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11th Jan, 2023

Helena Smith
Helena Smith
Job Title

As of 5 December 2022, the government extended its 2015 ban on exclusivity clauses to include those earning below the lower earnings limit, which is currently set at £123 per week (gross).

The original ban in 2015 was introduced to enable workers in the gig economy, or on zero-hour contracts, to take up secondary employment to support their low or non-guaranteed income. The 2022 extension now prevents employers limiting their workers’ earning potential where they are below the lower earnings limit.

With the ease of which people can now embark on a ‘side hustle’ online, compounded with the ongoing cost-of-living crisis, many people are already taking up second roles to support themselves and expand their earning potential. Now that exclusivity clauses are nullified for many more employees, we will likely see this expand greatly in 2023.

What has led the government to make this change?

One possible reason for this legislative change is to limit the number of universal credit claimants, which anyone earning up to or under £1,284.17 (per calendar month in London), or £1,116.67 (per calendar month outside London), could potentially qualify for, and which can be paid as an in-work benefit.

However, according to the government’s website, it seems the change is intended to help workers supplement their existing pay, where employers find it challenging to offer a suitable number of hours:

‘Following the impacts of the Covid-19 pandemic, companies are not always in a position to offer enough hours for every worker. If more workers are able to take on additional work, on short hours contracts, this could also increase businesses’ confidence to create jobs with contracts which suit them and their current circumstances.’

Changes to employment

Employers must be aware that any existing exclusivity clauses in standard contracts for those earning below £123 per week have now been rendered unenforceable, and those workers are now protected from detrimental treatment or dismissal for having a second job.

It is now automatically unfair for an employer to dismiss an employee for breaching an exclusivity clause if they meet the conditions of the ban, and they are not required to have completed two years of service before they can take their case to an employment tribunal. If successful, the tribunal may award such compensation as it considers ‘just and equitable’, up to an amount equal to the unfair dismissal basic and compensatory award.

The requirements for minimum rest breaks between shifts and 48-hour working week restrictions under the Working Time Regulations 1998 will remain relevant, as all working time is counted towards the weekly average. Working time includes time working for other employers where a worker has more than one job or works for multiple employers. To avoid breaching working time regulations, employers will have to find a way of keeping track of qualifying employees’ working hours or consider asking them to opt out of the working week restriction.

Impact on employees

There are many reasons that the 'ban' is beneficial to employees, such as their protection from unfair dismissal from day one and the unlimited opportunity to make more money, but there are also some things they should consider.

When taking up secondary employment, qualifying employees will still have an obligation to both of their employers to fulfil the role as expected during their contracted hours and must not carry out tasks for any other role in that time – those who do could still face disciplinary action.

Fewer working hours might be awarded to those who have secondary employment, in favour of those who are exclusive workers, and this wouldn’t necessarily be considered unfair treatment.

Considerations for managers

In addition to keeping track of their employees’ hours to ensure they are not working more than 48 hours a week, and have sufficient breaks between 'shifts', employers still have an obligation to support their team members’ wellbeing. Those needing to perform two separate roles are more susceptible to stress or burn-out, which can impact their work. They may ask for additional support with time management if they start to feel overwhelmed and those are reasonable adjustments employers can make to ensure staff are supported to do their best work.

On a positive note, while it may sound like they will split themselves between two roles, workers can be re-energised by having a second income and a new opportunity. That energy, and any new skills they learn from their second role, could make them a more valuable asset to your team.

Many companies are already happy to offer flexible working options. The future of work depends heavily on flexibility from both employees and employers. Workers who are happy are proven to be far more productive. Therefore, making small accommodations could in fact boost your team’s growth. The UK working culture is increasingly flexible and is evolving rapidly, especially following the pandemic. It will be interesting to see to what extent workers take advantage of the lack of exclusivity in the future, and how the recruitment landscape will change as a result.

If you’re looking for a talented professional to join your team, or a first or second employment opportunity, contact your local Reed office.