Exclusivity Terms for Zero Hours Workers (Unenforceability and Redress) Regulations 2022 to come into force in December 2022

The Exclusivity Terms for Zero Hours Workers (Unenforceability and Redress) Regulations 2022 were made on 7 November and will come into force on 5 December 2022.

The Regulations extend the current ban on exclusivity clauses in zero hours contracts to all contracts where workers earn less than the Lower Earnings Limit (LEL) per week. The LEL is currently £123 a week.

Do the Regulations apply to all four nations in the UK?

No, they only apply in England, Scotland and Wales.

Do they apply only to employees?

No. The Regulations state that they apply to specified contracts, which is defined as ‘a contract of employment or other worker’s contract which is not a zero hours contract and entitles a worker to be paid under that contract, net average weekly wages that do not exceed the lower earnings limit.’  This will also include casual workers’ contracts.

What rights does it give to workers on these contracts?

If someone suffers a detriment as a result of breaching an exclusivity term, they will be able to bring an employment tribunal claim for compensation.

If someone is dismissed for breaching an exclusivity term, that dismissal will be automatically unfair.

This will be a day one right (there is no service qualifying period). Compensation is limited to the maximum unfair dismissal basic and compensatory awards (currently the maximum compensatory award is the lower of either £93,878 or 52 weeks’ pay).

How are average weekly wages calculated?

Regulation 4 states that where the contract is permanent, the average weekly wages are calculated by taking the total remuneration the worker is entitled to under their contract for a period of 52 weeks and dividing this by 52.

Where the contract is not permanent, average weekly wages are calculated by dividing the total remuneration they are entitled to under their contract by the number of weeks during which their contract is expected to continue.

Is the average taken on the gross or net figure?

It is taken on the net figure and the regulations say that this is calculated by subtracting ‘all deductions of whatever nature from the average weekly wages’.

Key actions for employers

Employers should review the terms of their contracts to see whether they will fall foul of the new rules and make sure managers receive training on this. It will be particularly important that managers understand the protections against dismissal and detrimental treatment.

They should also work out the average weekly earnings of lower paid workers to identify who may be affected.

If they find they have contracts that breach these rules, they should notify those workers that the exclusivity restrictions will no longer apply.

It’s still possible to have enforceable exclusivity clauses where individuals earn more than the LEL, but care should be taken with variable hours arrangements where average pay may fall below the LEL when calculated over time.

Employers are still entitled to ask workers to tell them if they are working elsewhere. They should also be mindful of the total hours worked by the individual as this may breach the 48-hour weekly limit and require an opt out (and consideration as to whether the hours worked in total may be a health and safety issue).

Any questions?

If you’ve got questions about how these new regulations may affect your responsibilities as an employer – from contracts to calculating wages – you can call our HR & Employment Law team 24/7 for their advice and guidance on 0345 844 4848.