Exclusivity in zero-hours contracts

There is a general political consensus that something must be done about zero hours contracts. So with some fanfare, the Small Business, Enterprise and Employment Bill published today contains a provision which ‘bans’ the use of exclusivity clauses. In other words an employer engaging workers under a zero-hours contract will not be able to prevent them from doing work for other employers.

At least that’s the theory. In reality there are a number of reasons why the new law will make little, if any, difference.

Defining zero-hours contracts

Firstly, it’s incredibly difficult to define a zero-hours contract. Here is how the proposed new S.27A of the Employment Rights Act tries to do it:

(1)In this section “zero hours contract” means a contract of employment or other worker’s contract under which—

(a)the undertaking to do or perform work or services is an undertaking to do so conditionally on the employer making work or services available to the worker, and

(b)there is no certainty that any such work or services will be made available to the worker.

Well that won’t work will it? What on earth does ‘there is no certainty’ mean? A bit philosophical for the Employment Tribunals, I reckon. And note the lack of any sort of timescale. If I guarantee at least 12 hours a year, but in any given week you might get nothing, is that a zero-hours contract? What if it is certain that some work will be offered at some stage but the probability is that in most weeks there will be no certainty at all?

To be fair I think that BIS realises that you can – to use a hackneyed lawyer’s phrase – ‘drive coach and horses’ through this definition. A new S.27B will give the Secretary of State power to make Regulations effectively plugging the gaps and making provision for a range of other zero-hour type arrangements that don’t quite fall into this definition to be covered.

There really is too much of this in modern employment law. The Government needs to legislate but hasn’t the time or energy to work out the details and so it creates an order-making power.  Essentially the Government is saying ‘We know this definition won’t really work, but we’ll fix it later’.

What does a ‘ban’ amount to?

Another thing they will have to fix later is the actual ban on exclusivity clauses, because as it currently stands the provision is effectively meaningless. Here it is:

(3) Any provision of a zero hours contract which—

(a) prohibits the worker from doing work or performing services under another contract or under any other arrangement, or

(b) prohibits the worker from doing so without the employer’s consent,

is unenforceable against the worker.

What this means (I suppose) is that an employer will not be able to sue a zero-hours worker who has – out of some selfish determination to earn a living – gone off and done some work for somebody else. I’m sure I won’t be the first to point out that they won’t need to.  The clause might be legally unenforceable, but that will hardly matter if a worker can be denied any further work as a result of breaching it and there is nothing in the Bill, so far, which creates a right for a worker not to suffer a detriment for breaching an exclusivity clause.

It is worth noting that the order making power allows the Secretary of State to

make provision for the purpose of securing that zero hours workers, or any description of zero hours workers, are not restricted by any provision or purported provision of their contracts or arrangements with their employers from 
doing any work otherwise than under those contracts or arrangements.

That seems wide enough to allow the unfair dismissal and unlawful detriment rights that any sensible reform will have to include – but why are these not on the face of the Bill?

BIS has published a memorandum on the delegated powers contained in the Bill which says:

439. For example, where evidence shows that employers are seeking to avoid the effect of the primary provisions, by varying zero hours contracts to provide one hour of guaranteed work under a contract, regulations to add such a category of contract would enable this to be addressed. If evidence showed that employers sought to penalise workers as a consequence of taking work for other employers, these powers would allow regulations to confer rights on workers who had suffered detriment in these circumstances.

440. Given that the content of secondary legislation under these powers will depend on further evidence, it is necessary for this power to be delegated in order to allow the Government to respond to that evidence. In particular, the Government is committed to consulting on the use of these delegated powers during the passage of the Bill and will consider carefully the evidence received from stakeholders and interested parties in determining how to exercise these powers

I can’t think of any other area of employment law where the ‘right’ was introduced, but the standard protection for those exercising the right was held back pending actual evidence of abuse.  It simply makes no sense to me.

What Exclusivity Clauses?

Overall, then, I don’t think this new law solves the problem. But then again, I’m not entirely sure that there is a problem to being with. Where are these exclusivity clauses which this Bill seeks to clamp down on? The Department estimates that 125,000 people are restricted by these clauses , but the evidence for that is pretty weak. It is drawn from a CIPD research paper which said:

Six in ten zero-hours workers report they are allowed to work for another employer when their primary employer has no work available. A further 15% say they are able to sometimes. Just 9% say they are never able to work for another employer and a sizeable 17% don’t know.

It is far from clear to me that the respondents to this survey were talking about actual exclusivity clauses, as opposed to an unspoken rule. Also, the the sample size on that issue was under 500 employees. Even if the figures are right, however, it hardly points to exclusivity being the biggest problem  with zero-hours contracts – the one issue that is crying out for Government action.

In reality this provision will be inserted into employment law with little practical effect. It will gather some headlines but do next to nothing to improve the lives of those who are trapped in precarious and low-paid employment. You might argue that it is hardly worth the effort. But here is the politician’s syllogism at work: something has to be done; this is something – therefore we must do it.

About Darren Newman

Employment law consultant, trainer, writer and anorak
This entry was posted in Zero Hours COntracts and tagged , , , . Bookmark the permalink.

4 Responses to Exclusivity in zero-hours contracts

  1. Editor says:

    As an employer, we use zero hours contracts though would like as many workers as possible to become employees, but most don’t want to, choosing freedom to come and go over mutuality of obligation. This new rule is surely sensible for employers to comply with any way; if workers are free to work for others and therefore accept work with the employer at their discretion, they are more likely to be considered workers rather than employees, which is one of the main reasons for having this type of contract in the first place.

    • John Anzani says:

      Why are they not employees for the duration of the contract? Surely for the duration of the actual work there is a mutuality of obligation even if the contract itself is of short duration?

  2. Pingback: Zero hours contracts: How far can (and should) the law go? | Flip Chart Fairy Tales

  3. Pingback: Zero Hours Contracts – the symptom, not the problem | Ariadne Associates

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