Exclusivity clauses banned in zero-hours contracts

Exclusivity clauses are now (from 26 May 2015) banned in zero-hours contracts. Other employment law-related measures have also been brought into effect today by the first commencement order made under the Small Business, Enterprise and Employment Act 2015.

26th May 2015

Exclusivity clauses are now (from 26 May 2015) banned in zero-hours contracts. Other employment law-related measures have also been brought into effect today by the first commencement order made under the Small Business, Enterprise and Employment Act 2015.

Section 153 of the 2015 Act inserts a new section 27A into the Employment Rights Act 1996 which renders exclusivity clauses in zero-hours contracts unenforceable. Employers can no longer ban a person on a zero-hours contract from accepting work from any other party (even a competitor) or require them to seek permission before accepting such work.

However, the Government has not taken the next step to include anti-avoidance/enforcement measures. Instead, it has added section 27B to the Employment Rights Act 1996 giving them the power to introduce such measures in the future.

In March this year we provided an update on the proposed changes to zero-hours contacts. A link to our article can be found here. At that time, the Coalition Government’s response to the zero-hours contracts anti-avoidance consultation included draft regulations which, in addition to prohibiting exclusivity, protected zero-hours workers from suffering a detriment if they accept work from someone else.

They also protected workers on contracts with limited hours in certain circumstances, which helped minimise the risk of employers, for example, using one-hour contracts to avoid being caught by the restrictions. Draft regulations were included in the consultation response document. However, these proposed regulations have not been brought into force today. While these types of provisions could be brought in in the future, for now, the lack of enforcement provisions may mean that the new restrictions lack teeth and are at risk of being ignored or circumvented.

Other provisions of the Small Business, Enterprise and Employment Act 2015 have also come into force today, most notably the increase in the maximum financial penalty that can be imposed on an employer for underpayment of the national minimum wage to £20,000 per worker.