The Government last week announced the start of a consultation on banning exclusivity clauses in zero-hours contracts, and how to identify and close any loopholes in the way they implement this future ban.

Exclusivity clauses in zero-hours contracts effectively ban people on such contracts from taking jobs elsewhere, even if they are offered no hours of work by their employer. Under existing common law a restriction of this type would only be upheld by a court if the Employer had a good reason to justify the clause (as it would be seen as an unreasonable restraint on the individual’s freedom to work).

[Article Updated 2016]

Zero hour contracts have been in the news continuously for the past 2 years with the Government, in mid-December 2013, announcing the start of a consultation period on the use and nature of zero hour contracts, taking views from various stakeholders. They highlighted concerns at the use of exclusivity clauses preventing staff from working with multiple employers and the apparent lack of transparency of the contracts from both the employer’s and employee’s / worker’s perspective.

You can read more about zero hour contracts here – what they are, who is likely to be employed on one and, if you are employed on such a contract, whether it can ever become permanent.

The Government’s initial consultation received 36,000 responses. On 25th June Vince Cable, the Business Secretary, announced his intention to introduce legislation that bans ‘exclusivity’ clauses, allowing everyone working on zero hour contracts the right to work for more than one employer (which is especially important if work is not always available from the ‘first’ employer).

Announcing this latest consultation, Business Secretary Vince Cable said:

“We are tightening the screws on rogue employers who try to abuse workers on zero-hours contracts. We are looking closely at any potential loopholes that could arise from a ban, to ensure that these are closed off and no one can get round the new law. We are also ensuring there is access to justice for workers treated unfairly.”

Labour’s shadow Business Secretary Chuka Umunna said the Government’s measures to resolve zero-hours contracts do not go far enough:

“As well as ensuring that the terms and conditions of employees on zero hours are made clearer and that they are free to work for other employers, Labour would give employees the right to demand a regular contract if they are, in practice, working regular hours for a certain period, with an automatic right to a fixed-hours contract after a period.”

Views submitted during the consultation will help shape the zero hours contracts section of the Small Business, Enterprise and Employment Bill. Estimates of the number of people with such exclusivity clauses in their zero hour contracts range from 17,000 – 125,000 people in the UK.

The Consultation document “Zero hours employment contracts exclusivity clause ban avoidance” can be seen here and consultation is open until 3rd November 2014.

The Consultation is seeking views on a range of potential actions the Government could take to stop employers avoiding the exclusivity clause ban, as well as considering routes for individual redress.

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In March 2015 the Government published draft legislation (the Small Business, Enterprise and Employment Bill which is currently before Parliament) to make exclusivity clauses unenforceable among staff whose have a mixture of low pay and low guaranteed hours of work each week.  And said an hours and pay threshold will be introduced.

On 26th May 2015 exclusivity clauses in zero hours contracts became illegal – which means that any clause that stops a worker “doing work or performing services” under another contract (with another employer) or stops the worker from doing so “without the employer’s consent” will be unenforceable by the employer.  However, the implications of this change are limited as the worker has no way, yet, of complaining if they suffer any ‘detriment’ from an employer trying to enforce this clause.  The Government published the draft ‘Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015, in November 2015, which was introduced into law on 11th January 2016.

If you are an Employer and need ongoing professional help with any staff/freelance issues, or a Contractor/Freelancer/Employee with a complicated employment related problem, then talk to Lesley at The HR Kiosk  – a Human Resources Consultancy for small businesses – our fees are low to reflect the pressures on small businesses and you can hire us for as much time as you need.

Please note that the advice given on this website and by our Advisors is guidance only and cannot be taken as an authoritative or current interpretation of the law. It can also not be seen as specific advice for individual cases. Please also note that there are differences in legislation in Northern Ireland.

Photo by Sebastien Wiertz