Exclusivity clauses within zero hours contracts set to be banned

Local authorities have found zero hours contracts to be useful tools over the last few years in the face of budget cuts and an uncertain future for many council services. It is believed that almost all local authorities nationwide use zero hours contracts, and their use is also common amongst private providers who deliver council services, including social care providers. However, the law surrounding zero hours contracts is set to undergo a legislative overhaul.

On 25 June 2014, the government published its response to the recent consultation on zero hours contracts. The Small Business, Enterprise and Employment Bill 2014-2015 was introduced into the House of Commons with the aim of preventing the abuse of vulnerable workers who are not guaranteed any hours of work under zero hours contracts.

The effect of this Bill is that two new sections will be inserted into the Employment Rights Act 1996.

The first new clause will ban the use of "exclusivity" clauses in contracts which do not guarantee hours of work. As a result, employers would not be able to prevent workers on zero hours contracts from working for someone else.

This change would apply to all existing and future zero hours contracts.

The second new clause will give the Secretary of State the power to make further regulations to protect individuals who earn below a certain threshold, or who are guaranteed less than a certain number of hours of work. This anti-avoidance provision will prevent employers from getting round the first change by putting zero hours workers on contracts guaranteeing (say) one hour of work.

Further regulations may also impose financial penalties on employers for expecting zero hour workers to work exclusively for them.

Local authorities should start looking at their zero hours working arrangements now. The resounding message from this Bill is that employers should not be trying to get around the ban on exclusivity clauses but instead accept that these measures are there to protect employees.

It looks like zero hours contracts are here to stay, at least for the time-being, as they provide flexibility within a workforce. However, organisations should expect that this is going to be an area which is set to undergo a lot of legislative change in the near future, and it is important to keep up to date.

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