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Banning ‘exclusivity’ in zero hours contracts: what you told us

Zero-hours contracts have hit the headlines repeatedly in recent months and your views may help to shape Government policy in this high profile area.

Zero-hours contracts have hit the headlines repeatedly in recent months and your views may help to shape Government policy in this high profile area.

Banning exclusivity: the current consultation

After considering responses to an initial far-reaching consultation, the Government has decided to proceed with a ban on exclusivity clauses in zero-hours contracts (by which workers are not allowed to seek work elsewhere even when an employer cannot or will not guarantee a minimum number of hours of work). It is expected that a ban will be introduced in the first half of 2015, as part of the Small Business, Enterprise and Employment Bill.

A second consultation was launched into how such a ban might work in practice and how potential avoidance of the ban should be tackled.  We asked you for your views.

What you told us

After inviting your input, we submitted a response to the Government. Many thanks to all of you who shared your views with us. We had over 200 responses to our questionnaire which indicates just how strongly you all feel about this sensitive issue. The breadth and variety of your input was fascinating. Below we pull out the key trends evident from your answers.

Is avoidance likely?

A majority of you (53%) believed that it was either likely or very likely that employers would seek to avoid a ban on exclusivity clauses in zero hours contracts. 17% thought it ‘very likely’ and 36% ‘likely’.

However it should be noted that a significant number of you held an opposing view. 32% of you who responded to our survey felt it was ‘not likely’ that employers would seek to avoid a ban.

What would avoidance look like?

51% of you felt that employers would seek to avoid a ban by restricting the work opportunities of the individual because they have not made themselves available in the past or have taken on an additional job. However a significant proportion of you (37%) felt that offering a minimal number of guaranteed hours might be an employer’s preferred mechanism to avoid a ban.

Notably a number of you commented that unscrupulous employers might seek to adopt both practices and felt that both gave serious cause for concern.

Some of you expressed real concern that, despite any ban on exclusivity clauses, some employers might in any event seek to ‘bully’ or  intimidate employees into working exclusively for them, taking advantage of a scarcity of work and job insecurity amongst employees to enforce unfair practices.

Should the government act now?

You expressed a strong prevailing view that the Government should do more to deal with potential avoidance by employers of a ban on exclusivity clauses and that such action should be taken immediately. Over 75% of you supported additional measures taken at the earliest possible opportunity.

What action is needed?

The majority of respondents to our questionnaire (65%) felt that legislation would be the best method of tackling avoidance. However, there was also significant support for a non statutory Code of Practice. it was broadly recognised though that any such code would be most credible and effective if endorsed by an independent body such as ACAS and/or the business community (for example the CIPD).

A number of those answering our survey suggested that a ‘light touch’ approach in the first instance might help retain flexibility for those businesses that really need it and that legislation should be a last resort, if  a guidance-based approach proves ineffective. However, overall, there was a clear preference amongst you for new ‘black letter’ law to set definite parameters on this issue.

Penalties for avoidance?

It was also suggested in your responses that tax penalties might be introduced for those employers found to be guilty of avoidance. Conversely, a number of you strongly felt that rewarding good practice would be the most effective way to bring about real cultural change. It was suggested that offering financial incentives or additional support to employers that are prepared to offer longer term sustainable employment might be more likely than a ban to promote compliance.

A number of you cited better education and guidance regarding the fair and proper use of zero hours contracts, as important tools to support any ban on exclusivity clauses.

The responses we received clearly expressed the view that, regardless of the method chosen, it is extremely important that individuals are provided with a clear and accessible form of redress against unfair practices.

A majority of you (61%) felt that the most effective from of redress would be a complaint to an Employment Tribunal. A much smaller number supported the introduction of civil or criminal penalties to tackle avoidance.

What should a ban look like?

One way for employers to get round a ban on exclusivity clauses would be to provide employees with a contract for only a small number of guaranteed hours. In the consultation document the Government set out a number of potential parameters to deal with this type of avoidance. The options were:

  • Setting an hours threshold (banning exclusivity where less than a certain number of hours are guaranteed);
  • Setting an income threshold (banning exclusivity where less than a certain level of earnings is guaranteed); or
  • Setting a pay rate threshold (banning exclusivity where less than a certain hourly rate is guaranteed).

The introduction of an hours threshold was most popular with you (75% chose this option), perhaps because such a threshold would be relatively straightforward to introduce and could be applied across all sectors and levels of earnings. There was a lesser degree of support for an income threshold (26%). Interestingly, none of you favoured the introduction of a pay rate threshold as an anti-avoidance measure.

Would a ban on exclusivity impact on job creation?

The potential impact of a ban on job creation sparked real disagreement amongst you. 41% did not see any direct impact. 34% stated that there might be some adverse consequences, whilst 24% did not know. Many of you expressed the view that, even if fewer jobs were created, those that were offered would be more secure, sustainable and fair for employees.  There was a general consensus that a ban on exclusivity would be a proportionate way to ensure that zero hours contracts are deployed as fairly as possible.

If you have any concerns about the future of the law in this area or would like to discuss the use of zero hours contracts in your business, please speak to your usual Weightmans contact or Phil Allen (phil.allen@weightmans.com).