Exclusivity clauses in zero-hour contracts will no longer be legal

From 5 December 2022, it will no longer be legal to include exclusivity clauses in zero-hour employment contracts.

What is an exclusivity clause?

Exclusivity clauses in employment contracts generally aim to limit an employee’s ability to work for multiple employers at the same time.

Whilst they have their uses, in the right circumstances they should only be used to protect a legitimate business interest and it is on that basis that the regulations governing the terms and conditions of employment will shortly be amended.

What impact will the ban have on employers?

Exclusivity clauses can still be included in the majority of employment contracts, but from 5 December 2022, employers will not be able to add them into, or enforce them in, zero-hours contracts where the employee earns on or below the lower earnings limit, which is currently £123 a week.

This means that any employees working under those contracts, who earn less than the earnings limit will be able to work for multiple employers, even if the exclusivity clause is included in their contract.

Employers should review any zero-hours and casual contracts to ensure that they do not include exclusivity clauses and may need to consult on the removal if required. Further, employers should consider whether the contracts comply with the recent holiday pay changes and make sure that all employees are receiving the equivalent of 5.6 weeks’ holiday pay, especially if they are on zero-hours or casual contracts. Remember, if you are still using the 12.07% calculation for zero hours or variable hours employees, the legal position has changed and you are likely to be underpaying your employees who will have claims for back pay.

If you would like us to review your contracts, please get in touch with our employment law experts on 01752 663295.