The federal government is marking a change in labor legislation to encourage the “wave of startups”.
Originally written by Timothy Adler about small business
The government is pushing for a labor law change to encourage a "wave of startups" across the UK.
The Business Department launched two consultations today: one to reform the use of non-compete agreements, which prevent individuals from starting a competing business after leaving a position; the other allows poorly paid workers to work elsewhere rather than being tied to one employer.
The Department of Business, Energy and Industrial Strategy (Beis) said reforming the use of non-compete agreements would ensure talented individuals would spark "a wave of new startups across the country."
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If an employer wanted a person to be included in a non-compete agreement to prevent them from starting a business in their area of expertise, they would have to compensate them financially.
The government is also looking for views on whether there is a need to go further and ban non-compete agreements altogether.
The move to exempt employees from non-compete obligations in labor law is aimed directly at workers in the technology and legal sectors who want to set up their own startups.
Other countries, including Germany and France, have also restricted exclusivity clauses to encourage innovation. In California, where non-compete obligations are unenforceable, free movement of workers has been cited as a reason for the rapid growth of the technology sector.
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"A more flexible approach to non-compete agreements would be great for the start-up ecosystem," Dominic Hallas, executive director of the start-up group Coalition for a Digital Economy, told the Financial Times. "You might have a groan from established companies, but it's going to be great for UK technology and the UK economy in the long run."
Business Secretary Alok Sharma said, “We want to make sure that every employee has the freedom and flexibility to work how they want, where they want – whether this adds to their payroll by taking on extra work or being able to do their own to start business using the skills they have acquired over the course of their careers. "
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The government is marking a change in labor law to encourage the “wave of startups”.