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Government plans action on Zero Hours contracts

The Department for Business, Innovation and Skills (BIS) has announced plans to ban exclusivity clauses in zero hours contracts.

This statement follows the conclusion of the Government’s consultation into zero hour contracts (ZHC) in March 2014.

What’s the issue?
The Government is concerned about ‘unscrupulous’ employers abusing the use of contracts that guarantee no fixed hours to workers but require them to work exclusively for one employer.

It is thought that around 125,000 workers in the UK are currently engaged on ZHCs with exclusivity clauses. These clauses are considered to be unfair and an abuse of position.

What’s going to happen?
The ban on exclusivity clauses will mean that it will no longer be lawful to engage workers on ZHCs requiring them only to work for one employer whist engaged under the contract.

The ban will be part of the Small Business, Enterprise and Employment Bill which was introduced to Parliament on 25 June 2014.

In addition, the Government will be:

  • working with Trade Unions and businesses to draft a Code of Practice on the fair use use of ZHCs
  • consulting on how to enforce the ban on exclusivity clauses (i.e. stopping employers simply offering 1 hour a week guaranteed work)
  • improving existing information and guidance on using ZHCs

Interestingly, if the Bill becomes law, we will have the first statutory definition of a ZHC.

What should you do now?
1. Review any arrangements that could be deemed a ZHC to determine whether they contain exclusivity clauses in order to consider the impact of any ban to your business.

2. If you do engage workers on such contracts, consider the effect of a ban on exclusivity on the business’ ability to adjust resource depending on work levels (clearly if workers start to take up engagements with other businesses then the flexibility of being able to call upon a standby workforce is likely to suffer).

3. Consider issues around the protection of confidential information and trade secrets when these are disclosed / discussed by workers especially where there is an element of competition between the businesses concerned (i.e. retail and construction sectors etc.)

What happens now?
It’s unclear whether this represents the entirety of the Government’s response to their ZHC consultation. We expect more will follow in due course.

BIS received a significantly above average number of responses to the consultation and exclusivity clauses represented only one topic of many. There were several other key issues addressed in the consultation, such as availability clauses and the transparency of terms. There has been no reference to these issues in the recent BIS statement.

This is an easy action to take as a large majority of those who responded to the consultation were in favour of the ban. The difficulty will be legislating against some of the more sensitive issues.

How can I find out more?

Please give one of the employment team a call if you would like to discuss this issue in more detail and/or you would like assistance protecting your business following the implementation of this ban.