innovation nation”, announcing three measures: 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.
He said these measures could lead to the UK beginning to “punch above its weight”.
