Prohibition of Exclusivity Clauses in Zero Hour Contracts

Employers should review their current zero-hours contracts in light of recent changes. In March 2015, the Coalition Government published its response to the consultation on the exclusivity ban in zero-hour contracts. Section 153 Small Business, Enterprise and Employment Act 2015 inserts s.27A and s.27B into the Employment Rights Act 1996, which came into force on 26 May 2015, prohibiting the use of exclusivity clauses in zero-hour contracts.

From now on, any provision in a zero hours contract which prohibits a worker from working under another contract or obligates a worker to request an employer’s consent before accepting other work, will be unenforceable. Under a zero hours contract an employer does not guarantee a worker work and pays only for hours actually worked. Workers on such contracts are also not obliged to accept work that is offered.

The new provisions have been welcomed by advocates of less restrictive terms for employees. Exclusivity clauses were largely seen as exacerbating the insecurity of employees by preventing people from subsidising their incomes when they were not guaranteed work. These clauses could potentially be abused by employers while side-lining employees during economic turmoil.

However, critics remain sceptical about the changes as currently there is no anti-avoidance measures attached to the provisions. Clauses can still be used by employers requiring workers on such contracts to be available for work if required. This may in practice undermine the prohibition on exclusivity clauses.

However, some employers may have genuine concerns about the risk of employees working for competitors, particularly higher paid employees such as consultants. These risks can be managed by the use of confidentiality clauses and restrictive covenants etc. to limit the activity of employees where needed.

For more information on the above changes please contact a member of the Employment Team.


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