The Alternative Investment Management Association (AIMA) has pushed back on the UK government’s proposal to restrict or ban non-compete clauses, warning that the plans risk undermining the UK’s competitiveness as global competition for investment and talent intensifies, according to a report by the Daily Telegraph.
AIMA said the overhaul could weaken firms’ confidence in Britain at a time when financial centres are vying aggressively for high-value jobs. Chief executive Jack Inglis described the proposals as “radical”, arguing they would strip away a key safeguard for intellectual property, confidential information and client relationships.
Non-compete clauses, which limit an employee’s ability to join a rival for a defined period after leaving a firm, are widely used across the hedge fund industry. In London, some senior traders are placed on gardening leave for up to two years to prevent rivals from gaining access to sensitive strategies and contacts.
The UK government is consulting on sweeping reforms, with the Labour Party blaming non-competes for suppressing job mobility and wages, while also arguing they make it harder for start-ups to hire experienced staff and share knowledge across the economy.
Industry figures warn the changes could backfire. Inglis said radical restrictions or an outright ban could prompt firms to relocate roles and investment to jurisdictions with stronger protections. Swiss hedge fund Erlen Capital Management managing partner Bruno Schneller added that a “blunt instrument” approach risked damaging one of the few areas where the UK still punches above its weight globally.
The debate reflects sharp divisions within the industry itself. Ken Griffin, founder of Citadel, has previously lobbied for longer non-compete periods in the US, while Izzy Englander of Millennium Management has criticised lengthy clauses for inflating pay and creating what he calls a “talent bubble”.
A spokesperson for the Department for Business and Trade said no final decisions have been taken, adding that reforms are being considered as part of efforts to make the jobs market more dynamic and support growth. Courts already regularly strike down non-competes deemed unreasonable, but the government argues many workers still fear legal consequences even when clauses are unenforceable.
