Zero hours contracts: ban on exclusivity clauses given bite

Zero hours contracts continue to attract headlines, with the Government legislating to control their use in a variety of ways. The latest step in this direction is the Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015 (SI 2015/2021), which came into force on 11 January 2016.

Background
Under a zero hours contract, workers are given no guaranteed minimum number of hours work. However, they are often also subject to exclusivity clauses, preventing them working for another employer for the duration of the contract, including during times that they are not offered work.

In May 2015, such exclusivity clauses became unenforceable.  However, at that time no remedy was introduced for an employee whose employer sought to enforce an unlawful exclusivity clause.

The new regulations
The Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015 (SI 2015/2021) (the “Regulations”) have now given this ban a bite, by providing that:

  • Employees under a zero hours contract who are dismissed primarily for the reason that they have breached an exclusivity clause in their zero hours contract are now entitled to bring a claim for automatic unfair dismissal. The requirement of having two years’ continuous service, which is usually necessary to bring an unfair dismissal claim, is not applied in such circumstances. 
  • Additionally, both employees and workers on zero hours contracts now have the ability to seek a declaration and to claim compensation for any detriment suffered because they were working for another employer in breach of an exclusivity clause, for example, being treated less favourably than a colleague or having shifts withheld.

Breach of either of the above entitle the individual to “just and equitable” compensation, subject, in the case of a dismissal, to the usual limits in unfair dismissal cases.

Comment
The Government says that the Regulations increase the protection for hundreds of thousands of employees and workers on zero hours’ contracts; but should be non-controversial for most employers.  It should be noted that the Regulations only apply to contracts under which there is no certainty that any hours will be offered. So, it may be possible to impose an enforceable exclusivity clause by guaranteeing a very limited number of hours work.

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