Zero hours and NMW – new provisions in force today

Written on 26 May 2015

The provisions in the Small Business, Enterprise and Employment Act 2015 that prevent the use of exclusivity clauses in zero-hours contracts came into force today. Zero-hours contracts were repeatedly debated in the run-up to the General Election and David Cameron has been quick to push through the commencement order bringing these new restrictions into force today.

Under a zero-hours contract, the employer is not obliged to provide the employee with any minimum working hours, and the employee is not obliged to accept any of the hours offered. In some circumstances, these contracts can work well, providing the employer with a fluid workforce that responds to demand and enabling the employee to accept only the work they want and to gain useful experience and skills.

The use of exclusivity clauses in zero-hours contracts has, however, earned these arrangements a poor reputation, with 83% of those responding to the last Government’s consultation supporting a ban on the use of exclusivity clauses in zero-hours contracts. Whilst many employers use zero-hours contracts fairly and to support business flexibility, the use of exclusivity clauses to prevent employees working for other employers while at the same time offering them no guarantee of work was identified as a growing problem. Exclusivity clauses are rendered unenforceable from today, but anti-avoidance measures are still awaited and will provide the teeth to this new legislation.

Other employment measures have also come into force today, including an increase in the maximum penalty for underpayment of the national minimum wage to £20,000 per worker.

The Queen’s Speech tomorrow will set out the Government’s legislative plans and many employment related initiatives are expected to feature high on the agenda, including: the renegotiation of Britain’s membership of the EU and a referendum by 2017; measures controlling illegal immigration; strike law reform; abolishing the Human Rights Act and replacing it with a British Bill of Rights and measures to boost job creation and expand the apprenticeship scheme.