Labour Research January 2016

Law Queries

Exclusivity clauses

Q. Can employers use exclusivity clauses in zero hour contracts?

A. Since May 2015, employers have been prohibited from using exclusivity clauses in zero hours contracts under the Small Business, Enterprise and Employment Act.

The Department for Business, Innovation and Skills recently produced guidance, Zero hours contracts: guidance for employers, which includes a section on exclusivity clauses. This explains that employers “must allow the individual to take work elsewhere in order to earn an income if they themselves do not offer sufficient hours”. If they insert an exclusivity clause regardless, this will be unenforceable.

The guidance also states that an employer must not take steps to try and avoid the exclusivity ban, for example, by requiring that individuals obtain their permission to look for, or accept, other work.

In addition, the government has published draft regulations, Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015. If enacted, the regulations will give some protection against the use of exclusivity clauses. 

For example, if an employee is dismissed by reason of failing to comply with an exclusivity clause, this will be an unfair dismissal, regardless of length of service. Also, workers will be entitled not to be subject to a detriment for failing to comply with an exclusivity clause.

When employers attempt to get around the exclusivity clause ban, this is likely to affect groups of employees with the same contracts, so could provide unions with an opportunity for recruitment and collective action.