Zero hours contracts in Scotland: Interim Report - Scottish Affairs Committee Contents

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 (%)
Yes - always
Yes sometimes
Don't know

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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Prepared 14 April 2014