In a bid to give workers more autonomy, the government announced on 9 May 2022 that it proposes to extend the ban on exclusivity clauses in employment contracts to cover low-paid workers. Such a ban already applies to zero-hours contracts but this announcement shows the government’s increasing willingness to step in with legislation in order to protect the rights of more vulnerable workers.
In brief, exclusivity clauses in employment contracts prevent workers from taking on additional work for other employers. The worker is therefore required to work exclusively for the business with which it has contracted. There has been an increasing amount of pressure to ban exclusivity clauses to ensure that individuals working under zero-hours contracts (with no guarantee of work) or low-paid employees (with limited income) are not prevented from working for more than one employer.
In 2014, the government consulted on banning exclusivity clauses in zero-hours contracts and low-income employment contracts. Although the government did not proceed with banning exclusivity clauses in low-income employment contracts, it did ban the use of these clauses in zero-hours contracts.
Section 27A(3) of the Employment Rights Act 1996 (as amended) renders any provision in a zero-hours contract void and unenforceable if it prevents a worker from either:
- doing work or performing services under another contract or any other arrangement; or
- doing work or performing services under another contract or under any other arrangement without the employer’s consent.
In light of the impact that COVID-19 had on low-income workers, on 4 December 2020 the Department for Business, Energy and Industrial Strategy opened a consultation on measures to extend the exclusivity ban to cover low-income workers. The consultation ended on 26 February 2021 and the government has recently published its response, agreeing to extend the ban to cover contracts where workers’ guaranteed weekly income is at or below the Lower Earning Limit, currently set at £123 a week. This is expected to cover 1.5 million workers.
The government will be legislating “in due course” to extend the exclusivity clauses ban in employment contracts so we have yet to see the detail of the proposed extension.
Key takeaway for employers
The extension of the ban on exclusivity clauses will give workers more flexibility over when and where they work, which in turn is intended to give them the ability to plan jobs around childcare or education. It is believed that the extension will help employers to widen the talent pool of job applicants and fill vacancies, particularly in sectors such as retail and hospitality, as there will be fewer restrictions on workers who wish to work for more than one employer.