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Government bans exclusivity clauses in zero-hour contracts

A new law banning exclusivity clauses in zero-hour contracts came into force on 26 May 2015.   Employers who do not guarantee staff any hours of work, but prevent them from working for another employer, could face legal ramifications from 26 May under a provision in the Small Business, Enterprise and Employment Act.

Before the 26 May employers were not prohibited from seeking exclusivity from an individual as this was considered a contractual matter between the employer and employee.  After a lengthy public consultation the ban on the use of exclusivity clauses in zero-hours contracts, which was first proposed by the  coalition government, has now come into force. today.

83 per cent of respondents to the government’s consultation voted in favour of a ban on exclusivity clauses, which it is now a legal offence to prevent staff on zero-hour contracts from seeking alternative employment.

Nick Boles, minister of state for the Department of Business, Innovation and Skills said: “Exclusivity clauses in zero hours contracts prevent people from boosting their income when they have no guarantee of work.

“Banning these clauses will give working people the freedom to take other work opportunities and more control over their work hours and income. It brings financial security one step closer for lots of families.”

Neil Carberry, CBI director for employment and skills, said the banning of exclusivity clauses was a “proportionate response to tackling examples of poor practice”.

“But any further regulation must not damage our flexible labour market, which is an important success story of our economy, benefitting employers and employees alike,” he added.

Gerwyn Davies, labour market adviser at the CIPD said he welcomed the changes but this was just the first step in changing the perception of zero-hour contracts.

“We think that there has been a missed opportunity in relation to compensating zero-hour contract workers, or employees who have had their shifts cancelled at short notice,” he said. “There should be some compensation to account for that employee who has travelled for a shift that has been cancelled at short notice.

“The flexibility of zero hour contracts can work incredibly well for both employer and staff, but it’s about striking that balance,” he added.

A 2013 survey from the CIPD found that zero-hours contract workers more likely to be happy with their work-life balance than other workers (65 per cent versus 58 per cent).

Davies said he didn’t expect the latest changes to the use of such contracts to have a radical effect on the businesses employing staff on them, but the government should be wary of those ‘rogue’ employers looking to circumvent the ban.

“We have been through a long consultation process, but as with all these things, it is as much about enforcement as actual policy.

“The legislation can be worded in such a way that makes it categorical that it is an illegal offence, but that needs to be matched by adequate enforcement,” he said.