It is very common for employment contracts to include an exclusivity clause. This is a clause which prevents the employee from working under another contract or requires the employee to obtain consent from their employer before commencing work with another business. The purpose of these clauses is to protect your legitimate business interests, for example to prevent an employee from working with a competitor.
It is also important in terms of the employer obligations under the Working Time Regulations 1998. Employees should not work over 48 hours a week on average, unless they have signed an opt out, and employers need to be aware if hours are being worked in another job so that this can be accurately tracked.
If consent is requested this should not be unreasonably withheld. If exclusivity clauses go too far, they are rendered unenforceable. Given the cost of living crisis there has been a rise in people looking for second jobs and in our view employers should prepare themselves for an increase in these requests.
Since 2015 such exclusivity clauses have been banned in relation to workers or employees who are on zero-hour contracts. With these kinds of contracts there is no obligation to provide work and there is no obligation to accept work when offered. It was decided in these circumstances it was unfair to prohibit workers or employees from seeking additional work.
This ban has now been widened to include those whose net average weekly wages do not exceed the lower earnings limit (this is currently £123 a week). This comes in to force on 5 December 2022.
Under the relevant regulations, it is automatically unfair to dismiss an employee if the reason for the dismissal is that the employee breached an exclusivity term, and there is no qualifying period of employment to bring this claim.
In addition, workers are protected from detriment if they breach an exclusivity term in their contract. Where an employment tribunal finds that a worker has suffered a detriment, it may award such compensation as it considers just and equitable up to an amount equal to the unfair dismissal basic and compensatory award.
Employers should be aware that if these clauses are contained in the contracts of those who earn less than £123 per week then these will no longer be enforceable. These clauses should not be added to new contracts for people who will earn less than the lower earnings limit. However, such clauses continue to be permissible for all employees and workers who earn more than the lower earnings limit and who are not on zero hours contracts.
If you have any questions on any of the issues raised in the above article, please contact Natalia Milne.