22.10.14 Zero Hours Banning Exclusivity Clauses: Tackling Avoidance

As a result of previous Government consultations, the Small Business, Enterprise and Employment Bill have introduced a provision that will ban the use of exclusivity clauses in contracts that do not guarantee an individual any working hours. A staggering 83% of the 26,000 responses to the Governments initial consultation were in favour of banning these clauses.

Since the introduction of this ban, stakeholders have raised concerns that employers could exploit this ban by offering contracts that guarantee just one hour of work. The aim of introducing the ban on exclusivity clauses is to prevent employers stopping the individual from working for someone else, even though he himself does not guarantee them any hours of work. The use of exclusivity clauses in zero hours contracts undermines the flexibility for individuals who can look elsewhere to boost their income when they have not been offered any work. BIS have estimated that there are approximately 17,000 people on zero hours contracts that include exclusivity clauses, however the CIPD estimate a much higher number of 125,000.

Government’s new consultation seeks to find the best mechanism to tackle avoidance of the exclusivity ban in contracts that do not guarantee any hours. The main points the Government would like views on include;

• What the likelihood is of employers avoiding a ban on exclusivity clauses and how they might achieve this;
• Whether Government should do more to deal with avoidance alongside the ban or wait for evidence that avoidance is taking place;
• How avoidance could be dealt with;
• Whether there should be consequences for employers who exploit the ban and what they should be; and
• Whether there are any negative or unintended consequences as a result of the wording of the legislation.

There is uncertainty as to how these new contracts will be administered and how the contents of the contracts will be agreed and enforced. The Bill and accompanying code of conduct are expected to become law in early 2015.

Now would be the ideal time for employers using zero-hours contracts to review  their current processes to ensure they are not imposing an exclusivity clause on workers and that work is allocated fairly.

The consultation should be of interest to employers, individuals, legal representatives and other intermediaries who advise employers and trade unions.

Click here to read the full consultation document and the list of consultation questions. View our previous article on the plans to ban exclusivity clauses here.