125,000 zero hours workers benefit from new Government Bill

Monday, 11 August 2014
125,000 zero hours workers benefit from new Government Bill

A zero hours contract exists where there is no guarantee of work from an employer but a worker is expected to be available as and when required.  Zero hours contracts are a valuable tool within industry, allowing employers to tap into specialist skills as the need arises and to appeal to employees and students who want to benefit from flexible working arrangements.  Zero hours contracts can at their best therefore provide important and flexible employment opportunities.  It is estimated that there are 1.4 million zero hours contracts in use, providing an average of 25 hours’ paid employment per week.  However, there are thought to be approximately 125,000 zero hours contracts in operation containing the controversial ‘exclusivity clause’.  Exclusivity clauses often seek to completely prevent workers from taking up additional employment with another employer, or to prevent a worker from engaging in further employment without the first employer’s consent.  Exclusivity clauses can undermine a worker’s choice and the Government is taking action to protect vulnerable workers from abuses by less scrupulous employers.

On 25 June 2014 the Small Business, Enterprise and Employment Bill was introduced into the House of Commons in response to the Government’s previous consultation into zero hours contracts. The Government has set out its plan to prohibit exclusivity clauses from being included in zero hours contracts.   The practical implication of the Bill, once it is passed, is that a zero hours worker will be entitled to work for another employer in order to boost their standard income without fear of legal action as a result.  Employers may face financial penalties if they attempt to prevent zero hours workers from gaining employment elsewhere.  It has yet to be seen how these changes will affect restrictions against a worker taking up employment with a competitor.

The Government has announced its commitment to improving guidance in relation to zero hours contracts and has declared its intention to work alongside business representatives and unions to develop a comprehensive code of practice for employers and workers.   Importantly, the Secretary of State has reserved power under the Bill to make further regulations in the future.  It is anticipated that the regulations could extend to cover individuals working under other contracts of employment where an employee’s earnings fall below a set threshold or the number of hours’ guaranteed employment is set below a minimum level.  Further consultation will also take place on what redress is appropriate for employers that breach the rules.  What the result will be of this increased scrutiny of zero hours contracts is yet to be seen.  Employers may stop offering zero hours contracts if they are unable to protect legitimate interests by way of exclusivity clauses.  The Bill successfully attempts to tread a difficult line between supporting workers who want to continue to work with the flexibility afforded by a zero hours contract against ensuring that employers do not use them as a means of unfairly impeding a worker’s freedom.

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