Future of zero hour contracts

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The government has now acted on its previous proposals to ban the use of exclusivity clauses in zero hours contracts. The recently published Small Business, Enterprise and Employment Bill 2014 contains provisions to make exclusivity clauses in zero hours contracts unenforceable.

Background

There is currently no legal definition of a zero hours contract (‘ZHC’). However, the term is commonly applied to contracts under which the employer does not ‘guarantee’ to provide work, but rather pays workers only for the work they actually undertake. Similarly, the worker is usually under no express obligation to accept any work offered.

ZHCs have generated much debate in recent years and attracted a high level of criticism from unions who have expressed concern that some less scrupulous employers have been exploiting those working under ZHCs. Some of the larger unions have been particularly vocal in their criticism, and expressed a desire to see a blanket ban on the use of ZHCs.

In response to this tide of negative press, the Government undertook a consultation in 2013, looking into the use of ZHC’s and assessing the potential for exploitation of those working under them.

See our previous HR Briefing Consultation on zero hours contracts published.

Ban on exclusivity clauses in ZHCs

Some ZHCs explicitly seek to prevent workers from undertaking work for anyone else. According to the Office of National Statistics such provisions are applicable to approximately 125,000 workers in the UK working under ZHCs. The Government has expressed concern that, by being restricted to one employer, even when work is not guaranteed, workers are prevented from seeking opportunities elsewhere to increase income even if work is not being offered under their ZHC.

The Small Business and Enterprise and Employment Bill (‘the Bill’) states that any provision of a ZHC which prohibits a worker from working under another contract, or prohibits the worker from doing so without the employer’s consent, is ‘unenforceable’ against the worker. The Bill also gives the Government power to introduce anti-avoidance measures to prevent these rules from being circumvented.

As yet no date has been fixed for implementation. However, the Government has said that it will also look to:

  • Increase the availability of information for individuals working under ZHCs;
  • Consult further on how to effectively prevent “rogue employers” from evading the exclusivity ban; and
  • Work with unions and business to develop a Best Practice Code of Conduct for employers seeking to use ZHCs.

EEF will continue to liaise closely with BIS in relation the future governance of ZHCs

Author

Legal Compliance Lead

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