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22nd June 2014

Response to the consultation in respect of zero hours contracts published

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Zero hours contracts have received a great deal of media attention over the past few months.

A zero hours contract is not defined by legislation, but is generally understood to be a contract between an employer and a worker, under which the employer is not required to provide a set number of hours but the worker may or may not obliged to accept any hours offered.

Whilst on the face of it these types of contract would appear to work in favour of both the worker and the employer in terms of flexibility, concerns have been raised about the potential for employers to misuse these contracts. In particular, concerns have been raised by unions and campaign groups that employers are taking advantage of the difficult labour market, by requiring workers to sign zero hours contracts which include exclusivity clauses preventing the individual working elsewhere, when in fact the employer has very little work available in any event.

Following these concerns, the government launched a consultation at the end of last year to seek views in respect of the use of zero hours contracts and the problems connected with them. The government stated that whilst it wanted to maximise the benefits of the using zero hours contracts, it understood the concerns about potential for abuse. The consultation therefore sought views as to the possible options for both the government and employers in respect of the use of zero hours contracts going forward, including whether the use of exclusivity clauses should be banned. The consultation closed on 13 March 2014.

The government has now published its response to the consultation and has confirmed that, whilst zero hours contracts do have a place in the labour market, it had become clear from the responses received throughout the consultation that some employers do abuse the flexibility of these contracts. The government has, therefore, confirmed that it shall be legislating to ensure that zero hour workers get a fair deal and to prevent abuse by employers.

The government has confirmed that going forward it shall:

  • ban the use of exclusivity clauses within zero hour contracts;
  • consult further on how to prevent employers from attempting to avoid the exclusivity ban;
  • work with business representatives and unions to develop a code of practice on the fair use of zero hours contracts by the end of 2014; and
  • review existing guidance and improve information available to workers and employers on using these contracts.

It is hoped that by making more information available to workers, individuals will be more aware of their rights and therefore less likely to accept unfair terms. The government’s view is that the provision of this information together with the ban on exclusivity clauses will enable a fair balance to be struck between workers and employers, so that zero hours contracts can continue to be used where they are necessary and appropriate.

The implementation of the ban on exclusivity clauses shall form part of the Small Business, Enterprise and Employment Bill which was put before Parliament on 25 June.

For more information, please contact Gemma Hill on 01604 463309 or click here to email Gemma. For more information on our Employment services click here.