Exclusivity clause consultation

The government has recently published the response to its December 2020 consultation on the use of ‘exclusivity clauses’ – pledging to ban their use for low earners.

Exclusivity clauses are a type of restrictive covenant that prevent workers from undertaking additional work with another employer. There is general agreement that, when well-drafted and enforceable, they can protect legitimate business interests. However, they can be unfair when they prevent low-income workers from attaining additional work to increase their income.

Ultimately, the strength of the UK labour market lies in flexibility and fairness in law and practice for both parties.

What do employers think of the proposals?

The CBI agrees with the proposal to ban them from employment contracts with a guaranteed weekly income below or equivalent to the Lower Earnings Limit - currently £123 a week.

In practice, the current use of exclusivity clauses is low – where restrictive clauses do exist, this is typically for practical reasons, such as to ensure adequate rest time and compliance with Working Time Regulations (WTR) obligations.

Unless an employee has opted out of the WTR, the 48-hour weekly average is the limit, even if the employee has more than one job. Where an employee has more than one job, the employer must make sure their employee is not working more than an average of 48 hours a week in total across both jobs.

The CBI has been clear that, as long as employers know how to comply with their WTR obligations to ensure adequate rest and how to comply with this new ban, then employers support it.

Where workers do not provide information on the hours they are working elsewhere, the government believes that employers simply asking their employees to provide this information would be enough for them to comply with their requirement to take ‘all reasonable steps’ to fulfil WTR obligations.

The CBI will