D-BRIEF – Employment & Pensions Blog: Ban on exclusivity clauses in low-income employment contracts

Regulations have been made to extend the ban on adding exclusivity clauses in employment contracts to low-income workers who earn no more than the lower earnings limit.

An exclusivity clause restricts workers from taking up additional employment with other companies or prohibits a worker from doing so without their employer’s consent. In May 2015 the use of exclusivity clauses in zero-hours employment contracts was banned and any clause purporting to do this is void and unenforceable.

The regulations, effective on and from 5 December 2022, will extend these provisions to cover low-income workers. This will include employees and workers working under contracts which entitle them to a net average weekly wage that does not exceed the lower earnings limit, which is currently set at £123 a week. It is estimated that 1.5 million workers currently earn the lower earnings limit or less. The regulations mean that these workers will be able to top up their income through additional employment and cannot be prevented from doing this by their employer.

The regulations also provide protection against unfair dismissal where the reason or principal reason an employee is dismissed is due to them breaching an exclusivity term. This will be an automatically unfair dismissal with no qualifying period of employment required to bring a claim. In addition, workers will have protection from suffering a detriment for the same reason.

Employers will need to consider whether these regulations will have an impact on any of their employees or workers. If you would like advice in relation to exclusivity clauses or low-income workers, please contact a member of the Employment Team.

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