Zero hours contracts – contrary to popular belief – are not being banned. Employers will be able to continue offering contracts to individuals where it is agreed that there is no guarantee of any hours per week. The employer can call on the individual when required to fill a skills gap; or where demand is temporarily outweighing supply.
However, although there is no intention to ban zero hours contracts altogether, their use in their current form is going to be severely restricted by the Government.
It will no longer be possible to engage someone on a zero hours contract and prevent the individual from working elsewhere. This is because exclusivity clauses are to be prohibited. This is to eradicate the situation where an individual is not able to earn money by working elsewhere, even when he is provided with no hours of work under his zero hours contract.
Restricting other work may well be a valid inclusion in an employer’s zero hour contract – it may be that the employer wants to protect his ‘trade secrets’ or is seeking to prevent a potential conflict of interest situation and finds that he can only do that when places a ban on his workers working for other companies at the same time they are under contract to do work for him – when it is provided.
The Government has claimed though, that this is effectively a restraint of trade which is unlawful under common law. It also states that an employer’s interests can be protected in other ways: via confidentiality agreements and restrictive covenants which must not exceed the test of reasonableness.
The Government has suggested various ways in which it may allow exclusivity clauses to remain in operation. But the employer will be dictated to over how this can happen. One idea is that an employer may be able to restrict other employment if they offer over a certain amount of hours to the individual. Another is where a minimum hourly rate is provided; and the final suggestion is if a certain level of earnings is guaranteed.
So it does not mean an end to zero hours contracts – just zero hours contracts where they are coupled with a restriction on the individual working elsewhere at the same time.