Further to our article earlier this year regarding zero hours contracts, the Department for Business Innovation & Skills has now launched a new public consultation, specifically seeking views on the best mechanism for tackling avoidance of an exclusivity ban in zero hours contracts. New legislation is expected in early 2015.
Pam Sidhu, employment law solicitor at The Wilkes Partnership looks at the issues being raised by the consultation and where we are currently with imminent regulation of zero hours contracts.
Whilst many employers are successfully using zero hours contracts, concerns were raised in late 2013 that a small number were abusing this type of contract by incorporating an “exclusivity clause”. This clause prevents the individual from working for anyone else despite the fact they are not guaranteed any hours of work under the contract.
Following the Zero Hours Employment Consultation that took place between 19 December 2013 and 13 March 2014, given overwhelming support from respondents (83%), the Government announced in the summer that it would ban exclusivity clauses in zero hours contracts by way of the Small Business Enterprise and Employment Bill.
The purpose of the new consultation (Banning Exclusivity Clauses: Tacking Avoidance) launched on 25 August 2014 relates to the concerns raised as to the relative ease employers could avoid an exclusivity ban by, for example, offering a contract guaranteeing just one hour’s work.
The consultation seeks views as to whether the Government should take further action to guard against the possibility of employers avoiding the exclusivity clause ban and if so what mechanism(s) should be used. They also seek opinion as to whether they should take pre-emptive action now or take a “wait and see” approach to ascertain whether there is any evidence of the ban being avoided. The Consultation closes on 3 November 2014.
Pam Sidhu comments: “There is clearly a great deal of consensus that exclusivity bans are by and large unfair and inappropriate in the use of zero hours contracts, as borne out by the response to the Government’s previous public consultation. However, at present, the new wording the Government proposes to include in legislation to deal with the ban on exclusivity clauses is not precisely drafted in our view, and leaves a number of matters open for interpretation. For instance, zero hours contracts are loosely defined as where “there is no certainty” that any work will be made available to the worker. This is likely to cause confusion for employers and workers. Also, oddly, there are no “teeth” to the legislation as yet – it simply makes any exclusivity clause “unenforceable”, with no explicit right of redress for workers in the employment tribunals. Therefore it is not at all clear what breach of the ban will mean for employers and employees.
Separately, there has been debate as to why the Government has spent time and effort in the first place in dealing with an exclusivity ban – which most zero contracts (certainly, in our experience) do not contain. Having said that, there may be circumstances involving senior level staff, in relation to which protection of confidential information, investment in the individual and possibly the need to ensure they are always available, may warrant exclusivity. In these cases, employers will need to consider how they will protect these elements of their business through alternative contracts or specific contractual provisions.
On a more general level, the Government has proposed producing further guidance on zero hours contracts by way of sector specific codes of practice – so there will be further regulation, on a different level, also on the way. It will be interesting to see what these codes will stipulate as regards terms that should be included in zero hours contracts”
If you have any views on the above or would like to discuss any of the issues raised, please contact Pam Sidhu on 0121 233 4333 or email [email protected].