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Zero Hours Contracts - Past or Future?

With Parliament proposing to ban exclusivity clauses in zero hours contracts, is this the end?

If the Small Business, Enterprise and Employment Bill 2014 which was put before Parliament on 20th June 2014 is approved, individuals on zero hour contracts ("ZHC") will have the freedom to find work with more than one employer. Individuals will no longer need their current employer's permission to work for someone else; neither will they be in fear of them taking legal action if they choose to do so. The ban will apply to all existing ZHC and all future contracts from the commencement of the Act (due to be in force before the 2015 election).

Exclusivity clauses can prevent individuals from working for another employer, even when no work is guaranteed. The clauses significantly reduce the flexibility and earning potential for those individuals concerned. For the employer, an exclusivity clause allows them the benefit of accessing skilled labour exclusively for their own business purposes when required, with minimum obligation to the employee.

The action to ban exclusivity clauses follows a government consultation into ZHC which received over 36,000 responses, of which 83 % were in favour of banning the clauses. Interestingly, the Bill provides the first legal definition of ZHC - however the definition is of limited use as it is only applicable for the purposes of the exclusivity clause ban. The Bill gives the Secretary of State authority to draft regulations that further ensure that 'zero hours workers' are not restricted to working for just one employer. ‘Zero hours workers' are defined as:

  • Employees or other workers who work under zero hours contracts.
  • Individuals who work under ‘non-contractual zero hours arrangements'.
  • Individuals who work under worker's contracts of a kind specified in the regulations.

The provision for regulations and this wider definition of ‘zero hours workers' may provide for the modification of their contracts, banning exclusivity terms for prescribed categories of worker which would extend the ban further. The regulations may attempt to tackle wider issues surrounding ZHC, which will be of concern for employers who use them currently.

What further controls will the regulations bring, and will employers decide that ZHC no longer have a place in their business? The government has already announced that it will consult further on how to prevent evasion of the exclusivity clause ban; this followed rumour that some businesses intend to circumvent the legislation by introducing one hour contracts, in place of zero hour contracts.

One thing is for sure; with the red tape starting to take hold of ZHC, the government needs to provide comprehensive guidance for employees and employers. Employers who still use ZHC may wish to consider if ZHC will still work for them when the ban on exclusivity clauses comes into force, or what their options are if they wish to move away from them. Further regulation seems to be inevitable and begs the question: have ZHC had their day?