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Zero hours contract exclusivity clauses to be banned

On 19 December 2013, the government launched a public consultation on zero-hours contracts. The consultation closed on 19 March 2014, having received a record 36,000 responses from businesses of all sizes, charities and social enterprises, unions, union representatives and individuals. The government published its response on 25 June 2014.

What is a zero-hours contract?

The Small Business, Enterprise and Employment Bill 2014-15 was introduced to the House of Commons on 25 June this year. For the first time, it seeks to provide a statutory definition of a ‘zero-hours contract’, albeit with the definition provided for the purposes of the exclusivity ban, which we discuss below.

Zero-hours contract definition

Section 27A(1) and (2) of the Bill defines a zero hours contract as: “A contract of employment or other worker’s contract under which (a) the undertaking to do or perform work or services is an undertaking to do so conditionally on the employer making work or services available to the worker, and (b) there is no certainty that any such work or services will be made available to the worker.”

Therefore, a zero-hours contract is one that does not guarantee that work will be provided by the employer.

Public consultation

The public consultation on zero-hours contracts focused on the use of exclusivity clauses, i.e. a clause restricting zero-hours workers from working for other businesses or requiring their employer’s consent before doing so. Given the support of an overwhelming 83% of respondents, the government has decided to ban exclusivity clauses in zero-hours contracts. The ban will apply to all existing and future zero hours contracts from the commencement of the Act.

The government has also committed to improving their guidance on zero-hours contracts, after 42% of respondents said the current guidance was “not helpful”. A new code of practice on the fair use of zero-hours contracts is expected by the end of 2014.

Fixed-term contract

Additionally, there will be a further consultation on how to prevent rogue employers evading the exclusivity ban by, for example, offering one-hour fixed-term contracts and dealing with the issue of redress if this law is broken.

For more information about the ban on exclusivity clauses and zero-hours contracts or to discuss how the issues raised in this article may affect your business, contact Lyons Davidson’s employment team.

Posted on Jul 30th, 2014 by Lyons Davidson