The coalition government is to unveil plans to ban ‘exclusivity’ clauses in zero-hours contracts, the Business Secretary Vince Cable has revealed.

Exclusivity clauses prevent employees on zero-hours contracts from working with another employer, even if they haven’t been given any hours, and ‘undermines choice and flexibility for the individuals concerned’.

The move comes after a government consultation into the controversial use of zero-hours contracts, which resulted in 83% of 36,000 respondents saying ‘exclusivity’ clauses should be banned.

It is believed that the ban will affect around 125,000 workers currently on zero-hours contracts and trapped under ‘exclusivity’ clauses by ‘unscrupulous employers’.

The government say the move will allow those individuals to look to work elsewhere and ‘boost their income’.

Business Secretary Vince Cable said:

“Zero hours contracts have a place in today’s labour market. They offer valuable flexible working opportunities for students, older people and other people looking to top up their income and find work that suits their personal circumstances.

“But it has become clear that some unscrupulous employers abuse the flexibility that these contracts offer to the detriment of their workers. Today (25 June 2014), we are legislating to clamp down on abuses to ensure people get a fair deal.

“Last December (2013), I launched a consultation into this issue. Following overwhelming evidence we are now banning the use of exclusivity in zero hours contracts and committing to increase the availability of information for employees on these contracts.

“We will also work with unions and business to develop a best practice code of conduct aimed at employers who wish to use zero hours contracts as part of their workforce.”

Vince Cable also announced plans to consult with the public on how to ensure that employers don’t look for ways of evading the ban.

According to the government, the ban will form part of the Small Business, Enterprise and Employment Bill, which is being introduced to Parliament today (25 June 2014).

Commenting on the announcement, Tim Thomas, Head of Employment Policy at EEF, the manufacturers’ organisation, said:

“Zero hours contracts occupy an important space in the labour market where, properly used, they provide flexible employment in job roles where open-ended contracts are unsuitable.

“For manufacturers where skills are in scarce supply, zero hours contracts can help employers to tap into specialist skills when they are needed, such as drawing on the experience of older workers.

“The way forward set out in the Small Business, Enterprise and Employment Bill treads a fine line between supporting the majority of workers who want to continue to work on their zero hours contracts and limiting their use where they are neither necessary nor appropriate.”

Commenting on the government’s zero-hours consultation, Chuka Umunna MP, Labour’s Shadow Business Secretary, said:

“Under David Cameron’s government we’ve seen a rising tide of insecurity. Zero-hours contracts, which were once a niche and marginal concept, have become the norm in parts of our economy as families have been hit by the cost-of-living crisis.

“The Tory-led government has watered down people’s rights at work and have failed to match Labour’s plans to outlaw zero-hours contracts where they exploit people.

“Labour will ensure that people at work get a fair deal and proper protections so they are not forced to be available around the clock, are paid if shifts are cancelled at short notice and are able to demand a full contract if, in practice, they are working regular hours.”

To the dismay and anger of campaigners and opponents, both the government and Labour have stopped short of saying they would ban the use of zero-hours contracts completely.

In April, Citizens Advice Chief Executive Gillian Guy, slammed the use of zero-hours contracts which were “playing havoc with people’s ability to make ends meet”.

She added: “There needs to be more clarity around holiday pay and redundancy rights for workers on casual and zero-hour contracts”, and also that the controversial contracts should “come with minimum pay or minimum hours agreements so that employees know where they stand”.

TUC General Secretary Frances O’Grady said:

“The ban is welcome news but it’s not nearly enough to really tackle the problem. A lack of certainty is the real issue. Far too many employees have no idea from one week to the next just how many hours they’ll be working or more importantly how much money they’ll earn. This makes managing household budgets stressful and organising childcare very difficult indeed.

“The one change that would really make a difference would be for employers to have to guarantee their staff a minimum number of paid hours each week. And as the economy continues to grow that would give many zero-hours workers struggling to get by a much-needed pay rise.”