Written by Simon Bloch, JMW Solicitors LLP

On 9^th May 2022, the government proposed to introduce legislation in relation to exclusivity clauses within employment contracts for low paid workers.

Recap on exclusivity clauses

Exclusivity clauses in employment contracts are a type of restrictive covenant which prohibit the worker from taking on additional work with other employers.

Whilst, typically, the rationale behind employers using exclusivity clauses is to safeguard the interests of the business, employers need to equally understand that each worker has the right to make a living. Accordingly, whether an exclusivity clause will be enforceable will depend upon whether it imposes reasonable obligations on the worker and if it is reasonable in the interests of the public.

Exclusivity clause ban to be extended to employment contracts for low paid workers

The government intend to introduce legislation in the year which will result in employers being banned from including exclusivity clauses within employment contracts for low paid workers whose weekly earnings are equivalent to or below the Lower Earnings Limit (currently £123 per week).  This follows measures which were implemented in 2015 which banned the use of exclusivity clauses for zero hours employment contracts.

What is the rationale for extending the ban on exclusivity clauses?

Currently, it is estimated that 1.5 million workers earn £123 a week or less, which is the equivalent to less than 13 hours a week for a worker who earns the National Minimum Wage. By extending the ban on exclusivity clauses, this will allow workers who are on a low income to work for other employers and earn additional income. This will be an extremely welcomed measure by those who are low earning workers, particularly in light of the ever-growing rise in the cost of living.

The reforms are expected to give workers more flexibility over where and when they choose to work which, again, will be welcomed, given the newfound and widespread expectation for flexible forms of working after the coronavirus (COVID-19) pandemic.

What are the next steps?

The government will, “in due course”, lay legislation before Parliament to extend the ban on exclusivity clauses as above, as well as introduce related enforcement rights where an employer unfairly dismisses a worker or subjects them to detriment for reasons relation to the ban.

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