Extension of ban on exclusivity clauses
Exclusivity terms that seek to prevent individuals from doing work for other people (or doing so without their employer’s consent) have been unenforceable when included in zero-hours contracts since 2015. However, in order to provide protections specifically for low-income workers, the principle has been recently extended to apply to all workers whose net average weekly wages do not exceed the lower earnings limit for the purposes of National Insurance (currently £123 per week), rather than just those on zero hours contracts.
Under these new regulations, it is automatically unfair to dismiss an employee if the reason or principal reason for doing so is that they breached an exclusivity term. There is no qualifying service requirement for the employees wishing to pursue such claims – it is a protection that they have as soon as employment starts. The regulations also protect workers from suffering any detriment if they breach an exclusivity term, with employment tribunals being entitled to award compensation up to the value of the award made for unfair dismissal claims.
This change is designed to offer lower paid workers the opportunity to increase their income and to widen the pool of talent for employers to choose from. The change, which will apply in England, Wales and Scotland, will come into force on 5 December 2022.
This serves as a good prompt for employers to review the contracts being used in their business and ensure that any zero hours contracts or contracts issued to those earning less than the lower earnings limit don’t contain exclusivity clauses. While having the clauses present in the contract is not, of itself, unlawful provided they are not enforced, their presence does create a risk that managers may seek to enforce them, or that staff can use their presence to allege a motive for an employer’s actions.