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Government imposes ban on exclusivity clauses in zero hour contracts

14th July, 2014

Zero hour contracts have been a focus of media attention over recent years due to their controversial exclusivity obligation on employees and the requirement to accept work despite no guarantee of it being offered by the employer.

Public opinion appears to be split on this topic; whilst many believe that zero hour contracts result in financial insecurity for workers, others assert that flexible employment opportunities to suit both employers and employees are provided.

In 2013, BIS launched a consultation into the use of zero hour contracts, which attracted a staggering 30,000 responses. One of the key issues identified as a disadvantage to zero hour contracts was the use of exclusivity clauses preventing employees from seeking additional work whilst bound by a contract offering no guaranteed minimum pay. The government has now decided to ban the use of exclusivity clauses (in these arrangements) subject to further consultation.

When implemented, the exclusivity clause ban will mean that employees on zero hour contracts will be able to work for other employers (potentially even competitors) during the term of the contract without restraint from the original employer. The ban on exclusivity clauses is intended to apply to all existing and future zero hour contracts.

A concern arising from the prohibition on exclusivity clauses in zero hour contracts, is that employers may refrain from offering any contract of employment at all where they consider that they are unable to protect their legitimate interests.

Further consultation is now taking place in an effort to ensure that employers will not be able to evade the exclusivity clause ban by, for example, offering one-hour fixed term contracts which prevent employees from working elsewhere.

The Government is expected to impose financial penalties and/or the requirement to pay compensation to employees in the event of a contravention of the new ban.

We would recommend that employers seek legal advice when implementing new contracts of employment to ensure that the new legislative requirements are met.

Likewise, employees who are currently working under a zero hour contract, or may be in the future, may wish to seek legal advice in relation to their contractual rights and implications of the new ban on them.

For further information and advice in relation to zero hour contracts, please contact Claire Brook on 01244 405575 or send an email to [email protected].

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