Zero hours contracts were one of the hot areas of debate in the general election, with the parties making far reaching proposals as to how they would deal with the abuse of low paid workers.  The manifestos were wide ranging but in general they all took a firm stance on zero hours contracts, possibly in part due to the extensive media coverage the issue received.

Following the initial surprise caused by the election outcome, the dust has now settled and the Conservatives are well underway in implementing their manifesto. The Conservatives had vowed to ban exclusivity clauses in zero hours contracts.

In fact they were so efficient in implementing their manifesto promise that they had done so almost two months before the election. The Small Business, Enterprise and Employment Act 2015 was enacted in March 2015 and came into force on 26 May 2015.

Zero Hours Contracts

The Act provides that a zero hours contract is one where an employee gives an undertaking to perform work on the condition that the employer makes work available and where there is no guarantee that any such work will be made available.  If an employee is contracted under a zero hours contract that contains terms preventing them from working for other employers then those terms are now deemed unenforceable.  It is important to note that the ban covers both clauses which clearly state the employee cannot work for another and clauses where the employer’s permission is required before an employee can work for another.

Prevalence

According to the Office of National Statistics, the number of people employed on a “zero-hours contract” in their main job was 697,000 for October to December 2014, representing 2.3% of all people in employment. In November 2013 a CIPD survey found that 9% of individuals on zero hours contracts are never allowed to work for another employer when their primary employer has no work available for them.

If, prior to the ban, the 9% was still accurate then the ban will affect 62,730 employees.

Enforcement

Whilst the legislation enacting the ban is in place provisions giving employees a right of redress are not.

When the coalition government completed its consultation on exclusivity clauses in zero hours contracts it published draft regulations to deal with anti-avoidance and enforcement issues as part of its response.

The draft regulations provide  for redress through the following measures:

  • A right for a zero hours worker not to suffer any detriment if they have done work or performed services under another arrangement;
  • A right of redress for zero hours workers through the Employment Tribunal; and
  •  Potential for provisions to be made for civil penalties to be issued to employers in breach.

Along with the regulations it may be possible that an amendment of the Employment Rights Act 1996 could be made to support a claim that an employee should not suffer detriment for asserting his statutory right in relation to the ban.

Avoidance

One concern is that employers will attempt to avoid the ban by creatively avoiding having employees on zero hour contracts, for example, by drafting contracts guaranteeing one hour of work per week.  The draft regulations mentioned above did however propose that the ban could be extended to contracts under which an individual is not guaranteed a certain level of income, to be calculated with reference to the National Minimum Wage. At present the proposal is that the ban will not however extend to contracts where the rate of pay is over £20 per hour.

Practical Guidance

It is clearly the intent of the government to introduce enforcement avenues for employees and employers should prepare now. An employee will not have a claim purely for having an exclusivity term in an existing contract, as the ban simply makes such clauses unenforceable, but employers do  need to ensure their current practices will not breach the ban by attempting to enforce an exclusivity clause to the detriment of an employee.

The Stephens Scown employment team works in partnership with organisations to improve their HR practices and advise on employment issues. To discuss this or any other HR issue call 01392 210700 or employment@stephens-scown.co.uk