Exclusivity In Zero Hours Contracts: Top 5 ‘Must Knows’

Zero hours contracts have been one of the hot topics of the coalition government and have continued to provoke controversy since the election, with concerns about employers misusing them to the detriment of employees. Yet zero hours contracts can be a useful tool for both workers and employers who appreciate the flexibility and benefits they can provide. The Office for National Statistics stated in 2014 that they believed around 697,000 were working on zero hours contracts which represents 2.3% of all those in employment.

The focus however has now turned on exclusivity clauses that some employers use to keep their workforce working only for them even though they provide no guarantee of work.

Here is what you need to know about these clauses and the changes coming into effect.

1. What an exclusivity clause is

Exclusivity clauses form part of some zero hours contracts and prohibits the employee from working for anyone else or undertaking any further work or services. The Government believes that at present up to 14,000 people have these clauses in their contracts. These clauses can seriously restrict the income of those receiving variable hours each week as the very definition of zero hours contracts means that employers do not have to designate a certain number of hours per week or even guarantee any work. Some have voiced concerns that these clauses not only have an effect on an employee’s opportunity to boost their income through supplementary work but also inhibit financial security.

2. They are no longer enforceable

Since 26^th May 2015 these clauses have become unenforceable due to the Small Business, Enterprise and Employment Act 2015 which inserts Section 27 Part A in to the Employment Rights Act 1996. Section 27 Part A states that any provision preventing a worker from doing work or services under another contract or under any other arrangement or prohibits the worker from doing so without the employer’s consent is now unenforceable. An employee or worker will now have the right not to suffer detriment such as unfavourable treatment or dismissal for working for another employer whilst on a zero hours contract.  

3. They are unenforceable in a range of contracts and agreements

This prohibition applies to those on zero hours contracts which Section 27 part A describes as “a contract of employment under which the undertaking to do work or services is conditional on the employer making work or services available and there is no certainty that work or services will be made available”. However it also includes those who work under non-contractual zero hours arrangements and contracts of a kind which are specified by the Regulations. The latter are believed to include (as the Regulations have not formally come into force yet) contracts where the individual is guaranteed less than a certain level of weekly income.

4. Your hourly pay may affect whether exclusivity clauses are enforceable or not

Although the prohibition does apply to specified contracts, it does not apply if the specified contract states that the rate of pay per hour is £20 or above. The logic behind this cap appears to be that the prohibition has been brought in to protect those on low income who may need to supplement their income with additional work. Yet it could be argued that as there is no promise of work, employees could work just a couple of hours and even with £20 per hour, their weekly income may not be enough to support them. 

5. Employees may be able to take employers to the tribunal over this issue

The Draft Zero Hours Workers (Exclusivity) Regulations 2015 make it clear that the intended remedy for employees who have suffered a detriment because of an unenforceable exclusivity clause would be to take the employer to the employment tribunal. A complaint must be brought within three months of the act to which the complaint relates, although there appears to be some scope for a longer period which the tribunal thinks is just and equitable. If the complaint is upheld the tribunal may make a declaration as to the rights of the complainant and the respondent, or award compensation which they believe to be “just and equitable”, or both. If there are aggravating features related to the breach of the workers employment rights employers may also be subject to civil penalties. However as these Regulations are only an outline of the proposals they may be subject to change before they come into effect.  

It remains to be seen whether the changes will affect employers’ use of these contracts or indeed provide greater financial stability.

If you are an employee or employer and have a question about this or any other area of employment law,