Last reviewed 10 May 2022

The Government has confirmed it will introduce legislation to extend the ban on exclusivity clauses. New laws will make exclusivity clauses unenforceable in employment contracts where the guaranteed weekly income is below or equivalent to the Lower Earnings Limit, currently £123 per week. It is hoped that by removing red tape, the lowest paid workers will be given the choice to work multiple jobs if they wish, to give them more flexibility over when and where they work.

Exclusivity clauses restrict workers from taking on additional work with other employers. They were banned from being included in zero-hours contracts in 2015, with the same aim of maximising opportunities for individuals to find additional work and apply their skills to drive economic recovery. The legislation will also give employees the right not to be unfairly dismissed, and workers the right not to be subjected to a detriment, for failing to comply with an exclusivity clause, and to claim compensation.

There isn’t yet a set date for when the new law will come into force, but it will be laid before Parliament later this year. The proposed legislation follows the conclusion of a public consultation launched by the Government in December 2020, which sought views on extending the ban on exclusivity clauses beyond zero-hours contracts.

How will businesses benefit?

As well as supporting almost 1.5 million workers to increase their income, the new legislation will also positively impact businesses by widening the talent pool of applicants to those who may have previously been prevented from applying for roles due to an exclusivity clause with another employer. It will also help to attract more people in key industries, such as retail and hospitality and encourage employers to create jobs with contracts which suit them and their needs, for example, offering few weekly hours.

What will employers need to do?

Employers should be aware of the changes and how this will impact them individually, and put measures in place to ensure they are as prepared as possible. This might include reviewing existing contracts, as exclusivity clauses will need to be amended to ensure they only apply to those earning above the LEL. Employers may also have to update policies and procedures; whilst exclusivity clauses can’t be enforced for those earning £123 per week or less, employers can still require staff to tell them if they are working elsewhere. Similarly, employers should work out average weekly earnings for all employees, so they know who the new rules apply to.

Employers should also check employees’ total working hours; an opt-out agreement will need to be signed if the employee is working more than 48 hours per week across all employers, otherwise they might find they are in breach of the Working Time Regulations (1998).

Finally, in some case, it may be necessary to assess the role and industry the employee works in. Employers might want to introduce a restrictive covenant for employees who may want to work for a competitor or where there are concerns about the sharing of confidential or sensitive information.