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No more zero hours contracts?

21st July 2014

The hot topic of the moment, zero hours contracts have been under attack for a few years now. The government has now announced that it will ban ‘exclusivity’ clauses in zero hours contracts and has introduced draft legislation to do this.

A zero hours contract is an employment contract where the employee is not promised a defined amount of, or even any work at all. They are often used in businesses where there is fluctuating need for the employee (e.g. care provision) or where the employee has vital skills that the employer would like to access on an occasional basis (e.g. professional performer or sports person). Normally, the employee would not be paid if they do not work and would have the right to turn down work and/or work elsewhere.

There is concern that zero hours contracts can be used to exploit employees, especially if the contract contains an exclusivity clause. An exclusivity clause is a clause that prevents the employee working for another employer, even if the employer who gave them the zero hour contract does not provide them with any work. This can leave someone in the position of having a job, but no work and no income. There is anecdotal evidence of employers ‘punishing’ employees by not offering them any work, sometimes because the employee has been ill, or exercised their employment rights.

In some circumstances an exclusivity clause could be important to an employer, for example if there is confidential information or working practices that should not be passed on to competitors. However, an employer could protect itself with other clauses in the contract (for example, restrictions on how an employee can use information both during and after employment).

While the government has issued draft legislation containing a legal definition of a zero hours contract and has confirmed that it will ban the use of exclusivity terms, it also intends to do further work with businesses and unions to develop a best practice code of conduct for employers who wish to use zero hours contracts. There will be an additional consultation to consider how best to prevent ‘rogue employers’ circumventing the exclusivity ban (for example, by contracting employees to work one hour a week which would technically make the contract not a zero hours contract).

If your organisation uses zero hours contracts, it is important to remember that Employment Tribunals look ‘behind the contract’ to the reality of the working situation. So if an employee is on a zero hours contract but has always done 20 hours work a week the law will view the employee as being on a 20 hour a week contract. So whether you are an employer or an employee it is important to exercise caution when dealing with zero hours contracts.


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