Bid to head off attempts to dodge exclusivity contracts

A study by CIPD in the autumn found about 3.1pc of the workforce – more than a million people – were employed on a zero hours basis, with the practice most common in the hotel/catering and leisure sector where 36pc of employees are on the terms.

However, CIPD said the contracts were “unfairly demonised” and that people on them were nearly twice as likely to be satisfied (47pc) as dissatisfied (27pc) at having no set contracted hours, saying the flexibility suited their lifestyle.

In response, the Government launched a consultation which found 83pc of respondents backed a ban on exclusivity clauses and in June it was announced they would be prohibited in forthcoming legislation.

The latest Office National Statistics found that less than 2pc of the workforce - some 622,000 people - are employed on zero-hours contracts but the Government is now worried that some companies may try to get around the forthcoming ban, such as by drafting contracts offering just one hour of work, and is asking employees, unions and businesses for their input to see whether it needs to take pre-emptive action.

CIPD statistics estimate that 9pc of all those on zero hours contacts are on an exclusivity clause. The Department for Business, Innovation and Skills believes that this could mean between 17,000 and 125,000 are on them.

Announcing the consultation on Monday, Business Secretary Mr Cable said: “We are tightening the screws on rogue employers who try to abuse workers on zero-hours contracts. We are looking closely at any potential loopholes that could arise from a ban, to ensure that these are closed off and no one can get round the new law.”

“The evidence shows that the vast majority of zero-hours contracts have been used responsibly by many businesses for many years, but unfortunately we know that some abuse does take place,” Mr Cable said. “This is why we are bringing in new laws to ban the use of exclusivity clauses, which currently stop employees getting other jobs if they need to top up their income.”

The new consultation also proposes civil penalties if employers using the contracts are found to have treated staff unfairly.

However, recruitment industry association REC warned the Government not to overreact, saying zero-hour contracts can offer flexibility to workers.

“We must not prevent workers from flexing their hours to fit in with their other obligations,” said Kate Shoesmith, REC’s head of policy. “Businesses also need flexibility to manage peaks and troughs in demand.

“When used appropriately, zero hours contracts offer people flexibility and increased choice. But we agree that it is important to clamp down on abuse and we support the government’s plans to introduce new laws to ban the use of ‘exclusivity’ clauses in zero hours contracts as they prevent employees from being able to take full advantage of the opportunities that flexible work can offer.”

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