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Zero Hour Contracts - Guidance for Colleges and Legislating to Enforce Ban on Exclusivity

on Friday, 13 November 2015.

The Department of Business, Innovation and Skills (BIS) has published guidance for employers on zero hours contracts. The government has also published draft Regulations aimed at enforcing the ban on exclusivity.

Legal Background

The use of exclusivity clauses in zero hours contracts has long been controversial. The idea that an employer could sign up an employee to a contract which provided no guaranteed work, but also stopped him/her from undertaking work under any other contract or arrangement, risked placing many employees in real hardship.

On 26 May 2015 the Government banned exclusivity clauses in zero hours contracts through section 153 of the Small Business, Enterprise and Employment Act 2015. The new draft regulations are designed to add teeth to the legislation.

Draft Regulations and Guidance

The draft Exclusivity Terms in Zero Hour Contracts (Redress) Regulations 2015 propose that individuals employed under a zero hours contract have a right not to be unfairly dismissed or suffer a detriment if the reason is their failure to comply with an exclusivity clause. Any such dismissal would be automatically unfair, meaning that employees will not need to have the two years' service necessary for an ordinary unfair dismissal claim.

At the same time that the draft Regulations were published, BIS produced guidance for employers about the use of zero hour contracts. The guidance provides useful examples of the appropriate use of zero hours contracts, (which may include seasonal work and special events) as well as providing suggestions for what to include in zero hours contracts and alternative options for employers to consider, such as fixed term and annualised hours contracts.

Best Practice

The use of zero hour and variable hour contracts is common in the FE sector. They allow colleges the flexibility they need to deal with fluctuating student numbers, particularly when it is unclear whether there will be sufficient student numbers to run a course. They are also popular with some staff as it allows them the flexibility to carry out other employment or to balance work with family or other commitments. These Regulations do not change the entitlement of colleges to use such contracts and we anticipate that they will remain popular in the sector.

In our experience exclusivity clause are very rare in the sector but you should check the terms of your contracts and be aware that if you have such clauses they are no longer enforceable and under the Regulations employees who are dismissed or suffer a detriment for failing to comply with an exclusivity clause can bring a claim.

On a wider note, it is important that all contractual arrangements are kept under review. Fluctuating arrangements can, over time, crystallise into a more regular, definite need for work and it is important that the contractual relationship reflects what is needed in practice. There remains the risk that some employers will seek to circumvent the legislation by, for example, offering a guaranteed one hour of work per year. It is however anticipated that anti-avoidance measures will be introduced in due course.

For more information, please contact Jo Oliver on 0117 3145361.

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