Ban on exclusivity clauses extended

The Government has confirmed it will introduce legislation to extend the ban on exclusivity clauses. New laws will make exclusivity clauses unenforceable in employment contracts where the guaranteed weekly income is below or equivalent to the Lower Earnings Limit, currently £123 per week. The legislation will also give employees 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, and to claim compensation. It is hoped that by removing red tape, the lowest paid workers will be given the choice to work multiple jobs if they wish, to give them more flexibility over when and where they work.

Exclusivity clauses restrict workers from taking on additional work with other employers. They were banned from being included in zero-hours contracts in 2015, with the same aim of maximising opportunities for individuals to find additional work and apply their skills to drive economic recovery.

There isn’t yet a set date for when the new law will come into force, but it will be laid before Parliament later this year. As well as supporting almost 1.5 million workers to increase their income, the new legislation will also positively impact businesses by widening the talent pool of applicants to those who may have previously been prevented from applying for roles due to an exclusivity clause with another employer. It will also help to attract more people in key industries, such as retail and hospitality and encourage employers to create jobs with contracts which suit them and their needs, for example, offering few weekly hours.

Employers should be aware of the changes and how this will impact them individually, and put measures in place to ensure they are as prepared as possible. This might include reviewing existing contracts, as exclusivity clauses will need to be amended, to ensure they only apply to those earning above the LEL. Employers may also have to update policies and procedures; whilst exclusivity clauses can’t be enforced for those earning £123 per week or less, employers can still require staff to tell them if they are working elsewhere. Similarly, employers should work out average weekly earnings for all employees, so they know who the new rules apply to.

Employers should also check employees’ total working hours; an opt-out agreement will need to be signed if the employee is working more than 48 hours per week across all employers, otherwise they might find they are in breach of the Working Time Regulations (1998).

The introduction of this new law will be welcomed news for workers who are looking for ways to boost their income in the midst of the ongoing cost-of-living crisis. This is particularly relevant given the exclusion of the Employment Bill from this year’s annual Queen’s Speech, as further protection for workers’ rights is not on the government’s priority list for the next year. Whilst no other legislation is on the 12-month agenda, this does not mean employers can’t pro-actively introduce measures to assist employees. Those who do so will benefit from a more motivated and productive workforce, with higher retention rates and better overall success.