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Zero Hours – People Management

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A mix of political and media scrutiny has kept zero-hours contracts firmly in the spotlight – largely due to the potentially unfair limitations they impose on workers coupled with an overall lack of transparency.

Now, following feedback from an initial consultation, the government has launched a further consultation – seeking views on stopping employers potentially sidestepping a ban on exclusivity clauses.

According to figures released by the Office for National Statistics in April this year, there were 1.4 million jobs offered on zero-hours contracts and more than half a million people employed on them. Of these, most were for roles within large companies in the tourism, catering and food sectors.

In publicising the Small Business, Enterprise and Employment Bill on 25 June 2014, the government has effectively confirmed that zero-hours contracts do have a place in this post-recession labour market, but that changes need to be made in order to ensure that unscrupulous employers cannot abuse the flexibility such contracts provide.

One of the key provisions of the Small Business, Enterprise and Employment Bill is that exclusivity clauses, which effectively tie a worker to one employer even when no work is available, will be rendered unenforceable. Logically this move makes sense, as it has widely been accepted a necessary modification to the way zero-hours contracts are administered. In fact, a staggering 83% of the 36,000 responses to the government’s consultation, launched in December 2013, were in favour of banning exclusivity clauses.

Despite calls from a number of trade unions to ban the use of zero-hours contracts altogether, there is clearly a valid argument in favour of such contracts, as they constitute a means for catering to a more flexible, demand-based need for labour. However, by banning exclusivity, this kind of arrangement can put both parties on an equal footing – the arrangement being just as flexible for the worker as it is for the employer.

Fears have been raised that employers may, however, simply find legal ways of sidestepping the ban on exclusivity clauses, for example by offering a one-hour fixed contract. Other emerging issues are whether the government should do more to deal with potential avoidance of the exclusivity ban in contracts, how such avoidance could be dealt with, whether there should be consequences for employers that attempt to circumvent a ban on exclusivity clauses and, if so, what those consequences should be.

At this stage it is unclear what measures will be introduced to prevent employers sidestepping the ban on exclusivity clauses, and what guidance on implementation will be passed on to employers via the accompanying code of conduct. However, it would be fair to assume that any clause which restricts an individual’s ability to pursue additional employment will be deemed to be unenforceable.

The anticipated code of conduct will most likely provide guidance on areas such as the rights and responsibilities of the individual and the employer, how to calculate accrued benefits such as annual leave, best practice in allocation and cancellation of work and how to promote overall clarity.

There is still much uncertainty as to how zero-hours contracts will be administered and exactly how the contents of such contracts will be agreed, enforced and indeed disputed. With the Bill and accompanying code of conduct expected to become law in early 2015, now is an ideal time for employers that use zero-hours contracts to review their current processes to ensure that they are not imposing any unreasonable exclusivity on their workers and that work is allocated on a fair and transparent basis.

Employers who had previously imposed exclusivity clauses on zero-hours workers in order to protect confidential information may want to substitute the exclusivity clause for a specific confidentiality clause in the contract in order to protect their own business interests without falling foul of any future legislation.

The consultation closes on 3 November 2014 and views are welcomed online at https://bisgovuk.citizenspace.com/lm/banning-exclusivity-clauses-avoidance

 

If you have any questions please contact employment partner Sarah Tahamtani on 0113 336 3314.

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