Non-compete and related agreements: Hoarding talent, holding back growth?

Non-compete clauses (NCCs) and other restrictions on worker mobility can shape career opportunities, business performance and economic dynamism. Discover OECD evidence, insights and policy analysis on their use, economic impact and regulation across countries.

Focus

Key links

Blog: The fine print that follows you out the door: non-compete clauses are spreading and holding back growth, Ecoscope blogpost

Non-compete and related clauses: New evidence on prevalence and regulation

The prevalence of non-compete and related clauses is high and rising

Over the past 20 years, the productivity slowdown – underpinned by low rates of job mobility, firm entry and knowledge diffusion – has been accompanied by rising concerns over wage bargaining power in many OECD countries. One factor that could contribute to explaining these headwinds is the high and rising use of post-employment restraint clauses, which prevent workers from joining (or starting) a competing firm (non-compete clauses); the disclosure of confidential information; or the poaching of former co-workers or clients.

Recommended reading:
Non-compete and related agreements: Hoarding talent, holding back growth?
July 2026
by Dan Andrews, Andrea Garnero and Sara Holttinen
Chapter 5 from the 2026 OECD Employment Outlook

Five facts on non‑compete and related clauses in OECD countries
April 2025
by Dan Andrews and Andrea Garnero

Non-compete and related agreements country notes

Non-competes are being deployed in a fashion that is difficult to reconcile with the original intent

While the use of NCCs was originally justified on the basis that they protect legitimate business interests, such as trade secrets, there are concerns that they are increasingly being deployed to stifle job mobility and competition.

Non-compete clauses (NCCs) cover 20–30% of workers, which is surprisingly high due to deviation from two benchmarks:

Original intent: NCCs have spread beyond knowledge-intensive roles and are rarely negotiated
National regulation: duration/ scope is broader than implied by national regulatory frameworks à prevalence only weakly correlated with regulation.

How do countries regulate NCCs?

The regulation of non-compete clauses varies widely across OECD countries. Some jurisdictions ban them altogether, while others allow them only under strict conditions or are more willing to enforce them.

Rules differ in areas such as compensation, duration, enforceability and the protection of employer interests, meaning workers can face very different restrictions on job mobility depending on where they live. To compare these approaches, a new OECD index compares national frameworks across nine dimensions, helping to map how restrictive or permissive non-compete regulations are across countries. The index reflects the regulatory landscape as of 2025.

Recommended reading:
The regulation of non‑compete clauses across OECD countries
June 2026
by Dan Andrews, Tito Boeri, Andrea Garnero, Sindri Engilbertsson, Sara Holttinen and Lorenzo G. Luisetto

Non-compete and related clauses in Switzerland
January 2026
by Dan Andrews, Andrea Garnero and Sara Holttinen

Non-compete and related clauses in Canada (forthcoming mid-July 2026)

NCCs are associated with weaker economic dynamism, wages and productivity

OECD evidence suggests that non-compete clauses (NCCs) restrict job mobility, business creation and career progression. New survey data show that 5% of private-sector employees have been prevented from changing jobs and 3% from starting a business because of a non-compete clause. By limiting workers’ outside options, these agreements can also slow wage growth, with affected workers moving up the earnings ladder more slowly over their careers.

A higher prevalence of non-compete clauses (NCCs) at the industry level is associated with lower productivity, with a 10 percentage-point increase linked to a 1.9% decline in productivity. This appears to reflect weaker labour reallocation and reduced knowledge diffusion. While stricter regulation can mitigate these effects, non-compete clauses may still discourage worker mobility and weigh on productivity even where their use is restricted.

Recommended reading:
Non-compete clauses and productivity: new cross-country firm-level evidence (forthcoming mid-July 2026)

Awareness of no-poaching and wage-fixing practices is substantial

The survey evidence also raises concerns about the potential presence of firm-to-firm no-poaching and wage fixing agreements, which are illegal under competition law in most jurisdictions.

Almost one-half of surveyed firms report knowledge of either no-poaching, wage-fixing, or both within their industry. High reported awareness suggests that such practices may not be isolated occurrences, further limiting labour mobility and weakening productivity growth.

Recommended reading:
Non-compete and related agreements: Hoarding talent, holding back growth?
July 2026
by Dan Andrews, Andrea Garnero and Sara Holttinen
Chapter 5 from the 2026 OECD Employment Outlook

Non-compete clauses and productivity: new cross-country firm-level evidence (forthcoming mid-July 2026)

Policy can reduce the adverse growth consequences of restraint clauses but more action may be required

Countries have taken a number of measures to restrict the use of non-compete clauses over the last decade. While outright bans represent one policy extreme, they are far from the only option available. Most OECD countries have instead adopted more tailored approaches, combining restrictions on scope and procedural requirements with safeguards aimed at protecting workers while preserving legitimate business interests . These approaches can be grouped into six broad categories.

Recommended reading:
The regulation of non‑compete clauses across OECD countries
June 2026
by Dan Andrews, Tito Boeri, Andrea Garnero, Sindri Engilbertsson, Sara Holttinen and Lorenzo G. Luisetto

A growing number of jurisdictions prohibit non-compete clauses below specified earnings thresholds. Austria introduced such a threshold in 2006 (strengthened in 2015), following Belgium and Luxembourg, while eleven US states have adopted income-based bans. Australia announced a similar reform in 2025, effective from 2027. The rationale is that lower-paid workers are less likely to possess commercially sensitive information and generally have weaker bargaining power, making them more vulnerable to employer monopsony.

Some jurisdictions prohibit non-compete clauses for specific occupations or groups of workers, including physicians and lawyers in many US states, temporary-contract employees in the Netherlands, and most employees in Ontario. Such carve-outs can address clear mismatches between contractual restrictions and business needs, but concerns about mobility, worker choice and the public interest extend beyond the occupations they cover.

Many OECD countries require employers to compensate workers during the non-compete period, sometimes at prescribed minimum rates. Mandatory compensation internalises part of the cost of restricting mobility, discouraging routine use while protecting affected workers. However, it may be insufficient where clauses are poorly specified, awareness is limited, or spillovers affect other workers.

Maximum durations are widely used, ranging from six months in Spain to three years in Italy and Switzerland, with several jurisdictions setting a one-year limit. Such limits improve legal certainty and help ensure restrictions do not outlast the commercial value of confidential information.

Some jurisdictions require advance notice, written disclosure or information about legal advice. These safeguards improve transparency and help ensure that non-compete clauses reflect informed agreement rather than standard contractual practice.

Several countries restrict the enforceability of non-compete clauses following dismissal without cause or allow courts to consider the circumstances of termination when assessing reasonableness. This helps prevent restrictions from compounding the costs of involuntary job loss.

Because even unenforceable clauses may influence behaviour, effective regulation requires both transparency and enforcement. Clear guidance, plain-language requirements, public information services and contract drafting tools can reduce reliance on standard clauses and limit the deterrent effect of invalid restrictions. Enforcement is also important: while competition authorities can address anticompetitive agreements between employers, sanctions for overly broad non-compete clauses remain uncommon, with Spain, Ontario and some US states among the few exceptions.

The two surveys on non-compete and related agreements were made possible thanks to financial support from Coefficient Giving (formerly Open Philanthropy), Canada, New Zealand, Switzerland and the United Kingdom. Bocconi University, through funding from the European Research Council (ERC-MARKINDOWN, Grant Agreement No. 101 097 687) and the MUR PRIN 2022 programme (Project No. 2022JYY7SA), covered the costs for Belgium, Italy, Poland, Portugal and Sweden.