Ban on exclusivity clauses set to be extended
The Department for Business, Energy and Industrial Strategy (DBEIS) has announced its intention to widen the ban on exclusivity clauses. The new proposals will prohibit the use of exclusivity clauses where the individual’s guaranteed weekly income under their contract is on or below the Lower Earnings Limit, currently £123 a week. This appears to be an evolution of the earlier 2015 ban of such clauses in zero hours contracts.
Put simply, exclusivity clauses in employment contracts restrict a worker/employee from seeking additional work from other employers. Given this short definition, the rationale behind the 2015 ban of exclusivity clauses in zero-hour contracts becomes clear: a worker on a zero hours contract is not guaranteed to be offered work by their employer and without the ability to seek additional alternative employment, they could realistically be left without any income. The extension of the ban to contracts in lower paid roles follows a similar line of reasoning: those with a weekly income of £123 a week or lower would be those that would most benefit by being allowed to supplement or ‘top up’ their income with extra work. The Government estimates that 1.5 million UK workers are in this category.
In their press release, the DBEIS put forward some of the main advantages to the policy for both workers and employers. On the worker side, in addition to supplementing income, flexibility was noted as one of the biggest potential benefits, in that individuals with commitments such as childcare or studying were highlighted as those who may prefer multiple short-hour contract working arrangements. Businesses would benefit, on the other hand, from being able to select new employees from a widened talent pool of applicants. Key sectors such as retail and hospitality may also be able to fill vacancies more effectively with the policy in place.
Legislation for reform is now due to be laid before Parliament later this year.
This blog was written by Michael Green, Trainee Solicitor at didlaw.