Ban on exclusivity clauses extended to low-earning workers

The Department for Business, Energy and Industrial Strategy has introduced a new set of regulations targeted towards low-earning workers. These regulations will come into force on 5^th December 2022, and include a ban of exclusivity clauses, which prevent employees and workers from taking on additional work with other employers or undergo any other arrangement for work. These measures will apply in England, Wales and Scotland.

 

What do the new measures mean for low-earning workers?

 

The Exclusivity Terms for Zero Hours Workers (Unenforceability and Redress) Regulations 2022 will be an extension of previous regulations brought in in 2015. The measures brought in at that time banned the use of exclusivity clauses in zero hours employment contracts. This meant that zero hours workers were able to acquire further work without fear of reprisal from their employer, who may have wanted them to be available to work at any time.

 

The new measures will go beyond applying these regulations to Zero Hours Workers. The regulations have now been extended to a ban on exclusivity clauses for those who earn less than the lower earnings limit. This lower earnings limit is set by the government each tax year. For the 2022/2023 tax year, this figure is £123 a week. This equates to roughly 13 hours per week for someone who is earning the National Living Wage.

 

There are other aspects to the regulations which will have an impact on zero hours workers and low-earning workers. For example, employees will be protected from unfair dismissal when they are dismissed because of a pre-existing exclusivity clause in the contract.  This means that dismissals which occur because of a pre-existing exclusivity clause in the contract will automatically be classified as an unfair dismissal. This ban also applies to those who have not performed 2 years continuous service, as was previously the case in order to qualify for such protections.

 

Calculations for wages below lower earnings limit

 

According to the regulations, the calculations for working out whether wages are below the lower earnings limit of £123 a week will be as such for each type of contract:

 

1. Permanent contracts of employment or other worker’s contracts

• Where the contract of employment or other worker’s contract is permanent, the average weekly wages are calculated by dividing by 52 the total remuneration to which the worker is entitled under that contract in respect of a period of 52 weeks.

 

2.  All other contracts of employment or other worker’s contracts

• Where regulation 4 does not apply, the average weekly wages are calculated by dividing the total remuneration to which the worker is entitled under their contract by the number of weeks during which their contract is expected to continue.

 

3.  Net average weekly wages

• The net average weekly wages are calculated by subtracting all deductions of whatever nature from the average weekly wages.

 

Further measures ensure the regulations are made to:

 

• Provide remedies, including compensation, for individuals, by way of proceedings in employment tribunals
• Require the Secretary of State to review the operation and effect of these Regulations and publish a report within five years after they come into force and within every five years after that

Our thoughts

 

These measures will help to strengthen protections for low earning workers. Companies should be highly aware of these changes to ensure that they don’t breach them. For companies which have low earning workers and employees, contracts should be reviewed to ascertain whether they are paying them less than the lower earnings limit of £123 a week.

In such cases, companies must ensure that any exclusivity clause, which either prevents a worker or employee from working/providing services to another employer, or requires the consent of the employer to work for another employer, is removed.

 

If you have any questions about these changes, please don’t hesitate to contact us below.

 

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