Broadening the ban of exclusivity clauses
Exclusivity clauses in employment contracts prevent workers from taking on additional work with other employers. Since May 2015, the use of exclusivity clauses in zero hour contracts was banned.
Yesterday the Government in their press release confirmed the plans to extend the ban on exclusivity clauses for workers whose earnings are below £123 per week.
£123 is the current Lower Earnings Limit which is the minimum a person must earn in order to qualify for any state benefits or statutory payments such as state pension and equates to about 13 hours’ work per week at minimum wage.
The proposed reforms follow the end of the Government’s consultation launched in December 2020, seeking views on extending the ban on exclusivity clauses beyond zero hours contracts.
The legislation for these reforms will be laid before Parliament later this year. When the legislation passes, the following rights for workers will also be extended:
- not to be unfairly dismissed due to non-compliance of an exclusivity clause;
- not to be subjected to a detriment for failing to comply with an exclusivity clause; and
- to claim compensation in regards to points 1 and 2.
It is estimated that the proposed reforms will affect around 1.5 million low-paid workers throughout the UK, giving them more flexibility over when and where they work to suit their personal circumstances. Businesses should also benefit from the proposed reform as the pool of job applicants will increase and the current unemployment gaps in the hospitality sector could be filled.
Going forward employers may want to consider removing the exclusivity clause in their standard contracts for those who earn less than £123 per week now in preparation of the new legislation.