Exclusivity clause ban: can my employee work a second job without telling me?

Previously, many of the lowest-paid earners in society couldn’t work multiple jobs because of exclusivity clauses in their contracts.

In 2015, the government banned the use of exclusivity clauses in zero-hour contracts. And now, they’re widening this ban to include staff who fall under specific criteria.

To find out whether this update affects your workforce, here’s what you need to know…

What is an exclusivity clause?

If someone has an exclusivity clause in their contract, they cannot take on work elsewhere.

An employer might use an exclusivity clause to prevent a conflict of interest, like stopping their employee from working for a competitor.

Will the ban affect my staff?

As of 5th December 2022, you cannot enforce an exclusivity clause on staff who earn on or below the Lower Earnings Limit (LEL). This is currently £123 a week.

These workers will now have a right to take on work from more than one employer if they choose to.

This ban applies to all contracts, meaning it can affect both permanent employees and temporary workers. To check if it affects your staff, you’ll need to find out their average weekly earnings.

How can I work out someone’s average weekly earnings?

The way you need to calculate someone’s average weekly earnings will depend on the type of contract they have. If you have an employee or a worker on a permanent contract, you’ll need to add up how much pay they received over the last 52 weeks and divide it by 52 to get their average weekly wage.

If someone has worked for you for less than 52 weeks or is on a temporary contract, find an average based on how many weeks they have worked.

Will I need to amend my employment contracts?

If you find that any of your staff do earn on or below £123 a week, you’ll need to remove any exclusivity terms from their contracts if there are any.

Does my employee have to tell me if they take on another job?

Whilst you cannot stop an eligible employee from getting another job, you can require them to tell you if they take on additional work.

What if my employee starts working over the maximum weekly limit?

The risk of having staff who work multiple jobs is that they could end up breaking Working Time Regulations.

Under these regulations, most staff are legally not allowed to work more than 48 hours a week. This means the collective number of hours they work across all jobs cannot exceed this limit. So, if you suspect your employee might end up working more than 48 hours a week, you have two options:

• You could ask them to sign an opt-out agreement

Staff can opt out of the weekly limit if they sign an agreement to do so.

• You could reduce their hours

You could negotiate with them to reduce their hours or ask them to reduce their hours in their other jobs.

Can I stop my employee from working for a competitor?

You might worry about employees sharing confidential information if they work for a competitor.

One way to prevent this is by adding a restrictive covenant to their contract. This is essentially a statement that bans your employee from sharing information.

If you add a restrictive covenant to a contract, you should mention:

• the type of work you’re restricting
• how long the restriction applies 
• any additional requirements

Need to review your contracts?

Staying up to date with the law is tricky when it changes all the time. And when there is an important update, it leaves businesses vulnerable to serious risk. That’s why Peninsula takes care of the legal business, so you can focus on what you love.

For advice or help reviewing and amending your contracts, get instant expert support on 0800 029 4384 .