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Zero Hours Contracts- consultation on how to ban exclusivity clauses

31st August 2014
The Government has embarked on another step in dealing with issues raised in the use of zero hours contracts. A new consultation paper has been issued by the Government this months, entitled "Zero Hours Employment Contracts-Banning Exclusivity Clauses: Tackling Avoidance".

This consultation follows the concerns expressed by many people over the possibility of employers avoiding the ban on exclusvity clauses in zero hours contracts. The Government reached the decision on banning exclusivity clauses in zero hours contracts in June this year, but is now seeking views on a range of topics associated with the operation of the ban on exclusivity clauses.

The issue has relevance to a growing number of people, as the Government estimate that some 583,000 people in the fourth quarter of 2013 (ONS :Zero Hours Analysis, Feb 2014) were working under zero hours contracts. A survey produced by the CIPD estimates that some 9% of those on zero hours contracts have an exclusivity clause in their contract- which effectively prevents them from getting work from another employer even when their main employer is not providing them with any work (CIPD, Zero Hours Contracts:Myth and Reality, Nov 2013).

The consultation document is some 37 pages long. Essentially the  questions raised for the public are contained in section 7 of the consultation document. 

The consultation paper asks respondents for their views on a range of issues, including:-
-What is the likelihood that employers will try to avoid a ban on exclusivity and how may they try to achieve that,
-Whether Government should do more to deal with potential avoidance, how might that best be achieved,and whether to do this alongside the ban or wait for evidence of whether such avoidance is taking place,
-how potential avoidance could be dealt with,
-whether there should be consequences for an employer if they circumvent a ban on exclusivity and,if so, what those consequences should be, and
-whether there are any potentially negative or unintended consequences as a result of the wording of the legislation.

The consultation papers appears to indicate that rather than have one general Code of Practice to cover all businesses, that specific industries and businesses should reach agreement and implement their own codes of practice on the use of zero hours contracts. The paper makes suggestions on issues that should be addressed in such industry-led codes, including:-
-when it is appropriate  or not to use zero hours contracts,
-whether or not to promote clarity e.g. job adverts and contracts stating the type of contract being offered/used up front,
-specify the rights and responsibilities of the individual and the employer and how to calculate accrued entitlements (such as holiday),
-specify best practice in the allocation of workor the cancellation of work.

The paper asks for views on how best to deal with avoidance, for example by considering the requirement for a threshold of a minimum number of hours work being provided, or a set minimum level of income being guaranteed, or a set pay rate being specified. Clearly until these issues are addressed there will remain great scope to avoid the exclusivity ban by simply using a form of wording in the contract that does not bring it within the statutory definition of a zero hours contract. These issues are important so that loopholes caused by the actual definition of zero hours contracts (to be contained in the Employment Rights Act) can be closed, meaning that the exclusivity ban can then apply to the broadest range of such types of contract.    

The closing date to the consultation is the 3rd November 2014.

If you have any questions on the issues raised in this article please do not hesitate to contact us at Hallett Employment Law Services Ltd.

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