This LawFlash examines three recent developments and their potential impact on businesses:
- Whistleblowing: A consultation on potential reforms to the statutory whistleblowing framework.
- Non-compete clauses: A commitment to introduce legislation restricting the use of non-compete clauses in employment contracts.
- Employment status: A consultation on employment status reform and enhanced protections for self-employed individuals.
WHISTLEBLOWING: GOVERNMENT CONSULTATION ON POTENTIAL REFORMS
On 12 October, the government launched a consultation on the effectiveness of the whistleblowing protections under the Employment Rights Act 1996 (ERA 1996). The consultation closes on 8 January 2027.
The current framework protects workers and employees against dismissal and other detrimental treatment where a qualifying disclosure of wrongdoing is made in the public interest and allows them to enforce their rights through the Employment Tribunal, with remedies potentially including compensation and interim relief (if the worker or employee can show they are dismissed in consequence of making a qualifying protected disclosure).
The consultation seeks evidence on whether the current scope of protection, the disclosure process, and the remedies available are operating effectively.
Key areas under consideration include:
- Extending protection to a wider range of individuals: Whether whistleblowing protections should cover additional categories of individuals, including volunteers and self-employed individuals.
- Reviewing the public interest requirement: Whether the requirement for workers to reasonably believe that a disclosure is in the public interest operates effectively and whether further guidance would be helpful.
- Expanding the categories of qualifying wrongdoing: Whether the categories in section 43B ERA 1996 should be updated to address emerging risks, including those associated with artificial intelligence and its potential impact on public safety, national security, and critical infrastructure.
- Clarifying the scope of protected disclosures: Whether the existing framework adequately covers concerns involving the misuse of public funds or misuse or abuse of authority.
The government is also considering whether the requirement for workers to reasonably believe that the information disclosed is substantially true discourages individuals from reporting concerns.
The consultation additionally explores alternative reporting channels, including disclosures to trade union officials, which could enable concerns to be raised and addressed at an earlier stage.
Whistleblowing Policies and Procedures
While current government guidance recommends employers adopt whistleblowing policies and procedures, there is no general statutory requirement for all employers to do so.
The consultation considers two potential approaches:
- Strengthening non-statutory guidance on effective whistleblowing reporting and investigation procedures; or
- Introducing a statutory duty requiring employers to establish appropriate procedures for handling disclosures and make a whistleblowing policy available to workers.
The government is also seeking views on extending the deadline for applying for interim relief in whistleblowing unfair dismissal claims from seven days to 14.
If implemented, these reforms could broaden the range of individuals entitled to whistleblowing protection and increase expectations around how employers receive, investigate, and respond to disclosures.
NON-COMPETE CLAUSES: GOVERNMENT COMMITS TO LEGISLATIVE REFORM
Speaking at the 9 October Innovation Nation Summit, UK Prime Minister Andy Burnham announced the government’s intention to introduce legislation restricting the use of non-compete clauses in employment contracts.
The announcement reflects concerns that non-compete clauses can restrict employee mobility, hinder recruitment by start-ups and scale-ups, and limit competition and innovation. The government has also indicated that workers across the wider economy should have greater freedom to change jobs.
While the commitment is significant, the government has not published a final legislative proposal, confirmed a commencement date, or committed to an outright ban.
Current Legal Position
Under current UK law, such clauses are generally unenforceable as restraints of trade unless the employer demonstrates that they go no further than is reasonably necessary to protect legitimate business interests, such as confidential information or customer relationships.
In assessing enforceability, courts consider factors including the duration, geographical reach, and scope of the restrictions as well as whether less restrictive measures would adequately protect the employer’s interests.
There is currently no general statutory maximum duration for non-compete clauses or contractual notice periods.
Potential Areas of Reform
In November 2025, the government published a working paper exploring five broad options for reform. The period for submitting comments closed in February 2026.
Key options considered included:
- A statutory cap on the duration of non-compete clauses
- A cap varying by employer size
- An outright ban
- Restrictions linked to salary thresholds
- A combined salary threshold and duration limit
Until the prime minister’s recent announcement, the government had not provided any further direction on the proposed reform in this area.
Although the precise scope of the proposed legislation remains uncertain, the announcement indicates that reform is now firmly on the government’s agenda.
Statutory restrictions on non-compete clauses could significantly affect how employers protect confidential information, maintain workforce stability, and safeguard client relationships, particularly in sectors where such clauses are widely used. Conversely, greater employee mobility could create recruitment opportunities for businesses, including start-ups and scale-ups seeking experienced employees.
The practical impact will depend on the approach ultimately adopted, including any exemptions and how the legislation applies to existing contractual arrangements.
EMPLOYMENT STATUS REFORM AND PROTECTIONS FOR THE SELF-EMPLOYED
On 14 October, the government launched its consultation Make Work Pay: employment status reform and protections for the self-employed, seeking views on proposals to simplify the employment status framework and strengthen protections for self-employed individuals. The consultation closes on 8 January 2027.
Background
UK employment law currently recognises three main categories of employment status:
- Employees, who benefit from the widest range of employment rights including protection against unfair dismissal and statutory family leave and pay;
- Workers, who have fewer rights than employees but benefit from certain key protections including the national minimum wage and statutory paid holiday; and
- Self-employed independent contractors, who generally fall outside the scope of statutory employment protections.
Determining an individual’s employment status can be complex. While the courts and employment tribunals determine status by reference to the circumstances of the working relationship, the legal tests have developed through extensive caselaw.
The position is further complicated by differences between employment and tax law: for tax purposes, there is no separate “worker” category, and individuals are classified as either employed or self-employed.
The government considers that the complexity and uncertainty of the current framework has contributed to “bogus self-employment,” where individuals are incorrectly classified as self-employed and consequently denied employment rights to which they may be entitled.
Against this background, the consultation seeks views on several potential reforms, discussed in more detail below:
- Reforming the test for worker status: Placing less emphasis on the requirement for personal service and greater emphasis on the degree of control exercised over an individual.
- Introducing a presumption of worker status: Applying a presumption of worker status in certain employment tribunal proceedings.
- Strengthening enforcement: Introducing increased penalties for repeated misclassification and expanding the enforcement role of the Fair Work Agency (FWA).
- Extending protections for the genuinely self-employed: Including a proposed right to a written statement of contractual terms and enhanced protections against blacklisting and in relation to health and safety.
Changes to the Definition of Worker Status
The proposals seek to reduce the incentive for businesses to rely on broad contractual substitution clauses to avoid individuals being classified as workers, while ensuring that those who currently qualify as workers retain their existing protections.
The government also intends that any changes to the statutory definition of “worker” should be reflected in other relevant employment legislation, including provisions relating to working time, the National Minimum Wage, and trade union rights.
Proposed Presumption of Worker Status
Currently, individuals generally bear the burden of establishing that they qualify as “workers” and are entitled to the associated employment protections. The government’s concern is that this places a significant burden on individuals, particularly as employment status determinations are fact-specific and tribunal decisions do not create binding precedents.
Consequently, individuals may need to bring separate claims even where colleagues working in comparable circumstances have successfully established worker status.
To address this, the government proposes reversing the burden of proof in certain proceedings, i.e., an individual would be presumed to have worker status unless the employer could establish otherwise.
The presumption would apply only to the question of whether an individual qualifies for the relevant rights. The existing burden and standard of proof would continue to apply when determining whether those rights have been fulfilled, such as whether the correct amount of holiday pay has been paid. The government is not proposing equivalent changes to the determination of employee status.
Strengthened Enforcement and Guidance
The government is also considering how the FWA, which became operable in April 2026 under the Employment Rights Act 2025, could improve compliance with the employment status framework.
The consultation proposes developing an interactive online employment status assessment tool to help individuals and employers determine their likely employment status. Similar in concept to HMRC’s Check Employment Status for Tax tool, the proposed assessment would use questions based on existing caselaw and guidance to provide an indication of employment status, potentially including an estimate of the likelihood that the suggested status is correct.
However, the results would be non-binding and purely indicative. The tool would not constitute legal advice, replace a tribunal determination, or provide evidence that could be relied upon in court.
Potential Implication for Employers
The proposals are aimed at tackling bogus self-employment and making it more difficult for organisations to classify individuals as self-employed where the reality of the working relationship is more consistent with worker status.
If implemented, the reforms could increase the likelihood of individuals being found to have worker status, particularly where arrangements do not clearly reflect genuine self-employment. This would entitle those individuals to additional statutory protections, including the national minimum wage and paid annual leave.
For organisations that regularly engage independent contractors, caution should be exercised to ensure that the arrangements used are applied correctly and the appropriate status determination is made.
HOW WE CAN HELP
These developments demonstrate the UK government’s continuing focus on strengthening employment protections, with significant potential implications for employers’ contractual arrangements, workplace policies, and workforce models.
While the proposals remain at different stages of development, employers should monitor their progress and consider whether existing practices may need to be reviewed in anticipation of future reforms.
Morgan Lewis can assist employers in understanding the proposed changes, assessing their potential impact, and preparing for any resulting legal and operational requirements.
Trainee Louis Dean contributed to this LawFlash.
