Ban on Exclusivity Clauses Extended

Ban on Exclusivity Clauses Extended And Comes Into Force On 5 December 2022

Ban on Exclusivity Clauses Extended. The Government have agreed to extend the prevention of the use of exclusivity clauses in zero-hours workers’ contracts and agreed to extend the ban to those workers earning less that the Lower Earnings Limit (‘LEL’). In the current financial year 2022-2023, the LEL is £123 a week.

The extension reflects an acceptance from the government that employers should not be able to restrict the earning potential of those workers who have few guaranteed working hours and thus only low guaranteed earnings from seeking employment elsewhere whilst they are not working.

The Exclusivity Terms for Zero Hours Workers (Unenforceability and Redress) Regulations 2022 (the Regulations) shall come into force on 5 December 2022. The Regulations define ‘exclusivity terms’ as any contractual term which prohibits a worker from doing work or performing services under another contract or arrangement, or which prohibits a worker from doing so without their employer’s consent.

The Regulations make it automatically unfair to dismiss an employee if the reason or principal reason for the dismissal is they breached an exclusivity term. This is a ‘day one’ protection, meaning no qualifying period of employment is required to benefit from it. Employees are also protected from any detrimental treatment by their employer if they breach an exclusivity term, meaning employers cannot surreptitiously enforce exclusivity clauses by taking action other than dismissal. If a tribunal finds that a detriment occurred, it may award as much compensation as it considers ‘just and equitable’, up to an amount equal to the basic and compensatory awards available for unfair dismissal.

What You Need To Do

If you employ people who earn less than the LEL you will need to review the contracts of those employees to ensure that provisions which prevent or limit staff from carrying out work for other employers do not fall foul of the new Regulations.

The LEL threshold, which is as far as the ban extension goes, does not represent a significant income. It may be worth considering the working arrangements for all staff who you offer little in the way of guaranteed hours and pay.

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