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Businesses, trade unions asked to help identify zero hours contract exclusivity ban 'loopholes'

Out-Law News | 28 Aug 2014 | 2:02 pm | 2 min. read

"Unscrupulous" employers will not be able to circumvent new rules which would stop them from preventing workers on zero hours contracts from finding additional work elsewhere, the business secretary has announced.

Vince Cable has asked businesses, individuals and trade unions to help the UK government identify "potential loopholes" in its plans to ban the use of 'exclusivity clauses' in zero hours contracts. A consultation, which runs until 3 November, also proposes potential civil or criminal penalties as a means through which workers on zero hours contracts could use to hold employers that treat them unfairly to account.

"We are tightening the screws on rogue employers who try to abuse workers on zero hours contracts," he said.

"The evidence shows that the vast majority of zero hours contracts have been used responsibly by many businesses for many years, but unfortunately we know that some abuse does take place. This is why we are bringing in new laws to ban the use of exclusivity clauses in zero hours contracts, which currently stop employees getting other jobs if they need to top up their income. We want to give individuals the chance to find work that suits their individual circumstances whilst also giving employers the confidence to hire and create new jobs," he said.

Zero hours contracts are contracts under which an employer does not guarantee to provide the worker with any work and pays the worker only for work actually carried out. Under these contracts, individuals are under no obligation to accept work that is offered. Critics of zero hours contracts say that businesses use them to avoid giving workers the status of 'employee' and eligibility for the full range of employment rights; however, business groups claim that using this type of contract gives firms the flexibility to cope with fluctuations in demand, particularly during challenging economic times.

Exclusivity clauses are used to stop a contracted worker from working for another company, even when the contract does not guarantee them a minimum number of hours. According to government estimates, as many as 125,000 UK workers could currently be tied to these clauses. The government confirmed in June that it would use its Small Business, Enterprise and Employment Bill to ban the use of these clauses after a consultation showed 83% support for such a ban.

With its new consultation, the government is hoping to understand how likely it is that employers might try to get round the ban on exclusivity clauses and how they might do so, for example through offering contracts which only guarantee one or two hours of work per week. It is also seeking views on potential sanctions. These could include civil or criminal penalties; or giving workers the right to bring a claim for abuse of a zero hours contract to an employment tribunal.

The government has also announced that sector-specific codes of practice will be developed to help guide the fair use of zero hours contracts in industries such as construction, healthcare, retail and hospitality. These will be developed by business representatives and trade unions, it said.