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Zero hours contracts: detriment and unfair dismissal from today

If employers subject a worker to a detriment or dismiss an employee because they have breached an exclusivity clause in a zero hours contract then they could find themselves facing an expensive claim under the provisions of The Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015, which come into effect on 11 January 2016.

Background

Exclusivity clauses in zero hours contracts were made unenforceable in May 2015 under Section 27A(3) of the Employment Rights Act 1996. Exclusivity clauses aim to prevent workers with zero hours contracts from working for other employers. The Regulations provide workers with a remedy against employers who include exclusivity clauses in their contracts of employment. Claims for detriment and unfair dismissal will be subject to the Acas early conciliation rules.

Unfair Dismissal

The unfair dismissal provisions in the regulations apply to employees only. An employee will be regarded as automatically unfairly dismissed if the reason or principal reason for his dismissal is that he has failed to comply with an exclusivity clause. The right is not subject to the usual two-year qualifying period of employment.

Detriment

The detriment provisions of the Regulations apply to both employees and workers but an employee who has a claim for unfair dismissal cannot also bring a claim for detriment. If a worker is subjected to any detriment by an employer because he has breached an exclusivity clause, he may bring a claim at tribunal. The complaint must be brought before the end of three months beginning with the act or failure to act to which the complaint relates.

Penalties

In both cases, if the complaint is successful, the employment tribunal could:
• make a declaration as to the worker’s rights and those of the employer; and
• order the employer to pay compensation for the breach and any loss resulting from it, including the worker’s reasonable expenses and the loss of any benefit that he might reasonably be expected to have had but for the act or failure.

Recommendations

  • Employers who employ workers on zero hours contracts should avoid including exclusivity clauses in contracts as these are unenforceable and may give rise to expensive claims for unfair dismissal or detriment.
  • If in doubt, seek legal advice to review the terms of your zero hours contract to ensure they are compliant with legislation.

11 January 2016

Jonathan Waters is the founder of Helix Law. Before qualifying as a Solicitor he worked in industry and in investment banking for over a decade. He was also the Partner in charge of Commercial Litigation, Employment Law and Property Litigation at Stephen Rimmer LLP. Jonathan has wide experience of helping and advising businesses to avoid or to deal with commercial disputes and in particular construction disputes.

This article is written to raise awareness of the issues it discusses and it may not be updated after it is first written, even if the law changes. It is not intended to be legal advice and cannot be relied on as such. Helix Law is not responsible or liable for any action taken or not taken as a result of  this article. If you think the matters set out affect you and you wish to apply them to your particular circumstances then we are happy to give you free initial telephone advice.