Possible crackdown on unfair employment clauses

The following update is copied from a government press release recently issued by the Department for Business, Energy & Industrial Strategy.

New proposed measures to allow workers’ greater freedom to find new or additional work were unveiled by Business Secretary Alok Sharma 4 December 2020.

In a major win for the UK’s lowest paid workers, the government will consult on banning the use of exclusivity clauses in contracts, which prevent workers from taking on additional work with other employers. This would apply to workers whose guaranteed weekly income is below the Lower Earnings Limit, currently £120 a week.

This change will put more power into the hands of an estimated 1.8 million low paid workers across the UK to top-up their income with additional work if they want to – ending an unfair penalty on hardworking Britons who want the freedom and flexibility to make a living and support their families.

It will also greatly expand the pool of talent available for businesses who rely on part-time and flexible workers, as those already in low-paid part-time employment will no longer be bound by restrictive contracts.

The plans also look to reform the use of non-compete clauses, which can prevent individuals from starting up or joining competing businesses after they leave a position. The move will ensure talented individuals have the freedom to apply their skills in another role if they wish while unleashing a wave of new start-ups across the country.

Plans involve introducing a mandatory compensation requirement for any employer that wishes to use non-compete clauses, ensuring that workers receive a fair settlement if they are restricted from joining or starting a business within their field of expertise. This aims to discourage the unnecessary and widespread use of non-compete clauses by employers.

The government is also seeking views on whether it is necessary to go further and ban non-compete clauses all together.

Exclusivity clauses were banned for workers on zero hours contracts, where employers are not obliged to provide any minimum working hours and the worker is not obliged to accept any work offered, in 2015.

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