Many governments are experimenting with ways to boost employee productivity. These focus on making it harder for employers to rely on non-competes, and on reducing working time without a drop in pay.

The United States leads on regulating non-competes, at both state and federal levels. It is well known that California bans non-compete agreements and other states have followed suit, including Colorado in 2022. New York State considered a ban, although the legislation was vetoed in December 2023.

At the start of 2023, the Federal Trade Commission (FTC) proposed a rule to ban non-compete clauses. It argued that they amount to unfair competition, stop workers from switching jobs to attract higher wages and cut innovation because employers cannot hire from the widest talent pool. If enacted, the rule would be retroactive and apply to employees and independent contractors. Existing non-competes would be rescinded and employers would have to notify current and former workers that their non-competes were no longer effective. An FTC decision on whether to proceed is expected in April 2024.

The UK government won’t ban non-competes, but it plans to limit how long they last, to drive growth and promote competition. Non-competes of any length are valid if they’re reasonably necessary to protect a legitimate business interest. The government intends to change the law so non-competes can last three months at most after someone’s employment ends.

It’s unclear if or when the government will pass laws to implement the restriction. Time to do so before the anticipated 2024 general election is running short. Employers will probably respond to a change by increasing notice periods – an employee cannot work for a competitor during their notice period.

In the Netherlands the government intends to revise non-compete clause legislation. This will limit the duration of non-competes, specify geographical reach and include the business justification for a non-compete clause in indefinite employment contracts. It also proposes fixed compensation tied to the employee’s final salary when the clause is invoked. Although the minister aimed to present a preliminary legislative proposal by the end of 2023, followed by parliamentary review, this has not happened yet.

Working time is another area where governments are making or considering changes. The new Spanish government plans to cut the working week from 40 hours to 37.5 hours by 2024/25. If the change goes ahead, the greatest impact would be in areas governed by collective bargaining agreements. Here, reducing the working week wouldn’t result in a loss of pay.

In Mexico the government proposes to cut the working week from 48 to 40 hours, to boost productivity and improve employees’ work-life balance. Basic pay would remain the same and extra hours would have to be paid at overtime rates. The reform may go ahead in the months before the general election, due in June 2024, although the timing is not clear at this stage. 

Japan’s focus differs somewhat, although it also aims to reduce employees’ overall working hours. In recent years, the government has introduced limits on how much overtime employees can work, to tackle a long-hours culture, and it strictly enforces the rules.

Other countries are experimenting with a four-day working week with no loss of pay, even without government backing. A large-scale trial in the United Kingdom announced its results in 2023. Most employers taking part made the changes permanent but the project has been controversial. The government told local authorities not to adopt the arrangement because of concerns it doesn’t give taxpayers value for money.

Discussions about a four-day week are underway in Poland and Hungary.

Employers in Germany are dealing with a more prosaic working time issue: how to record employees’ daily working time. A federal labour court decision held that occupational safety law requires employers to record daily working time. This reflects the principle in the earlier CJEU decision in Federación de Comisiones Obreras (CCOO) v Deutsche Bank SAE. The German Working Hours Act does not require this. Employers want the government to amend the Act to codify the standards they should meet, potentially with greater flexibility than the law currently appears to allow. At this stage the coalition government hasn’t agreed what the standards should be.