Employment Law | Ban on exclusivity clauses for low-paid workers

This month the government announced it is set to widen the ban on exclusivity clauses in employment contracts for around 1.5 million low-paid workers. With the cost of living already at record levels and set to rise further, the aim of the change is to help the lowest paid workers boost their income through extra work. 

What is an exclusivity clause?

Exclusivity clauses in employment contracts restrict workers from taking on additional work with other employers. An exclusivity clause can be used to protect the interests of the business; however, they should be fair and equally respect the right for a worker to earn a living. Since 2015 exclusivity clauses have been unenforceable in zero-hours contracts. Zero hours employees also have the right not to be unfairly dismissed and workers the right not to be subjected to a detriment for failing to comply with an exclusivity clause (as it is now unenforceable) and to claim compensation.

Widening the ban on exclusivity clauses

The government now proposes to extend the ban to contracts where the guaranteed weekly income is on or below the Lower Earnings Limit of £123 a week. An estimated 1.5 million workers are earning on or below £123 a week and the new reforms will ensure that workers in this group are able to top up their income with extra work if they choose. 

When will the changes come into force?

Legislation for the reforms will be laid before Parliament later in 2022. The proposals follow the conclusion of a consultation launched by government in December 2020, which sought views on extending the ban on exclusivity clauses beyond zero hours contracts.

How will the changes affect employers?

The reforms will give more workers more flexibility and the option to take on additional work on short-hours contracts, which could prove beneficial to employers trying to fill vacancies in key industries such as retail and hospitality. Prior to the new legislation coming into force, employers should check the terms of their employment contracts to identify whether exclusivity clauses are currently in place for workers who earn below the Lower Earnings Limit. Employers should be aware that, once implemented, the new legislation will make these clauses unenforceable; therefore, any such employees who are dismissed or suffer a detriment for failing to comply with an exclusivity clause can bring a claim against their employer.