Zero Hours Contracts: regulations banning exclusivity clauses now in force

Following the ban on exclusivity clauses in zero hours contracts introduced on 26 May 2015, regulations are now in force which provide protection for workers employed under such contracts – but will these be effective?

18 January 2016

Exclusivity clauses in zero hours contracts became unenforceable from 26 May 2015, meaning that employers could no longer rely on such clauses to prevent employees from taking on work for other organisations. At that time, the Government did not introduce any anti-avoidance / enforcement measures, but left these to be implemented by future statutory instruments.

A new statutory instrument containing enforcement measures has now been introduced. The Exclusivity Terms in Zero Hour Contracts (Redress) Regulations 2015 came into force on 11 January 2016.  The new regulations only apply to zero hours contracts containing an exclusivity clause and provide that:

  • it is automatically unfair to dismiss an employee who works under a zero hours contract if the principal reason is that the employee breached a clause prohibiting him/her from working under any other arrangement;
  • there is no qualifying period of employment necessary before such an unfair dismissal claim can be brought; and
  • a worker (not just an employee) under a zero hours contract cannot be subjected to any detriment if s/he works for another employer in breach of a clause prohibiting him/her from doing so.

If an employer breaches these regulations, the tribunal could order them to pay compensation to the worker. The tribunal can also make a declaration of the parties’ rights.

For a worker’s claim to be successful, they would need to establish that the dismissal or detriment was, at least primarily, due to the fact that they had undertaken work for another organisation. This may be difficult to prove.  For example, given that there is no obligation under a zero hours contract to provide any work at all, in practical terms how can a worker establish that the reason they have not been offered fresh assignments by their employer (an alleged detriment) is because they undertook work for another employer?

Employers may wish to remove any express exclusivity clauses from their zero hours contracts.  These types of clauses are not enforceable in any event and if an employer seeks to enforce an exclusivity clause then it will be exposing itself to a risk of a claim under the new regulations. It is also worth bearing in mind the situation of a zero hours contract without an express exclusivity clause. We do not yet have any guidance on this situation.  However, if in practice a worker is dismissed or sanctioned for not being "exclusive" to the employer, then it is possible that an exclusivity clause could be deemed to be implied into the contract, and the employer penalised for trying to enforce that implied clause.

While the regulations go some way to enforcing the law in this area, it remains to be seen whether they will function in practice to protect workers in the way they are intended.

Our update from May 2015 explaining the prohibition on exclusivity clauses in zero hours contracts is available here.