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Eversheds comment: Exclusivity clause ban no end to zero hours contracts matter

  • United Kingdom

    25-06-2014

    Commenting on today's announcement by Vince Cable in relation to zero hours contracts, Simon Rice-Birchall, partner at law firm Eversheds, says:

    "Pressure has been mounting on BIS for some time to prevent the negative consequences associated with some zero hours contracts (ZHCs), hence the Government’s announcement today of new legislation (in the Small Business, Enterprise and Employment Bill) aimed at banning the use of exclusivity clauses. Such clauses tie a worker to one employer even when there is no work available. However, as the Government has already conceded by announcing a further consultation on how to prevent unscrupulous employers from seeking to evade this ban, a ban will not be the end of the matter.

    "In practice, banning exclusivity clauses in ZHCs may have little impact because few employers use them. Instead, the issue appears to be more subtle with Acas highlighting the issue of “effective exclusivity” - where ZHCs workers report being frightened to look for other work in case they are dropped by their employer. A proposed new code of practice and proposed measures to improve transparency over ZHCs workers’ rights and contracts may prove more effective in this respect than a legislative ban on exclusivity.

    "In the meantime, attention moves to the wording of the ban in the Bill announced today. The challenge is on for how the Government will construct a legislative approach that works. With no tried and tested statutory definition of a zero hour contract, the potential danger is that any new wording could inadvertently impact on other forms of employment where exclusivity is currently lawful and common practice.

    "Looking ahead, research suggests that some of the bad practices associated with ZHCs flow from a general lack of understanding, amongst both workers and employers, about the nature of ZHCs including employment status and entitlements. The Government hopes to address this knowledge-gap by making new information and guidance on ZHCs widely available together with a new code of practice.

    "Employers should anticipate increased interest in the employment status and statutory rights of those on ZHCs following the Government’s push on transparency. In anticipation, reviewing employment status, ensuring statutory entitlements are properly granted, including holiday pay, and improving the way that ZHCs are communicated and understood by managers and workers are all sensible precautions to take."

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