4 Exclusivity
59. The use of exclusivity clauses was
identified as a concern by the Government's information gathering
exercise on zero hours contracts. An exclusivity clause prevents
a worker from working for another employer. In the consultation
paper the Government stated that:
exclusivity acts as a limitation
upon the flexibility of the employee and, if no work is forthcoming,
means they have no other means of employment.[109]
60. The CIPD survey found that 1 in
4 zero hours workers were affected by exclusivity clauses (see
table below).[110]
Dave Watson from UNISON estimated this represented approximately
25,000 workers in Scotland.Table
1: Proportion of zero-hours workers that report they are allowed
to work for another employer when their primary employer has no
work available for them (%)
| All
| Men
| Women
| Private
| Public
| Non-profit*
|
| Yes - always
| 59
| 59
| 59
| 54
| 73
| 49
|
| Yes sometimes
| 15
| 16
| 15
| 15
| 13
| 23
|
| No-never |
9
| 10
| 9
| 10
| 7
| 13
|
| Don't know
| 17
| 15
| 18
| 21
| 7
| 16
|
Source: CIPD, Zero-hours contracts:
myth and reality, November 2013, table 18
*Care needs to be taken when analysing
figures in this column because of the small number of respondents
in this category.
The Government noted that in some circumstances
exclusivity clauses are useful and justifiable, for example to
prevent individuals with access to confidential commercial information
from working with a competitor. However, the Government also noted
that "there is no clear or obvious reason" why an exclusivity
clause relating to commercially sensitive information should be
part of an employment contract.[111]
The Employment Lawyers' Association go further and suggest that
the use of restrictive covenants in a zero hours contract situation
may be unenforceable under current law as an unreasonable restraint
of trade.[112]
61. In Dave Watson's view, there is
no place for exclusivity clauses in zero hours contracts:
in feudal days there was at least
mutuality of obligation. Here, there is no mutuality of obligation
and it is simply outrageous that you are in a situation where
you are not being offered work but you cannot go and work for
somebody else because of your exclusivity.[113]
62. The Government has consulted on
four options to address the misuse of exclusivity clauses:
· Legislating
to ban the use of exclusivity clauses in contracts that offer
no guarantee of work;
· Government
issuing guidance on the fair use of exclusivity clauses in employment
contracts;
· An
employer-led Code of Practice on the use of exclusivity clauses,
with an option of government sponsorship of the Code;
· Rely
on existing redress available through common law which allows
individuals to challenge exclusivity clauses.
63. We have already made clear that
zero hours workers, in need of work but with no guarantee of income,
are unlikely to challenge their employer and seek redress, even
if the terms and conditions of their employment might be considered
illegal. Half of all zero hours workers earn less than £15,000
per year and one in three are under 25. It is fanciful to assume
that individuals in these circumstances would opt to challenge
an exclusivity clause through an expensive and complex legal process.
64. As we stated in an earlier recommendation,
we do not believe that an unenforceable employer-led Code of Practice
would be sufficient to prevent unscrupulous employers abusing
the rights of zero hours workers. A Code of Practice that provided
greater clarity of the rights and entitlements of workers on zero
hours contracts may be of some benefit, particularly if it follows
legislative change, but on its own is not enough to achieve the
Government's stated aim of protecting vulnerable workers.
65. As part of its response to the Government's
consultation the CIPD undertook an internal consultation with
178 members. The internal consultation had a particular focus
on exclusivity. Of those 178 CIPD members, 81% stated there were
no circumstances in which exclusivity clauses are justified in
zero hours contracts and 77% said they should be banned.[114]
The CIPD's internal survey also found little support for the notion
that a ban on exclusivity clauses would reduce job creation.[115]
66. The TUC believes that it would be
difficult for the Government to limit a legislative ban on exclusivity
clauses to zero hours contracts because this type of contract
is not recognised in UK labour law. Furthermore, any ban that
applied solely to zero hours contracts might easily be circumvented
by employers switching to one-hour contracts or similar short-hour
contracts.[116]
67. If employers want to prevent
workers from taking up employment with somebody else then they
should pay for that privilege. Employers who do not provide a
zero hours worker with sufficient work should not be able to prevent
that individual from seeking employment or additional employment
elsewhere. We recommend that the Government legislate to ban the
inclusion of exclusivity clauses in all employment contracts that
do not guarantee work.
109 Department for Business, Innovation and Skills,
Consultation: zero hours employment contracts, December 2013 Back
110
CIPD, Zero hours contracts: myth and reality, Research Report,
November 2013 Back
111
Department for Business, Innovation and Skills, Consultation: zero hours employment contracts,
December 2013 Back
112
Employment Lawyers Association (ZHC006) Back
113
Q266 Back
114
CIPD, Policy Response: Zero hours employment contracts, March
2014 Back
115
CIPD, Policy Response: Zero hours employment contracts, March
2014 Back
116
TUC, Ending the abuse of zero hours contracts: TUC response to BIS consultation,
March 2014 Back
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