Zero Hours Contracts - Ban on Exclusivity Clauses

Having received Royal Assent on 26 March 2015 The Small Businesses Enterprise and Employment Act 2015 (SBEEA 2015) brings into force the following employment provisions:

  • A ban on exclusivity clauses in zero hour contracts. The Secretary of State will now have the power to introduce regulations in relation to zero hour contracts.
  • The maximum penalty for breach of the National Minimum Wage has been raised to £20,000 per underpaid worker.
  • The Secretary of State may now make regulations which prohibit an NHS employer from discriminating against an applicant that has made a whistleblowing protected disclosure.

The aim of the new legislation is to encourage employers to re-evaluate the contracts that they put their zero hour and low income workers on. Restricting zero hour workers from working for other businesses puts them at a disadvantage to their full-time employee counterparts. In conjunction with the government's plan to introduce a Minimum Living Wage in April, this update to the existing protection for low income workers will assist workers' in being able to earn enough, regardless of whether this is through one full time job or several part time jobs.

Employers should be mindful of this update when reviewing their current contractual offerings to workers. It may be necessary to amend shift patterns in order to ensure that there are consistent workers who have enough hours to avoid the need for more than one job, thus eliminating the issue of exclusivity within the contract.

It is important for employers to consider, when offering low hour contracts, that the regulations also cover contracts which fail to meet a minimum income threshold based on a multiple of the National Minimum Wage.

Those earning an hourly rate of £20 per hour or more will, however, not be afforded the protection of the regulations. This is equivalent to an annual salary of £41,600 for someone working a 40 hour week.

The effect of the regulations is that there is now no qualifying period to bring an unfair dismissal claim on this basis. Any claim made to the tribunal will be contingent on a tribunal finding the existence of an exclusivity clause in the employment contract.


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