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05 June 2015

Zero hours contracts: the ban on exclusivity clauses

The Small Business, Enterprise and Employment Act 2015 inserts a new section into the Employment Rights Act 1996 in order to render unenforceable exclusivity clauses in zero hours contracts.

However, aware of the potential for employers to sidestep such a ban without further measures being introduced to tackle the problem, a follow-up consultation exercise sought views on what these should be.

The Government Response to the 'Banning Exclusivity Clauses: Tackling Avoidance' Consultation has now been published. The proposed measures are included in secondary legislation – The Draft Zero Hours Workers (Exclusivity Terms) Regulations 2015.

The draft Regulations:

  • propose that the prohibition on exclusivity clauses should be extended beyond zero hours contracts to those where an individual is guaranteed less than a certain level of weekly income. To prevent those earning higher hourly rates but who only wish to commit to working one or two hours a week being caught by the ban, exclusivity clauses should be permitted if the worker's hourly rate of pay under the contract is at least £20; and
  • include the right for zero hours workers not to suffer detriment on the ground that they have done work or performed services under another contract or arrangement. Individuals will be able to seek redress at the Employment Tribunal (ET). If their complaint is upheld, they will receive compensation in line with similar employment legislation, as determined by the ET. In addition, employers could be subject to civil penalties in circumstances where there are aggravating features related to the breach of the worker's employment rights.

In order to improve information, advice and guidance with regard to zero hours contracts, business representatives and unions will be encouraged to develop codes of practice on their fair use relevant to their particular industry sector. The Government also plans to work with interested parties to review existing guidance and improve information available to individuals and employers on the use of such contracts. This work will begin once the details of the Regulations have been finalised.

In addition, issues raised in the course of this consultation will be considered in the ongoing review on employment status, so that concerns around zero hours contracts can be considered alongside all types of contract.

The response to the consultation and the Draft Zero Hours Workers (Exclusivity Terms) Regulations 2015 can be found here.

Contact Jo Davis, partner in the employment team at B P Collins, for advice on any contractual matter. Call 01753 279029 or email employmentlaw@bpcollins.co.uk.

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Email: enquiries@bpcollins.co.uk

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