Government “crackdown” on zero hours contracts

We suspect that many of you will have heard of the phrase “zero hours contracts” and our earlier article, posted by Abigail Brightwell on 20th May 2014 provides a detailed overview of these contracts, including a discussion on what they are and why they were in the spotlight earlier this year.

As a reminder, the term “zero hour contracts” is used to describe contracts whereby an employer does not guarantee to provide the worker with any work, and only pays the worker for work actually done.

Under these arrangements, the worker will usually be expected to be available for work if called upon by the employer and in some cases, the contracts will include a provision which will prevent an individual from working for another employer, often referred to as “exclusivity clauses”.

Back in May 2014, we informed you that the Department for Business Innovation and Skills were deciding whether or not to hold a formal consultation on proposals for legislation in this area. That consultation went ahead and on 25 June 2014, the Government published its response to the zero hours contracts. It is believed by the Government that their plans will be a “crackdown on zero hours contract abusers”. Please click here to read more.

The “crackdown” is focused on the “exclusivity clauses” and it plans to prohibit employers from restricting zero hours workers for working for other businesses; allowing workers on zero hours contracts to have the freedom to find work with more than 1 employer. The proposal is set to benefit as many as 125,000 zero hours contract workers estimated to be tied to exclusivity clauses. The Government has stated that the “use of exclusivity clauses in zero hours contracts undermines choice and flexibility for individuals concerned” and they want to “clamp down on abuses in the workplace by less scrupulous employers”.

So, what does this mean for the future?

The implications of the recent proposals for zero hours workers are only limited to those who are restricted by exclusivity terms and there does not seem to be any movement towards banning these arrangements in its entirety, yet. In fact, the Government in this recent publication, are saying the opposite and that zero hours contracts do have a place in today’s labour market, but it believes there are some employers who are taking advantage of the flexibility these contracts provide at the detriment of the worker. Business Secretary Vince Cable has confirmed that the Government will also:

• Consult further on how to prevent employers evading the exclusivity ban (for example, prevent employers offering 1 hour fixed contracts as a way to get around the exclusivity ban).
• Work with business representatives and unions to develop a fair use (set to be completed by the end of 2014).
• Work with stakeholders to review existing guidance and improve information available to both employers and employees.

For workers with exclusivity clauses, this latest update will most probably come as good news as you regain an amount of freedom for who you are able to work for.

For employers who employ its workers on zero hours contracts with exclusivity clauses, maybe because the nature of the work requires a number of workers on-call and it cannot afford the risk of a worker saying “no”, this proposal will mean that you will have to rethink how you are able to meet your requirements – for now, this could include things such as engaging more workers on zero hours contracts (whilst ensuring that the arrangement does not contain exclusivity clauses) or moving the workers onto fixed term contracts.

For now, however, the future prospects of the zero hours contracts is still very much uncertain as the Government sets to continue consultation in this area.

This content is correct at time of publication