What employers need to know about the ban on exclusivity in zero hours contracts
March 24, 2015
The government has published draft legislation to stop employers restricting workers zero hours from working for other businesses (Zero Hours Works (Exclusivity Terms) Regulations 2015). The regulations are currently going through Parliament although it is not yet clear if they will become law before the forthcoming election.
The Regulations seek to implement the government’s findings from a consultation on this issue include:
- A ban on exclusivity clauses in zero-hours contracts that prevent employees seeking work elsewhere.
- To prevent employers avoiding the ban by offering a very low number of guaranteed hours, the regulations would cover contracts that failed to meet a minimum income threshold based on a multiple of the national minimum wage. That figure is yet to be determined.
- The regulations will not apply to anyone earning an hourly rate of £20 per hour or more.
- Workers will be able to bring an Employment Tribunal claim if they are subjected to a detriment, for example being offered no work or fewer opportunities to workers because they also worked elsewhere.
- Employment tribunals will be empowered to issue financial penalties in addition to compensation for workers to deter employers from seeking to avoid the ban.
The government has also stated that the issues raised in the consultation will inform the current government review on employment status, which is due to present options to ministers in spring 2015.
Richard Linskell Says:
Few would question the moral case for stopping abuse of low paid workers by promising them no work but then stopping them working for others. However, what employers need to watch out for is how the regulations will work in practice and whether there are any unintended consequences. Here are a few things to be aware of:
1. Work allocation is likely to be one area to watch out for. Zero hours contracts are often highly valued by employees as it gives them opportunities for flexibility, for example to take off school holidays or to be able to accommodate time for particular hobbies. Employers will often give extra shifts to those who are most enthusiastic and, importantly, most available. Detriment claims may arise where someone is dissatisfied with their work opportunities and believes others are being preferred to them. Employers will therefore need to adopt strategies to ensure a fair distribution of opportunities along with suitable record keeping to be able to defend claims, which might include recording the occasions offers of work were made were made and refused and recording whether the refusal was on the grounds of unavailability due to working elsewhere.
2. One reason for using exclusivity clauses is because employers do not want employees working for competitors which may cause unfair competition or confidentiality issues. Employers should therefore ensure that they review their employment contracts to ensure that they are adequately protected from this perspective whilst not falling foul of the regulations.
3. The regulations are intended to cover only the low paid. However, the £20 per hour limit that applies may cover more people than employers expect. It would be the equivalent of an annual salary of £41,600 for someone working a 40 hour week. Whilst the final minimum weekly income that is set will be considerably lower than this, employers will need to ensure that they check all workers who work under such contracts and not just the lowest paid.