Andy Burnham is poised to unveil a government crackdown on non-compete clauses in employment contracts, which are commonly used by technology and financial services companies.
People familiar with the matter said the prime minister was expected to announce in a speech on Friday that the government is determined to tackle non-competes, which are used to restrict employees’ ability to work for or set up a rival after they have left a business.
The crackdown could also affect restrictive notice periods for employees.
One senior Whitehall figure described the anticipated announcement as a “big win for pro-business forces in the government”.
Burnham is due to confirm the crackdown in a speech in Manchester alongside business secretary Jonathan Reynolds and former prime minister Gordon Brown.
The founders of some leading UK tech start-ups last month called on ministers to limit the use of non-compete clauses and extended notice periods, arguing they hamper British businesses’ ability to compete with Silicon Valley.
The tech figures told Burnham and Reynolds in a letter that such practices reduced competition and undermined innovation.
The letter was signed by more than 20 founders, executives and investors in British start-ups such as Recursive Superintelligence, Synthesia and Fuse Energy.
The fight for tech talent has been a particularly controversial issue after some Google DeepMind employees left the company’s London base to launch rival AI businesses.
About 5mn employees in Britain work under a contract that contains a non-compete clause — typically with a duration of about six months.
Many companies, particularly in financial services, have long used non-competes to protect their talent and intellectual property.
A review into non-competes was launched last year when Sir Keir Starmer was prime minister.
Starmer set out various options ranging from an outright ban to placing a time limit — for example of three months — on the arrangements.
One person with knowledge of the situation said that Burnham would set the “direction of travel” in his speech on Friday rather than outline the fine detail of any policy changes.
Enterprise Britain, a business lobby group, found in a recent survey that 87 per cent of “scale-up leaders” regarded non-compete clauses as a hurdle when hiring.
Brent Hoberman, co-chair of Enterprise Britain, said: “Non-compete clauses have held back Britain’s fastest-growing firms from hiring, while forcing workers to miss out on job opportunities or spend months without pay.
“Banning non-competes is in part what made Silicon Valley what it is today — and it’s the reason we’ve been calling for the same action to be taken here.”
But scrapping non-competes would not be popular among all business leaders: the CBI business lobby group has said it has not seen evidence that they are a significant drag on innovation.