Zero hour contracts have been the source of much controversy over recent years. Politicians, unions and employee organisations have all united to accuse employers of abusing them leading the Government to try to tackle some of the commonly perceived underlying problems associated with them.
The Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015 (‘the Regulations’) now in force, represents part of this initiative, providing a remedy for zero hours workers against employers who include exclusivity clauses in their contracts of employment.
Why are such Regulations necessary and will they make a difference?
Zero hours contracts – what are they?
A zero hours contract is a standard contract for a casual worker where there will be no guarantee that the employer will offer or provide any work, but the worker is expected to accept any work offered. The intention is that the individual will be a worker, rather than an employee or self-employed contractor.
Employers in the retail and hospitality sectors commonly use such contracts.
These types of contracts are the source of some controversy as some employers included exclusivity clauses that effectively prevented workers engaged under such agreements from working for another organisation, or at least prevented them from doing so without their consent.
In 2014 the Government calculated that 125,000(around 20%) of zero hour workers had contracts including exclusivity clauses meaning that they could not work for anyone else.
Zero hour contracts became a major issue at the last general election with Labour campaigning against them. This led to the Government subsequently seeking to address the abuse of such contracts.
Ban on exclusivity clauses
Exclusivity clauses in zero hours contracts have been unenforceable since May 2015, under section 27A(3) of the Employment Rights Act 1996. The Government’s justification for doing so, as set out in its guidance, is that employers must allow zero hour workers ‘to take work elsewhere, in order to earn an income if they themselves do not have sufficient hours’.
This means employees cannot be bound by exclusivity clauses and can therefore effectively ignore them. Until now though employers have still been able to try to avoid the exclusivity ban and penalise zero hour contract workers who chose to work elsewhere by failing to offer them any further work for example.
Remedy now available to employees for trying to avoid the ban
This loophole has now, effectively, been closed with the introduction of the Regulations giving zero hours employees the right not to be unfairly dismissed and zero hours employees and workers the right to not be subjected to a detriment for choosing to work for another employer also or asking their employer for permission to do so.
Where a zero hour worker successfully brings a claim for detrimental treatment the new Regulations give employment tribunals a fairly wide discretion over the amount of compensation to award on “just and equitable” grounds.
Whether the effective outlawing of exclusivity clauses and penalties employers now face for seeking to circumnavigate this ban has any real impact on the numbers of workers engaged on zero hours contracts remains to be seen. Only time will tell. This commentator suspects not though given the flexibility such contracts afford businesses in managing their staffing levels with many retailers such as Sports Direct still using them.