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Guidance on exclusivity clauses in zero hour contracts

Background

Most employers will be aware of the Small Business, Enterprise and Employment Act 2015 which has amended the Employment Rights Act 1996. In particular, it provided that exclusivity clauses in zero hour contracts are unenforceable, but it did not go as far as to include any sanctions for employers who continued to apply such restrictions unlawfully.

New Regulations

Following consultation, the Exclusivity Terms in Zero Hour Contracts Regulations 2015 now provides remedies to individuals working under such contracts if their employer seeks to prevent them from working for another employer.

The Regulations provide the following:

  • The dismissal of an employee on a zero hour contract is automatically unfair if the principal reason for their dismissal is that he or she breached an exclusivity clause. There is no minimum service required to bring this claim.
  • It is unlawful for an employer to subject such an employee or worker to a detriment if they work for a different employer in breach of an exclusivity clause. If a claim for detriment under the regulations is successful, the Employment Tribunal may make an award for compensation for the amount it considers ‘just and equitable’.

Therefore, employers who do use zero hour contracts must ensure not only that they do not dismiss an employee for breaching an exclusivity clause but also that they do not act, or fail to act, in such a way that puts employees and workers under zero hour contracts at a detriment which could lead to a costly claim. Employers should consider removing exclusivity clauses, given they are unenforceable. This could reduce the risk of any action being brought.

 

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