Press release

Government pledges to act on employment rules that could be stifling British innovation

Business Secretary Sajid Javid announces plans to look into employment rules that could be stifling British entrepreneurship

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  • the government announces new plans to investigate employment rules that could be stifling small businesses and entrepreneurship
  • businesses across the UK asked for their views to feed into new government Innovation Plan – focused on promoting high tech business and advanced manufacturing to revolutionise how we work and live
  • plans are part of government pledge to make Britain the best place in Europe to innovate and start a business

Business Secretary Sajid Javid has today (24 April 2016) announced plans to look into employment rules that could be stifling British entrepreneurship by preventing employees from starting up their own business after leaving a job.

In a move designed to back even more small businesses and entrepreneurs across the country, the government is launching a call for evidence asking for views on what are known as ‘non-compete clauses’ – which can be written into employment contracts and can prevent individuals from competing against their former employer or working for a competitor for a set period of time, sometimes up to 9 months after leaving a firm.

The clauses are only enforceable in a court of law if it protects a legitimate interest and is reasonable. However, there have been suggestions that they can hinder start-ups from hiring the best and brightest talent, so the government is asking for views from individuals and employers on whether this type of practice is acting as a barrier to innovation and employment.

The move is the latest by the government to deliver on its pledge to make Britain the best place in Europe to innovate and start up a new business, with an Innovation Plan, setting out how the government can help make the UK a better place to turn ideas into new products and technologies, due to be published later this year.

The plan will look at a range of key areas, including how better regulation can drive innovation and opportunities to use the millions of pounds spent on public procurement every year to support new and exciting businesses. And today, UK businesses are being asked to give their ideas to feed into the new government Innovation Plan launched online today.

Business Secretary Sajid Javid said:

Home to some of the most innovative companies in Europe, Britain is already ahead of the curve in many ways when it comes to driving forward new ideas.

But I am clear that I want to see more enterprising start-ups and greater productivity in a free and fair marketplace, by making sure we take action to break down any barriers that are curbing innovation and entrepreneurship.

Emma Jones, founder of Enterprise Nation said:

The UK continues to record over half a million start-ups being formed each year, with many people starting a business by holding onto the day job and building the business at nights and weekends. Entrepreneurial individuals need to be able to ease out of employment and into self-employment so a move to look into how employment contracts reflect this and the modern economy is warmly welcomed.

The 2 steps announced today:

Action to prevent red tape from stifling entrepreneurship

The government is asking businesses and entrepreneurs to give their views on whether clauses that prevent an individual from competing against their former employer are stifling opportunities to innovate and grow.

Known as non-compete clauses, these are provisions in a contract that prevent an individual from competing against their former employer and can include restrictions on individuals approaching former clients or working for a competitor for a set period of time, sometimes up to 9 months, after leaving a company.

Due to be launched shortly, the call for evidence will look for views from individuals and employers on whether this type of restrictive practice is acting as a barrier to innovation and employment and preventing British start-ups from prospering.

Innovation Survey

With some of Europe’s leading innovative sectors, including biopharmaceuticals, aerospace and automotive sectors based here in the UK, the Business Secretary wants firms up and down the country to contribute views on how government can work with them to create new opportunities from big ideas to improve services, drive growth and create jobs.

The results of the survey will feed into the government’s Innovation Plan, which will set out how we can lead the fourth industrial revolution in innovation and new technologies by creating opportunities for British businesses to tap into lucrative new markets. It will look at a range of key areas – including how regulation can drive innovation and opportunities to use the millions of pounds spent on public procurement every year to encourage new ideas and technologies.

Notes to editors

The survey will ask businesses for their views on 7 key areas:

1. Making regulation work for business

Regulation can have a real impact on how businesses operate and how easy it is for them to take the risk and try to develop and foster new ideas. We want to know how the government can make sure that regulation doesn’t stifle businesses and instead drives innovation.

2. Access to data

We are at the start of a data revolution in government with the potential to drive greater efficiency, support economic growth and deliver better public services for citizens. We want to know how we can continue to be a world leader in open government and transparency.

3. Access to finance

For businesses to really be able to lead the way at a time of rapid technological change, they need to be able to have access to science and innovation investment. We want to know what difficulties businesses encounter in seeking finance for innovation and how the government can help unlock these.

4. Using government procurement to kick start development of new tech

With the public sector spending around £240 billion a year – equivalent to around 14% of GDP – there is huge potential to invest in businesses offering new and innovative services and make sure that government procurement practices reflect this.

5. Supporting new and dynamic businesses

Challenger businesses that are pursuing new technologies and business models are already embracing innovation and challenging existing models and business structures across the UK. These can be fast growing and create new opportunities that not only improve services but also boost jobs and growth. We want to make sure more of these can emerge without being stifled by red tape and regulation and want the views of business in how government can work with the sector to make this happen.

6. Maximising opportunities to deliver infrastructure that unlocks wider economic opportunities

We already have a network of Catapult Centres across the UK developing new technologies and working on taking these ideas to market. Government funding for these allows ventures that would not be able to be funded through business alone to be developed. We want to know how we make sure we can build on this to make it more widespread across the country.

7. Intellectual Property (IP)

The IPO’s 2016 IP Awareness Survey showed that 96% of firms had not valued their intellectual property assets and that only 20% had generated additional income by trading those assets. We want to hear views from business on measures that would help ensure the benefits of British research, invention and creativity are felt strongly within our economy and fuel the development of future innovation.

Published 24 April 2016