Press release

Ministers to consider outlawing exclusivity on zero hours contracts

This news article was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The government is consulting on the problems identified around the use of zero hours contracts.

Companies could be banned from imposing exclusivity on zero hours contracts which offer no guarantee of work and stop employees from working for another company, under new proposals announced by Business Secretary Vince Cable. These measures come as part of efforts to boost fairness for workers.

In a consultation launched today (19 December 2013), the government will also outline proposals on ways to tackle the lack of transparency in the way zero hours contracts are currently being used and improve guidance for both employers and employees around their use.

Business Secretary Vince Cable said:

A growing number of employers and individuals today are using zero hours contracts. While for many people they offer a welcome flexibility to accommodate childcare or top up monthly earnings, for others it is clear that there has been evidence of abuse around this type of employment which can offer limited employment rights and job security. We believe they have a place in today’s labour market and are not proposing to ban them outright, but we also want to make sure that people are getting a fair deal.

Our research this summer gave us a much needed insight into both the positive and negative aspects of zero hours contracts. Our consultation will now focus on tackling the key concerns that were raised, such as exclusivity clauses and how to provide workers with more protection. We don’t think that people should be tied exclusively to one employer if it unfairly stops them from boosting their income when they are not getting enough work to earn a living. We also want to give employees and employers more guidance and advice on these types of employment contracts.

Employers need flexible workforces and people should have the choice in how they work. But this shouldn’t be at the expense of fairness and transparency.

The 12 week public consultation will seek views on a range of proposals including:

  • proposals to potentially ban the use of exclusivity clauses in contracts that offer no guarantee of work
  • new advice and guidance to improve transparency around the use of zero hours contracts for employers and employees

The launch of the consultation follows a fact-finding exercise that was carried out over the summer by the Department for Business, Innovation and Skills (BIS) to explore how these contracts are currently being used.

The consultation will run until 13 March 2014.

Notes to editors

1.You can respond to the BIS consultation via our survey monkey at https://www.surveymonkey.com/s/QYP3WKY..

2.The BIS review conducted over the summer highlighted a range of concerns of including:

Exclusivity

This is where someone agrees to a contract that does not guarantee them a minimum number of hours and is stopping them from working for another company. This is described as an ‘exclusivity clause’. In certain cases this can mean that people were stopped from looking for work elsewhere particularly when they needed more hours to bump up their earnings. Feedback from employers themselves suggests awareness that there can be abuses that limit flexibility.

Transparency

There is no clear or legal definition of a zero hours contract and it can cover a number of working arrangements. This can lead to confusion and a lack of understanding on contract details and what it means for the individual. In some cases people were not aware of the fact that there was a possibility that they might not be offered work on a regular basis.

Uncertainty of earnings

The amount of money a person on a zero hours contract can expect to earn is dependent on the number of hours worked. This means that people on a zero hours contract can find it hard to calculate their earnings and it can lead to concerns about how benefits might be affected.

3.The government’s economic policy objective is to achieve ‘strong, sustainable and balanced growth that is more evenly shared across the country and between industries’. It set 4 ambitions in the ‘Plan for Growth’, published at Budget 2011:

  • to create the most competitive tax system in the G20
  • to make the UK the best place in Europe to start, finance and grow a business
  • to encourage investment and exports as a route to a more balanced economy
  • to create a more educated workforce that is the most flexible in Europe

Work is underway across government to achieve these ambitions, including progress on more than 250 measures as part of the Growth Review. Developing an Industrial Strategy gives new impetus to this work by providing businesses, investors and the public with more clarity about the long-term direction in which the government wants the economy to travel.