This a fascinating one. The government has issued a call for evidence on the issue of restrictive covenants and whether they block innovation, the implication being that there could be a case for further restricting their use in the UK.
So what of the companies whose lifeblood is their proprietary information (and that could include new start-up businesses who are establishing themselves)? Might it not be argued that the law already protects individuals enough by ensuring that only those covenants which are tight in scope and duration (and no wider than needed for protection of legitimate business interests) can be enforced through the courts? Will this encourage 'misbehaviour' amongst departing employees at a time where protection of data is of ever increasing importance? Will companies lose their ability to defend themselves against other businesses who seek to employ their staff and approach their clients via ex-employees?
One imagines that the voices in favour of change will be focusing on the impact of long covenants (and I note that it is not entirely clear what kind of restrictive covenants are under review here) in the context of small business growth, but it remains to be seen how this can be argued to be worthy justification for further restricting the use of covenants across the board.
What is clear is that businesses will be watching developments in this area with great interest and may wish to present their perspectives as part of this call for evidence.
This call for evidence is seeking your views on whether non-compete clauses stifle entrepreneurship and innovation by preventing people from: moving between employers developing innovative ideas creating a start-up growing a business