UK hedge funds and financial firms are expressing concern after the government revived plans to reform non-compete clauses in employment contracts, raising the prospect of an outright ban or tighter time limits, according to a report by Bloomberg. Proposals published alongside last week’s budget seek industry feedback on whether post-employment restrictions should be capped at three or six months, or removed entirely.
The measures would be designed to boost labour mobility and economic growth. Industry bodies and employment lawyers warn the measures could have significant consequences for asset managers, where non-competes are widely used to protect intellectual property and retain senior talent, with some restrictive clauses lasting two or more years. They say that reforms risk stifling innovation and damaging the UK’s competitiveness.
Recent legal disputes involving firms including Brevan Howard, Walleye Capital and Jump Trading highlight how fiercely such provisions are defended, particularly in algorithmic strategies where trading models are highly portable.
Lawyers expect that even if non-competes are curtailed, firms will turn to longer notice periods, garden leave, deferred compensation and stricter non-solicitation clauses instead.
