Update on Zero Hours Contracts

The Small Business Enterprise and Employment Act 2015 came into force last week on 26 May.  This implemented several changes relevant to employers, including an increase in the maximum financial penalty for failing to pay the National Minimum Wage to £20,000 per worker. 

However, the provisions gaining the most attention are those relating to zero hours contracts.  As of last week, any provision in a zero hours contract that tries to prohibit a worker from doing work or performing services for anyone else, or that prohibits him or her from doing so without the employer’s consent, is now unenforceable. 

Although there was discussion about so-called “anti-avoidance measures” which would be put in place to prevent employers from breaching this new exclusivity ban, no such provisions have yet been brought into force.  As such, whilst the clauses remain unenforceable as against the worker, there are no express penalties for employers who include these provisions. It is unclear if/when such measures will be introduced.

Either way, we doubt this is the last word on the issue; the use of zero hours contracts is likely to remain controversial for the foreseeable future. In addition, ACAS have indicated they intend to publish new guidance for employers on this subject. 

We would recommend that any employers who currently use zero hours contracts urgently review the provisions which are in place to make sure that they do not infringe these new provisions.  It may be necessary to amend your standard documents or reissue existing contracts to make sure they stay compliant with the new legislation. Employers who rely on zero hours contracts will also need to keep a watching brief on the issue to make sure they stay abreast of any further developments.

Update on Zero Hours Contracts