Exclusivity Clauses and Zero Hours Contracts

Significant changes to zero hours contracts came into effect on 26 May 2015 with the aim of offering a fairer deal for employees who are not guaranteed any hours of work.

Under the Small Business Enterprise and Employment Act, any contract provided to a worker which does not guarantee a minimum number of hours may not include a clause which prevents the worker from undertaking employment elsewhere.

It is the current practice at a number of organisations to prevent the individual from working in any other business in order to try and maintain the flexibility of its workforce. However, during a Government consultation on the issue, some 83%of respondents voted in favour of a ban of exclusivity clauses.

The Chartered Institute of Personnel and Development (CIPD) has suggested that these changes are welcome but that they do not go far enough in providing a greater degree of protection for workers. The example was cited of a worker who travels for a shift which is cancelled at short notice. In such circumstances, it is argued that the worker should receive some form of compensation.

The Confederation of British Industry (CBI) has warned against any further regulation in this area, however, in order to maintain the flexible labour market. The CBI is keen to stress that zero hours contracts provide as much benefit for employers as for workers as it allows individuals a greater degree of choice in their work-life balance. This view seems to be supported by a previous CIPD survey which found that zero hours workers are more likely to be happy with their work-life balance than other employees.

It should be noted that regulations have not yet been introduced dealing with penalties for employers who do attempt to use exclusivity clauses. Draft regulations were published in March 2015 but have not yet been passed.

The Small Business Enterprise and Employment Act has also made an amendment to the maximum penalty for breach of the National Minimum Wage Regulations to £20,000 in respect of each underpaid worker. Other provisions in the legislation are yet to come into force and do not yet have a commencement date.