Exclusivity clauses

Exclusivity clauses in employment contracts restrict staff from working for multiple employers or stop them from doing so without their employer's consent. This is seen as an acceptable restriction if an employee works a sufficient number of hours for an employer – it is not unreasonable for the employer to seek to limit what work, if any, their employees can do for anyone else. However, a part of the labour market which is badly affected by exclusivity clauses is low paid workers. The government has long seen this as a problem and has recently changed the law to extend the ban on exclusivity clauses.

These clauses have been banned from zero hours contracts since 2015. This ban has now been extended to low-income workers (that is, an employee or worker who is earning on or below the Lower Earnings limit of £123 per week). The Regulations apply in England and Wales and came into force on 5 December 2022.

The government estimates that 1.5m workers are earning on or below £123 a week and the new reforms will ensure that workers in this group that have exclusivity clauses are able to top up their income with extra work if they choose. The reforms will give workers more flexibility over when and where they work to best suit their personal circumstances such as childcare or study, including the option of working multiple short-hours contracts.

The problem came to the fore when it became clear the impact that COVID-19 has had on job security and its decrease in guaranteed working hours.

Employers should therefore review their employment contracts to check the scope of existing exclusivity clauses and ensure that they do not fall foul of the new provisions. Employment contracts are becoming increasingly complex, and employers should consider taking specialist advice.

To discuss this or any other employment matter, contact us.