What is a non-compete clause?

A non-compete clause is a type of restrictive covenant in a contract that can restrict an individual or business from working with competitors or carrying out certain activities after a contract ends.  

For self-employed professionals, contractors and freelancers, these clauses can have a significant impact on which clients you can work with and what kind of services you can provide. The restrictions may apply for a certain period of time and within a particular geographical location or market.  

Our guide below, created in collaboration with Markel Law, explains what a non-compete clause is, how it can work, and what you may want to consider before agreeing to one.  

How does a non-compete clause work?  

A non-compete clause, sometimes referred to as a clause of non-competition, is a contractual restriction designed to prevent one party from competing with another for a specified period of time.  

The clause may appear in an employment contract, consultancy agreement, or commercial contract. For example, a business working with a freelance consultant may seek to prevent the consultant from providing similar services to a direct competitor after the project ends.  

The precise wording of the clause is important because restrictions can vary considerably depending on the work and the company involved. For example, a non-compete clause may restrict you from:  

• Working for a named competitor  
• Providing similar services to competing businesses  
• Starting a competing business  
• Approaching or working with particular customers  
• Operating within a defined geographical area  

A non-compete clause may be accompanied by other restrictions, such as a non-solicitation clause, which can prevent you from approaching certain customers, suppliers, or employees, or a non-disclosure clause, which can prevent you from sharing sensitive information.  

A clause may specify how long the restriction lasts, which activities are prohibited and which businesses or geographical locations are covered. For example, a contract might prevent a freelancer from providing substantially similar services to certain competitors for a defined period after the agreement ends.  

The length of the restriction is likely to depend on the seniority of the individual and the term of the contract, as well as the nature of the industry. For example, industries that move quickly, such as technology or media, tend to have shorter terms as information may soon become outdated, whereas industries where knowledge may remain valuable for longer, such as pharmaceuticals, may insist on longer restrictions.  

The restriction may only apply after a particular type of termination, or may be triggered when the contract ends, depending on the agreement.  

Why do businesses use non-compete clauses?  

The UK government estimates around 5 million employees in Great Britain may be working under a contract that contains a non-compete clause, with a typical duration of around six months. Businesses may use restrictive clauses like non-compete clauses to protect their commercial interests when an employee, contractor, or consultant leaves, such as confidential information and intellectual property. 

For example, because a contractor could gain access to commercially sensitive information such as pricing or customer relationships while working with a client, a business may seek to protect that information from being used to benefit a competitor after the contract ends. The business may consider that allowing an individual to subsequently use the information or relationships for a competitor could cause financial or reputational harm.  

A business might also use a non-compete clause alongside other contractual protections to help protect its customer relationships and limit unfair competition.  

However, a restriction that is unnecessarily broad may have a significant effect on the other party’s ability to work for other clients during or after the contract ends. This can be particularly important for self-employed professionals who rely on finding new clients and projects.   

What should you check before agreeing to a non-compete clause?  

If you are considering signing a contract containing a non-compete clause, it can be useful to establish exactly what activities it would prevent you from carrying out and for how long.  

Consider checking these terms:  

• How long the clause will apply after the contract ends and whether the period is clearly defined.  
• Whether the restriction applies to specific services or could prevent you from carrying out a broader range of work.  
• Whether the clause identifies particular competitors or uses a wider definition that could include businesses you may not expect.  
• The geographical scope that applies to the restriction.  
• Other restrictions such as non-solicitation, confidentiality or intellectual property provisions that could affect your future client work.   
• What happens if either party terminates the contract.  
• The consequences if you are alleged to have breached the contract.  

If you are a self-employed professional, it can also be useful to consider whether the restriction could prevent you from accepting work with existing clients or entering new markets that are important to your business.  

Can a non-compete clause be negotiated?  

The wording of a non-compete clause may be open to negotiation before an agreement is signed.   

You may be able to negotiate a shorter restriction, narrow the types of services covered or limit the businesses to which it applies. Alternative clauses, such as confidentiality or non-solicitation restrictions, may also provide a business with protection without broadly restricting your ability to work.  

Any proposed changes can be documented in the contract so that both parties have a clear understanding of their obligations.  

If the non-compete clause could have a material impact on your business or future earning opportunities, professional legal advice may help you assess and negotiate the terms before you agree to them.  

Are non-compete clauses legally enforceable?  

Whether a non-compete clause can be enforced legally depends on the circumstances and the wording of the contract.  

In England and Wales, non-compete clauses are assessed under the common law doctrine of restraint of trade. The starting point is that such clauses are presumed to be unenforceable. A non-compete clause will only be enforceable if the party seeking to rely on it can demonstrate that it protects a legitimate business interest and goes no further than is reasonably necessary to protect that interest. A restriction that is too broad or unreasonable may not be upheld by the courts. 

There is no single maximum period that automatically determines whether a non-compete clause is enforceable. The reasonableness of the duration will depend on the nature of the relationship, the interests being protected, and the wording of the clause. In practice, periods of between three and twelve months are common, though longer periods may be upheld in certain commercial contexts. 

In May 2023, the UK government announced its intention to introduce a statutory limit on the length of non-compete clauses in employment contracts to a maximum of three months. A further government working paper published in November 2025 explored additional reform options, including a ban on non-compete clauses below a salary threshold. At the date of publication, no legislation had been enacted, and the common law position described above continues to apply. The law in this area may change in the future. Readers should check the current legal position at the time they rely on this information. 

The legal position can also differ depending on whether the agreement relates to employment, a consultancy arrangement, or another commercial relationship.  

What can you do if you think you have breached a non-compete clause?  

Breaching a non-compete clause can have significant legal and professional implications. The party seeking to enforce the clause may apply to the court for an injunction to prevent the breach and may also pursue a claim for financial damages. If you believe you may have breached the terms of a contractual restriction, you may want to review the agreement and consider seeking legal advice promptly to help you understand your position and identify the options available to you. 

If a former client or business contacts you alleging that you have breached a non-compete clause, it is important to note that non-compete clauses are not automatically enforceable. Under the doctrine of restraint of trade, the responsibility is on the party seeking to enforce the clause to demonstrate that it is reasonable and protects a legitimate business interest. The exact contractual wording, duration, scope, and circumstances will all be relevant. 

Depending on the policy purchased and the circumstances involved, some legal expenses insurance products may provide cover for certain legal costs. Policy terms, conditions and exclusions will apply. 

Frequently asked questions about non-compete clauses 

Can a contractor have a non-compete clause?  

Yes, non-compete clauses can appear in contracts involving contractors and other self-employed professionals, although the enforceability of the restriction will depend on the specific circumstances and contractual wording.  

Can I work for a competitor if I signed a non-compete clause?  

You may be restricted from carrying out certain work for competitors, depending on the wording of the contract. The precise scope of the restriction is important, particularly for self-employed professionals who may rely on a small pool of clients or businesses for work.  

What is the difference between a non-compete and a non-solicitation clause?  

A non-compete clause generally restricts an individual from working for or establishing a competing business for a specified period, while a non-solicitation clause is narrower and typically prevents the individual from soliciting or dealing with particular customers, clients, or suppliers, or from seeking to recruit employees of the former employer. 

How long can a non-compete clause last?  

The period a non-compete clause remains in effect can depend on factors such as the business interest being protected and the nature of the individual’s role. A restriction that lasts longer than necessary may be more difficult to enforce.  

Can a non-compete clause be challenged?  

A contractual restriction may be challenged depending on the circumstances, including whether it is legally enforceable and reasonable to protect the legitimate interests of the business. A legal professional can provide advice on the specific terms and circumstances.   

Visit our knowledge centre for more help and guidance or learn more about Caunce O’Hara’s contractor insurance.   

Please note: This article provides guidance for information purposes only. It should not be relied upon wholly when making or taking important business decisions – always seek the services of an appropriately qualified professional. The views expressed by websites referred to are limited to those of the websites, and do not necessarily reflect the views of Caunce O’Hara. Caunce O’Hara is not affiliated with any of the brands, companies or websites mentioned in this article.