Employers are now prevented from prohibiting a worker on a zero-hours contract from also working elsewhere. This change was brought into force on 26th May 2015
A zero-hours contract is a contract whereby an employer does not guarantee to provide a worker with any work, and only pays a worker for work actually done. Historically, some of these types of contract also contained an 'exclusivity' clause. The new law will make exclusivity clauses in zero-hours contracts unenforceable, but will not render the entire contract unenforceable (so you don't have to rip up the contract and start again).
This is unlikely to be the end of the regulation of zero-hours contracts. The ban does not prevent employers from guaranteeing only a couple of hours' work per week or penalising workers who have jobs elsewhere, ie. offering those workers less work. Following a consultation earlier this year, the Government said it would introduce new anti-avoidance regulations to protect zero hours workers from being disadvantaged by working under more than one contract. The Government has also discussed banning exclusivity clauses in all contracts of employment where the worker is not guaranteed a certain level of weekly income. However, there is no indication as yet as to when the Government might finalise these anti-avoidance regulations and bring them into force.
The press commentary on zero-hours contracts has focused predominantly on lower paid workers. However, the new law may also impact higher paid workers who use these types of arrangements. For example, an employer who uses a highly paid consultant who has a zero-hours contract arrangement may not be able to rely on some non-compete provisions in the contract, such as the consultant working for another competitor employer. This may have more of a significant impact, and perhaps was not fully intended when trying to protect those in lower paid positions.
Given the risk that non-compete clauses, in particular for senior individuals, will not be enforceable under such zero-hours contracts, it would be advisable to consider whether this type of contract is still suitable for your business. This will be all the more important if the Government introduces further protection for zero-hours workers.
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