2015 saw the introduction of a UK ban on the use of exclusivity clauses in zero-hour contracts. Zero-hour workers are not guaranteed work and it was generally accepted that it was unreasonable and disproportionate to prevent such individuals from working for another business. The exclusivity clause ban provides workers with more flexibility to take on additional work to top up their income. In December 2020, the Department for Business, Energy & Industrial Strategy (BEIS) consulted on measures to extend the ban to cover workers whose weekly income is on or below the lower earnings limit, currently set at £123 a week (for the year 2022/2023). Following the consultation, the government has laid draft regulations before Parliament. The draft regulations will come into force 28 days after they are made and apply to England, Scotland and Wales.
The draft regulations mirror the rights offered to zero-hour workers in relation to exclusivity clauses. Any provision in a zero-hour contract that prohibits a worker from (a) doing work or performing services under another contract or under any other arrangement or (b) doing so without their employer’s consent is void and unenforceable.
Once the draft regulations come into force, the same will apply to contracts where workers’ guaranteed weekly income is on or below the lower earnings limit. The regulations will prevent employers from restricting employees who earn below the limit from seeking additional employment, and any exclusivity clauses within their contract will become void and unenforceable. This means that if a low-income employee or worker “breaches” an exclusivity clause, they will be protected from unfair dismissal (if they are an employee) or detriment (if they are an employee or a worker).
The new unfair dismissal protection has no qualifying period – an employee does not need to be employed by their employer for two years before being able to bring an unfair dismissal claim. The draft regulations will also have the effect of allowing an employment tribunal to award compensation where a worker or employee has suffered a detriment, up to an amount equal to the unfair dismissal basic and compensatory award. From April 2022, the maximum compensatory award is £93,878 or 52 weeks’ salary, whichever is the lower. The maximum basic award is £6,634.
Employers should review any contracts for low-income workers and make it clear to workers in this category that their ability to enter into other arrangements is no longer restricted. They should also ensure that managers are aware of the new rules to prevent any low-income employee or worker who seeks alternative employment being subjected to a detriment for doing so.
