Zero Tolerance For Exclusivity Clauses In Zero Hours Contracts

Over the last few days, the Government has announced the outcome of its consultation on the use of Zero Hours Contracts, along with the draft legislation that will implement their proposals. The draft legislation is only in the early stages of its journey through Parliament to become law, so it is unclear when these changes may be effective.

Although not defined in law, generally the term “Zero Hours Contracts” is used to refer to contracts with employees where an employer does not guarantee any work and the employee is not obliged to accept any work offered. Whilst there are many variations on this theme, the common factor in all such contracts is that there are no guaranteed minimum hours of work.

The use of such contracts has increased exponentially since the recession, with the Office for National Statistics estimating that in January of this year that there were some 1.4 million contracts in active use with employees where there was no guaranteed minimum number of hours. They estimated that there were a further 1.3 million such contracts in force where no work was currently being undertaken.

The subject of Zero Hours Contracts has been a political hot potato for some time and has achieved significant press coverage in recent months. Many unions and campaigning groups have called for a complete ban, on the basis that they exploit employees and take advantage of vulnerable groups.  Employers’ groups on the other hand have emphasised that they reflect a need for flexibility in the modern workplace.

The Government consultation on this subject began in December last year and attracted more than 36,000 responses.  After considering the responses, the Government has made significant proposals to regulate the way in which Zero Hours Contracts are used by employers. The key proposals are:

  • Exclusivity clauses will be banned; in other words it will no longer be permissible to tie employees in to a single employer whilst they are working under a zero hours contract;
  • To increase the availability of information on Zero Hours Contracts for employees; and
  • Further consultation on what can be done to crack down on employers who try and evade the new rules.

The Government has also committed to working with unions and business to develop a best practice code of conduct aimed at employers who utilise Zero Hours Contracts by the end of 2014.

For some these proposals still don’t go far enough, with the General Secretary of the TUC Frances O’Grady again calling for the law to be changed to require a minimum number of guaranteed hours in all employment contracts.

If you would like to discuss any of the issues raised in this article or any other employment query, please contact Gareth Roberts on 0161 833 8402 or any member of the Employment team.