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27 August 2014

Zero-hours contracts: further consultation

The Government has issued a further consultation intended to seek views on how employers can be prevented from avoiding the proposed ban on exclusivity clauses in zero-hours contracts.

Provisions in the Small Business, Enterprise and Employment Bill will introduce a new restriction on the use of terms preventing those engaged under zero-hours contracts from working for another employer.

The Bill also makes provision for further regulations to be made if necessary to ensure that zero-hours workers are not prevented from working for anyone else by employers circumventing the ban on exclusivity clauses.

As many commentators have already identified, the provisions under the Bill are largely ineffectual in restricting the use of zero-hours contracts.  There is currently no enforceable claim against the employer if a worker is subjected to any detriment for working elsewhere. Even without relying on an express exclusivity clause in the contract, employers could simply stop allocating work to zero-hours employees who chose to work for another employer.

In the latest consultation, the Government seeks to explore how the ban on exclusivity clauses can be enforced by tackling potential avoidance strategies.  This may be achieved by means of further regulations (as provided for in the Bill), or the Government may decide to wait for evidence of whether such avoidance is taking place once the ban takes effect, before taking necessary steps to prevent it.

Comment

The Government has been under pressure to tackle the perceived over-use of zero-hours contracts by businesses, but as currently drafted the measures proposed are likely to have little practical effect.

Alongside the statutory measures, however, the Government’s stated aim is to introduce new and improved guidance for businesses and individuals on the use of zero-hours contracts.  In addition, it has announced its intention to encourage the development of sector-specific codes of practice on the fair use of zero hours contracts.

It seems likely, given the current Government’s preferred approach of ‘industry-regulation’, that further statutory restrictions on the use of zero hours contracts will only be introduced as a last resort if this approach is (at some point in the future) regarded as unsuccessful.

A copy of the new consultation is available here.