Zero hours contracts

In June, the Business Secretary, Vince Cable, decided to “ban” exclusivity clauses in zero hours contracts. Zero hours contracts normally mean there is no obligation for employers to offer work, or for workers to accept it.

Exclusivity clauses seek to prevent workers from working for other employers, even when no work is guaranteed.

The Government published the Small Business, Enterprise and Employment Bill and a new s.27A, will be inserted into the Employment Rights Act 1996 to ban exclusivity clauses in zero-hours contracts.

Section 27A defines a zero-hours contract as “a contract of employment or other worker’s contract under which… the undertaking to do or perform work or services is an undertaking to do so conditionally on the employer making work or services available to the worker, and… there is no certainty that any such work or services will be made available to the worker.

Under the new provisions, any clause in a contract which attempts to prevent the worker from working elsewhere will be void.

The Government is now consulting on:

• the likelihood of employers seeking to avoid a ban on exclusivity clauses and how they might go about it;
• whether the Government should do more to deal with potential avoidance, and how that might best be achieved e.g. setting an hours threshold below which exclusivity clauses would be banned;
• whether there should be consequences for an employer if it restricts work opportunities (e.g. by offering no work or fewer opportunities to work) for zero hours employees who, following the introduction of the ban on exclusivity clauses, work for other employers and, if so, what those consequences should be (e.g. criminal or civil penalties); and
• whether there are any potentially negative or unintended consequences as a result of the wording of the legislation.

Vince Cable stated that by the end of 2014, the Department for Business Innovation and Skills will “work with unions and businesses to develop a best practice code of conduct aimed at employers who wish to use zero-hours contracts as part of their workforce”.

Contrary to the Government’s view, commentators at the British Chambers of Commerce feel that the ban threatens business flexibility and that exclusivity clauses are vital in maintaining low levels of unemployment.