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Government Bans Exclusivity Clauses In Zero Hour Contracts

What are zero hour contracts?

The exploitation of workers through the use of zero hour contracts was a hot topic in the General Election and it’s easy to see why.  Zero hour contracts are contracts that do not guarantee a minimum number of hours’ employment and, as of August 2014, a staggering 1.8 million workers were employed on these controversial contracts. This figure, from the Office for National Statistics (ONS) shows that the number of workers on zero hour contracts has increased by more than a quarter from 2013, when figures were first collected.

Who uses zero hour contracts?

Zero hour contacts are particularly popular in the hotel and catering industries where they are used by more than half of businesses. According to the ONS, most workers on zero hour contracts are students or women, and one-third of these workers would like more hours of work compared with just 10% of other people in employment.

It’s easy to see the appeal of zero hours contracts for employers who are afforded greater flexibility in their work force in order to cater for seasonal or fluctuating demand. However, some employees (especially students) like them too and find that zero hour contracts enable them to pursue other interests or commitments alongside a flexible working pattern.

There is general agreement, however, that some employers do not use zero hours contracts in a fair and equitable way. One of the biggest bugbears in this regard is the use of exclusivity clauses in zero hour contracts and a key part of the Conservative Party’s election campaign was a promise to ban such clauses.

Why the fuss about exclusivity?

An exclusivity clause is a contractual clause that prevents workers on zero hour contracts from being able to take work elsewhere, even though the employer does not guarantee any hours of work. As of 26 May 2015, the government finally took some action, bringing into force the much-trailed ban on exclusivity clauses in zero hour contracts.

According to the government, an estimated 125,000 workers in the UK have exclusivity clauses in their zero hour-contracts and so this change could have far-reaching effects.

A proportionate response?

The government’s thinking in banning such exclusivity clauses is that these clauses undermine choice and flexibility for the employee and could constitute an abusive practice on the part of the employer. Neil Carberry of  Confederationof British Industry (CBI) commented: “Banning exclusivity clauses in zero hours contracts is a proportionate response to tackling examples of poor practice”.

As of 26 May, therefore, exclusivity clauses in existing and new contracts will be unenforceable and employers will not be able to rely upon them.

Anti-avoidance measures

The new legislation has, in addition, a section giving the government power to take additional steps to prevent workers on zero hour contracts from being stopped from working for other employers. The law, however, does not give protection from detriment to workers on zero hour contracts and so there are no anti-avoidance measures in place as yet. Watch this space!

By Iain Mackintosh

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