The Small Business, Enterprise and Employment Bill 2014-2015 (SBEEB) , currently going through the House of Lords, proposes a ban on employers using “exclusivity clauses” in zero hour contracts. The legislation will allow the Secretary of State to make regulations to ensure that employers do not try to circumvent the ban, and employees, who have been offered a zero hour’s contract containing an exclusivity clause, will also be able to seek redress from the Employment Tribunal. This all sounds very good for the rights of zero contract workers- but will the above legislation really tackle employers avoiding the ban? And on the flip side, what does this spell for employers who have enjoyed the benefits of this flexible contract?
The SBEEB will introduce two new sections (S27A and 27B) into the Employment Rights Act 1996 (ERA);
S27A will render unenforceable terms in zero hours contracts which prohibit workers from working for another employer or from doing so without their employer’s consent.
S 27B gives the Secretary of State the power to make regulations which further ensure that “zero hours workers” are not restricted from working for another employer.
Alongside the new legislation, the government conducted a consultation (Banning Exclusivity Clauses: Tackling Avoidance) which sought views on the new ban. The consultation paid particular attention to the likelihood of employers avoiding the ban, how they might achieve this, whether the government could do more to prevent avoidance, how potential avoidance could be dealt with, whether there should be consequences for avoidance and whether the wording of the legislation could have any unintended consequences. The government response has now been published which includes the draft Zero Hour Workers (Exclusivity Terms) Regulations for Parliament to consider.
Both the Bill and the Regulations will at the very least act as a deterrent to employers who are looking to circumvent the ban. The regulations have given zero hour contracts a wide definition in order to expand the amount of workers caught by the legislation; “contracts of employment or worker’s contracts under which the individual is not guaranteed a certain level of weekly income”. The level of weekly income below which an exclusivity clause will be unenforceable will be determined by the agreed number of hours multiplied by the national minimum wage. To prevent workers on high hourly rates of pay but fewer hours being inadvertently caught by the anti- avoidance measures, individuals who have a hourly rate which is above a certain threshold will be excluded. The response from the government indicates this will be around the £20 mark.
The Government’s response to the consultation also supports the notion of using financial penalties issued by Employment Tribunal, to deter employers from circumventing the ban. We already have provisions which allow Tribunals to impose financial penalties for the breach of an employment right. This should allow Government to legislate for financial penalties to be imposed for breaching the exclusivity ban. Furthermore, there is considerable support for enabling zero hours workers to have the right of redress if they are subjected to a detriment as a result of working for another business.
However the protection afforded by the new Bill and the Regulations, although well intended, may still allow employers to guarantee the worker a small limited number of hours of work per week, therefore satisfying “a certain level of weekly income” and so circumventing the ban on exclusivity. The minimum number of hours and the minimum income below which an exclusivity clause is unenforceable have not been specified in the draft regulations. Furthermore, on closer look at the draft bill, there is technically no provision which would protect a worker from being subjected to a detriment for working elsewhere. The bill only protects the worker from the contractual consequences of ignoring the exclusivity clause (damages for a breach of contract or injunction against the employee) rather than actually banning the employer from declining to offer further work because they are unhappy the worker is working for another business.
From an employer’s perspective, if a zero hours worker is working for another business, in particular a fellow competitor, there is the risk of certain confidential information and trade secrets being disclosed at the employer’s detriment. Employers will need to be wary of this if the Bill goes through; the redrafting of restrictive covenants within the zero hours contract may be necessary here.
There are currently estimated to be about 125,000 workers in the UK who are tied to exclusivity clauses who could benefit from this new legislation. Despite the Government’s vow in their response to the Consultation, to improve the level of information available to zero hours workers, not a lot has been done in the way of developing codes of practice and guides which would considerably help in the understanding of how to use zero hours contracts fairly. Given the recent introduction of higher employment tribunal fees, it is likely that zero hour workers are not going to be able to afford to bring a claim. The introductions of financial consequences to employers who include exclusivity clauses in zero hour contracts or subject zero hour workers to a detriment if they are working for other businesses, may though act as a deterrent. For the time being, zero hour workers, employers and practitioners will have to sit tight until the Bill goes through and further clarification is provided by Government.
0 Comments