REWARD
The ban on exclusivity clauses to be extended
Danny Done, managing director of Portfolio Payroll , discusses the upcoming laws which expand the ban on exclusivity clauses in employment contracts
T he government has confirmed it will introduce legislation to extend the ban on exclusivity clauses. New laws will make exclusivity clauses unenforceable in employment contracts where the guaranteed weekly income is below or equivalent to the lower earnings limit (LEL), currently £123 per week. The legislation will also give workers the right not to be unfairly dismissed, not to be subjected to a detriment for failing to comply with an exclusivity clause and to claim compensation. It’s hoped that, by removing red tape, the lowest paid workers will be given the choice to work multiple jobs if they wish, to give them more flexibility over when and where they work. Exclusivity clauses restrict workers from taking on additional work with other employers. They were banned from being included in zero-hours contracts in 2015 under the Small Business, Enterprise and Employment Act, with the same aim of maximising opportunities for individuals to find additional work and apply their skills to drive economic recovery. There isn’t yet a set date for when the new law will come into force, but it will be laid before members of Parliament later this year, as soon as Parliamentary time allows. The proposed legislation follows the conclusion of a public consultation launched by the government in December 2020, which sought views on extending the ban on exclusivity clauses beyond zero-hours contracts. As well as supporting almost 1.5 million workers to increase their income, the new legislation will also positively impact businesses. It will widen the talent pool of applicants to include those who may have previously been prevented from applying for roles due to an exclusivity clause with another employer. It will also help to attract more people in key industries, such as retail
and hospitality, and encourage employers to create jobs with contracts which suit them and their needs, for example, offering a small number of weekly hours.
affected employee and assess whether it’s reasonable to do so in the circumstances. Furthermore, employers will have to calculate the average weekly earnings for all employees, so they know who the new rules apply to. This might also involve checking employees’ total working hours and ensuring an opt-out agreement is signed if the employee is working more than 48 hours per week across all employers. Failure to do so might mean employers find they’re in breach of the Working Time Regulations (1998). The introduction of this new law will be welcomed news for workers who are looking for ways to boost their income amid the ongoing cost-of-living crisis. This is particularly relevant given the exclusion of the Employment Bill from this year’s annual Queen’s Speech, as further protection for workers’ rights is not on the government’s priority list for the next year. While no other legislation is on the 12-month agenda, this doesn’t mean employers can’t pro-actively introduce measures to assist employees. Those who do so will benefit from a more motivated and productive workforce, with higher retention rates and better overall success. Some measures for employers to consider include contractual entitlements to carer’s leave, fair distribution of workers’ tips and the right for workers to submit a flexible working request from as early as day-one of employment. n It’s important that employers are aware of the changes and how this will impact them individually
As well as supporting almost 1.5
What do employers need to to start considering? It’s important that employers are aware of the changes and how this will impact them individually. They’ll need to put measures in place to ensure they’re as prepared as possible. This might include reviewing existing contracts, as exclusivity clauses will need to be amended, to ensure they only apply to those earning above the LEL. Similarly, employers may also have to update their current policies and procedures. Although exclusivity clauses can’t be enforced for those earning £123 per week or less, employers can still require staff to tell them if they’re working elsewhere. In some cases, it may be necessary to assess the role and industry the employee works in, as employers might want to introduce a restrictive covenant for those who want to work for a competitor, or where there are concerns about the sharing of confidential or sensitive information. Where a restrictive covenant or confidentially agreement is to be implemented, employers must first complete a full consultation process with the million workers to increase their income, the new legislation will also positively impact businesses
| Professional in Payroll, Pensions and Reward | July - August 2022 | Issue 82 36
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