Government crackdown on zero hours contract abusers
25 Jun 2014 11:59 AM
Business Secretary Vince
Cable announces plans to ban exclusivity clauses in zero hours
contracts.
Employees on zero hours
contracts will have the freedom to find work with more than 1 employer after
Business Secretary Vince Cable announced plans to ban exclusivity
clauses.
Exclusivity clauses prevent an
individual from working for another employer, even when no work is guaranteed.
The use of exclusivity clauses in zero hours contracts undermines choice and
flexibility for the individuals concerned.
The ban, set to benefit the
125,000 zero hours contract workers estimated to be tied to an exclusivity
clause, is part of a bid to clamp down on abuses in the workplace by less
scrupulous employers. It will allow workers to look for additional work to
boost their income.
Business Secretary Vince Cable
said:
Zero hours contracts have a
place in today’s labour market. They offer valuable flexible working
opportunities for students, older people and other people looking to top up
their income and find work that suits their personal
circumstances.
But it has become clear that
some unscrupulous employers abuse the flexibility that these contracts offer to
the detriment of their workers. Today (25 June 2014), we are legislating to
clamp down on abuses to ensure people get a fair deal.
Last December (2013), I launched
a consultation into this issue. Following overwhelming evidence we are now
banning the use of exclusivity in zero hours contracts and committing to
increase the availability of information for employees on these contracts. We
will also work with unions and business to develop a best practice code of
conduct aimed at employers who wish to use zero hours contracts as part of
their workforce.
This action follows a government
consultation into zero hours contracts which received over 36,000 responses.
83% were in favour of banning exclusivity clauses in zero hours
contacts.
The Business Secretary also
announced that the government will:
- consult further on how to
prevent rogue employers evading the exclusivity ban, for example through
offering 1 hour fixed contracts
- work with business
representatives and unions to develop a code of practice on the fair use of
zero hours contracts by the end of the year (2014)
- work with stakeholders to review
existing guidance and improve information available to employees and employers
on using these contracts
Tim Thomas, Head of Employment
Policy at EEF, the manufacturers’ organisation, said:
Zero hours contracts occupy an
important space in the labour market where, properly used, they provide
flexible employment in job roles where open-ended contracts are
unsuitable.
For manufacturers where skills
are in scarce supply, zero hours contracts can help employers to tap into
specialist skills when they are needed, such as drawing on the experience of
older workers.
The way forward set out in the
Small Business, Enterprise and Employment Bill treads a fine line between
supporting the majority of workers who want to continue to work on their zero
hours contracts and limiting their use where they are neither necessary nor
appropriate.
The ban will be part of the
Small Business, Enterprise and Employment Bill, which is being introduced to
Parliament today (25 June 2014).
Notes to
editors:
- For more information please
refer to the WMS which will be laid in the Houses of Parliament today
(25 June 2014).
- The BIS consultation into zero hours contracts (ZHCs) was launched in
December 2013 and closed in March 2014.
- The Summer Review
into ZHCs was conducted in August 2013. It identified 2 clear
concerns, both supported by recent ACAS research
- the use of exclusivity clauses
which leave employees tied exclusively to 1 employer even if no or little work
is available
- lack of transparency and
information on the employment contract, leaving individuals unaware of their
rights
- The ONS analysis from
April 2014 highlighted that ZHCs can provide important and
flexible employment opportunities that suit most people in these jobs and
provide an average of 25 hours work a week. It also indicated that these types
of contracts are most widely used by students, older people and people wanting
to increase their income and fit work flexibly around their other
commitments.
- Recent CIPD research
found those on ZHCs are equally satisfied with their job, happier
with their work-life balance and less likely to think they are treated unfairly
by their organisation, when compared to the average UK employee (November
2013).
- There is no current estimate on
the number of people on ZHCs. The ONShave the following
figures:
- the ONS Labour Force
Survey found 583,000 people self-identified as being
on ZHCs
- ONS estimated that
employers held 1.4 million contracts that do not guarantee a minimum number of
hours (April 2014)
- the Business Secretary wrote to
the ONS in the autumn (2013) asking them to assess the strength of
current estimates and definitions and develop a new methodology for calculating
the number of ZHCs. TheONS have committed to looking at the strength
of previous estimates and definitions of ZHCs and to help develop a
more rigorous methodology. They will undertake further research over the summer
(2014).
- Our provisional estimate is that
around 125,000 are covered by exclusivity clauses. This estimate is derived
from a CIPD employer survey on the use of ZHCs which
estimated that 9% had exclusivity clauses. The ONS have provisionally
estimated that there are 1.4 million contracts with no guaranteed hours.
Combining these 2 pieces of information suggests that there are around 125,000
contracts with exclusivity clauses. However, given the provisional nature of
the estimates and the fact that they are measuring slightly different things
this estimate should be seen as a broad order of magnitude.
- The UK is a great place to set
up a business and more people than ever are beginning new enterprises. The
Government is backing business every step of the way and introducing
legislation to help make the UK the most attractive place to start, finance and
grow a business. The Small Business, Enterprise and Employment Bill will help
to build a stronger and fairer economy by supporting small businesses as they
compete, and ensure they are not disadvantaged by those that do not play by the
rules. It will foster and back the entrepreneurial spirit and build on the
UK’s reputation as a fair and trusted place to do business. The Bill sets
out measures to help hard working people have confidence in their employers and
reduce the barriers that can hold businesses back from
growth.