Zero Hours Contracts

The Government has proposed a prohibition on employers restricting zero hours workers from working for other businesses. The result of the legislation, once it comes into force, will render any terms in a zero hour contract which prohibit working for another employer, or from doing so without their employer’s consent, unenforceable. These terms are known as exclusivity clauses. The prohibition of such clauses will ensure that workers employed under zero hours contracts are able to seek work elsewhere when there is no work, or a low level of work available with their contracted employer.

The legislation will apply to zero hour contracts defined as a contract of employment or a worker’s contract under which a worker undertakes to perform work when that work is offered by an employer, but there is not certainty of work.

The Government has also consulted on measures to tackle avoidance of the exclusivity ban, noting that employers might try to circumvent the exclusivity ban by introducing one-hour contracts that provide little security to workers. To ensure this does not become the case, one anti-avoidance measure recommended is to extend the exclusivity ban to contracts beyond zero hours, to contracts where the individual is not guaranteed a certain level of weekly income. The minimum income will be defined by reference to an agreed number of hours multiplied by the minimum wage, to ensure that the minimum keeps pace with NMW rates. An exclusivity clause in a contract which does not guarantee a worker the minimum income would then be unenforceable in the same way as an exclusivity clause in a zero-contract. In other words, exclusivity clauses will be unenforceable in contracts under which a worker works less than a set number of hours each week or earns less than a set amount each week. The threshold for number of hours and the minimum income has yet to be specified, however, it has been proposed that a worker earning in excess of £20 per hour, is likely to be unaffected by the ban of exclusivity clauses. This ensures highly paid, skilled workers who work few hours per week can still be subject to exclusivity clauses.

It is also intended that zero hours workers will get a right to redress in the employment tribunal if they are subjected to a detriment as a result of also working for another business. A remedy for any detriment would be a payment of compensation by the employer. The tribunal will also be empowered to impose financial penalties on employer found to be seeking to avoid the exclusivity ban.

The new proposals go a long way to protect workers on zero hours contracts by enabling them to seek work elsewhere when there is a shortage of work available with their current employer. As long as alternative work is available for a worker, a zero hours contract should not be seen as a negative arrangement. However, the proposals do little to clarify the confusion that arises day-to-day for such zeros hour workers, including calculating their rights, holiday entitlement and benefits.

Philippa Tanner-WoodTrainee Solicitor

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