Government to widen ban on exclusivity clauses

Exclusivity clauses in contracts of employment restrict workers from working for other employers. In 2015, they were banned from being included in zero-hours contracts. At the same time, the Government consulted on whether this ban should be extended to low-paid workers. This was not taken further at the time but was revisited in 2020 due to the impact of the pandemic.

On Monday, the Government announced new plans to extend the ban on exclusivity clauses where a worker’s guaranteed weekly income is equal to or below the lower earnings limit (currently £123 per week). It is estimated that this will affect around 1.5 million workers.

The Government says that as a result, such workers will have more flexibility to work to suit them, such as working around childcare or studying, or working multiple short-term contracts, and to boost their income through extra work. It also says that it will help businesses by widening the talent pool of job applicants and will help to fill vacancies in sectors like retail and hospitality.

There were suggestions that the lower earnings limit is too low, but the Government decided to stick to that limit due to the increased cost to businesses post-pandemic.

The right not to be unfairly dismissed or subjected to a detriment for failing to comply with an exclusivity clause to those earning equal to or below the lower earnings limit will also be extended.

Legislation will be introduced “in due course” and we will of course keep you updated through our alerts when it is. In the meantime, now would be a good time to check the contracts that are in place for such workers to make sure that e.g. confidential information and intellectual property are protected in the event that workers may decide to work for other businesses in addition to their current jobs.

If you have any queries regarding this alert, please contact our employment team on 01228 552600 or 01524 548494.

This alert does not provide a full statement of the law and readers are advised to take legal advice before taking any action based on the information contained herein.

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