Following on from our update in May 2015 advising that exclusivity clauses in zero hours contracts had become unlawful, new anti-avoidance regulations are now in force, as of 11 January 2016, which provide some real protection for employees and workers operating under these contracts.

The Small Business, Enterprise and Employment Act 2015 amended the Employment Rights Act 1996 last year to provide that exclusivity clauses in zero hours contracts are unenforceable but did not include any sanctions for employers who continued to apply such restrictions.  The aim of the Exclusivity Terms in Zero Hour Contracts (Redress) Regulations 2015 is to ensure that individuals engaged on zero hours contracts have a remedy if their employer seeks to prevent them from working for other employers.

The Regulations provide that:

  • the dismissal of an employee employed under a zero hours contract is automatically unfair if the principal reason for his or her dismissal is that he or she breached an exclusivity clause in that contract, preventing him or her from working for another employer. Employees do not need 2 years' service to bring such a claim; the right applies from day one of employment.
  • it is unlawful for an employer to subject a zero hours employee or worker to a detriment if he or she works for a different employer in breach of an exclusivity clause. If a claim for a detriment under the regulations is successful, the Employment Tribunal may make an award for compensation for the amount it considers "just and equitable" in all the circumstances.
  • Employers which use zero hours contracts must therefore ensure not only that they do not dismiss employees for breaching an exclusivity clause but that they do not act, or deliberately fail to act, in such a way that puts employees and workers at a detriment.  We recommend that exclusivity clauses be removed from zero hours contracts, given that they are unenforceable.  This will also reduce the risk that any action of the employer which is perceived as a detriment could be alleged to have been motivated by a breach of such a clause.