Business Law & Compliance

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Vince Cable’s legacy lives on: Exclusivity clauses banned in zero-hours contracts

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The former Liberal Democrat had pushed for changes to be made regarding the controversial area – which had become a hotspot for discussion in the lead-up to voting.

Ed Miliband had pledged to end the “epidemic” of zero-hours contracts, while work and pensions secretary Iain Duncan Smith suggested they be rebranded as “flexible-hours contracts” in a bid to shake off the “scare stories” stirred up by Labour.

The debate has discussed the added flexibility for both employees and employers, alongside the risk of workers being exposed to poor practice. Cable had pushed for a ban on exclusivity clauses, which has come into effect this month. 

This means that staff utilising a flexible employment agreement can work for more than one company without being disciplined or fired. It forms part of the Small Business, Enterprise and Employment Act, which received Royal Assent in March 2015.

Neil Carberry, the director of employment and skills at CBI, said this was an important adjustment that should make a difference. “Banning exclusivity clauses in zero-hours contracts is a proportionate response to tackling examples of poor practice,” he said. Carberry also warned of too much additional action, suggesting that “any further regulation must not damage our flexible labour market”.

Read more on the Small Business Act:

An employment lawyer, however, has suggested this change may not necessarily be that effective. Kirsty Ayre, an employment partner at Irwin Mitchell, said: “It’s difficult to know at this stage how much of a difference these new rules will make. Employers can still include clauses requiring workers on such contracts to be available for work if required, which may have a similar impact to an exclusivity clause.”

She added that employers should take the opportunity to check the terms of zero-hours contracts they are currently using, to update for the ban, and be aware of the consequences.

“Employers may be as a result of these new laws find that they are at risk of an employee working for a competitor. If this is the case, they should take action by either putting them on a different type of contract, or beefing up the confidentiality and IP provisions and restrictive covenants,” Ayre explained.

Labour had previously promised to introduce a law that would ensure all workers received a regular contract after 12 weeks on the job. 

Business groups including the CBI, Institute of Directors and the Adam Smith Institute had previously said flexible contracts were actually popular with many workers, and providing too many conditions could threaten jobs. 

A survey carried out in 2013 by the CIPD – the professional body for HR and people development – found that nearly half of zero-hours contract workers were satisfied with having no minimum contracted hours, and 27 per cent were dissatisfied. Some 23 per cent were neither satisfied nor dissatisfied.

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