293: Exclusivity clauses: Consultation to extend ban in employment contracts for low earners

Exclusivity clauses in employment contracts restrict workers from taking on additional work with other employers. Their use in zero hours contracts was banned in 2015 under the Employment Rights Act (section 27A(3)). The government also consulted at that time on extending the ban to other low-income workers but decided not to proceed. This decision is now being revisited due to the pandemic, which has particularly affected lower earners.

On 4 December 2020, the government published a consultation on proposals to extend the ban on exclusivity clauses to employees whose guaranteed weekly income is below the Lower Earnings Limit (LEL), currently £120 a week. This equates to 13.76 hours a week for an employee on the National Living Wage. A ban would give low-income workers the right to seek additional work elsewhere if they are not offered sufficient hours by their employer.

Key questions in the consultation include:

• whether the ban should be extended to other workers, in addition to workers earning below the LEL;
• whether the LEL is an appropriate threshold;
• whether those earning under the LEL should have the same rights not to be unfairly dismissed and not to be subjected to a detriment for failing to comply with an exclusivity clause as currently apply to zero hours workers;
• whether to introduce an exemption to the ban by setting an hourly wage cap at an appropriate level, which would be reviewed regularly. The consultation proposes a cap of £20, £22 or £29 an hour. This would protect businesses employing well-paid individuals who only work a few hours per week; and
• the practical impact of a ban on employers and workers.

The consultation covers England, Wales and Scotland, and closes on 26 February 2021.