Zero-Hours contracts: ban on Exclusivity Clauses comes into effect

A significant part of the election debate was spent on zero-hours contracts (ZHCs). Labour announced their intention to introduce a right for those working under ZHCs to request a "standard" contract from employers after 12 weeks, but this is now not something businesses will need to grapple with. Instead, the new Conservative government has announced that it has, with effect from today, introduced the ban on exclusivity clauses in ZHCs that was foreshadowed in the last Act of Parliament made before the election.

For those with a liking for detail, the legislation is set out in section 153 of the Small Business, Enterprise and Employment Act 2015, the snappily-titled Small Business, Enterprise and Employment Act 2015 (Commencement No.1) Regulations 2015 and the new section 27A of the Employment Rights Act 1996.

The new restrictions provide that any clause in a ZHC that prohibits the worker from taking other work, or from doing so without consent, is not enforceable by the employer.  A ZHC is defined for these purposes as a contract under which work is conditional on the employer making it available to the worker, but where there is no certainty that work will be made available.

As practitioners, we have seen very few such exclusivity clauses in the matters on which we have advised, but clients who operate ZHCs should ensure that their provisions do not fall foul of the new restrictions.

Some commentators previously criticised the proposed ban on exclusivity clauses because it seemed reasonably easy to circumvent by instead using contracts which guarantee a very short period of work.  The Coalition government recognised this concern before the election and published draft anti-avoidance regulations which would establish a minimum income level below which exclusivity clauses would be unenforceable.  The minimum income level eventually chosen would clearly be critical to whether or not such an anti-avoidance mechanism would work in practice.  Thus far, there has been no announcement from the Conservative government that it will implement those draft regulations, and with major companies like Sports Direct continuing to be on the front pages, it is too early to say whether today's reform will remove ZHCs from the political agenda for good.