Zero Hours Contracts

Helen O'Brien writes:

One of the most contentious topics in employment law in the past 12 months has been the use (and misuse) of zero-hours contracts.

Zero-hours contracts are not unlawful. If they are freely entered into, such a contract is a legitimate form of contract between individual and employer. Individuals on such contracts work in sectors across the economy and in occupations throughout the pay range.

The Westminster Government has no plans to abolish zero-hours contracts; it simply intends to make exclusivity clauses in these contracts unenforceable. The position in NI is that the Minister for Employment and Learning is seeking the views of stakeholders before deciding what actions for change (if any) should be put to the NI Assembly.

Consultations

In December 2013, GB Business Secretary Vince Cable launched a consultation into the subject of zero hour’s contracts. The consultation focused on two key areas which were highlighted in the government’s information gathering exercise: exclusivity clauses and transparency.

A formal consultation exercise in NI took place through the summer of 2014. It closed on 29 September and we await the outcome.

Consultations Results GB

The Westminster Government considered the results of the GB consultation and provisions relating to zero-hours contracts were incorporated into the Small Business, Enterprise and Employment Bill, notably a ban on exclusivity clauses in zero-hours contracts — a decision approved by 83% of the respondents to the GB consultation.

What does the Bill say about Zero-Hours Contracts?

The Small Business, Enterprise and Employment Bill, which deals with a number of other employment law issues, including measures relating to whistleblowing, employment tribunals and the National Minimum Wage, was introduced to Parliament on 25 June 2014. Some parts of the Bill will impact in NI, others will not.

In addition to defining a zero-hours contract, the Bill introduces a new provision into the GB Employment Rights Act 1996, which will render the use of exclusivity clauses in these contracts unenforceable in GB. NI has yet to make a decision on zero hours contracts in general and exclusivity clauses in particular - that part of the Small Business, Enterprise and Employment Bill does not apply in NI.

Currently, employers are not prohibited throughout the UK from seeking exclusivity from an individual as this is a contractual matter between the employer and individual.

The Westminster Government believes that using exclusivity clauses in zero-hours contracts when work is not guaranteed is wrong as it means that when individuals have not been offered any work, they are prevented from looking for work elsewhere to help boost their income if they so wish. Such clauses undermine choice and flexibility.

However, stakeholders have raised concerns about this measure, stating that employers could potentially sidestep the exclusivity ban, for example by offering contracts that guarantee just one hour of work. The Department for Business Innovation & Skills in GB has published, therefore, another consultation 'Banning Exclusivity Clauses: Tackling Avoidance', which closes on 3 November 2014:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/347034/bis-14-992-zero-hours-employment-contracts-exclusivity-clause-ban-avoidance.pdf 

What does this Further Consultation Ask?

This second GB consultation seeks views on the best mechanism to tackle avoidance of the exclusivity ban in contracts that do not guarantee any hours and possible routes of redress for the individual. Any additional mechanism would be implemented via regulations made under the powers set out in the Bill.

Specifically, in the consultation the Government is seeking views on the following:

• What might be the likelihood of employers avoiding a ban on exclusivity clauses and how that might be achieved?
• Whether the Government should do more to deal with potential avoidance, how that might be best achieved, and whether to do this alongside the ban or wait for evidence of whether such avoidance is taking place.
• How to deal with potential avoidance.
• Whether there should be consequences for an employer if they circumvent a ban on exclusivity clauses and, if so, what those consequences should be. Whether there are any potentially negative or unintended consequences as a result of the wording of the legislation.

As stated, the GB consultation closes on 3 November 2014. The consultation document, having been informed by the earlier GB consultation responses, is a useful document for anyone in the UK that is interested in this issue.

The position in NI is that our consultation officially closed on 29 September but DEL is still looking for ideas. Legal-Island has been asked to facilitate a consultation morning on 16th October - see below for details.

What Next?

The Westminster Government believes that the provisions relating to zero-hours contracts in the Small Business, Enterprise and Employment Bill will improve flexibility and fairness in the labour market; more specifically, it maintains that the proposed legislative measures will ensure greater opportunities for workers on zero-hours contracts to boost their income.

It also hopes that business representatives and unions will work with it to develop industry-led, industry-owned, sector-specific codes of practice on the fair use of zero-hours contracts as the reality of the situation is likely to be different in each sector. The Government will review existing guidance with a view to improving the information available to individuals and employers on using these contracts.

The results of the most recent consultation are awaited with interest. It remains to be seen whether the final legislative proposals to ban exclusivity clauses will prove sufficient to stop employers tying down their staff to work only for them.

The Small Business, Enterprise and Employment Bill is expected to be enacted in GB (and, where appropriate, NI) in early 2015.