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Ban on exclusivity clauses in employment set to be extended

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Ban on exclusivity clauses in employment set to be extended

The Government have announced that the ban on exclusivity clauses in employment contracts is set to be ‘widened’.

In this article, Employment Partner Paul Burton looks at whether this extension will actually come into force, and discusses the impact it will have it does.

What is an exclusivity clause in employment?

An exclusivity clause is essentially a restrictive covenant found within an employment contract which restricts an ex-employee’s employment in a certain sector or role.

Essentially, they are used to restrict workers from working for multiple employers.

Is the ban on exclusivity clauses set to be widened?

The government announced plans earlier in May that they are going to widen the ban on exclusivity clauses to contracts where the guaranteed weekly income is on or below the Lower Earnings Limit of £123 a week.

An estimated 1.5 million workers are earning on or below £123 a week and the new reforms, if they come into effect, will ensure that those workers are able to top up their income with extra work if they choose.

Why is the exclusivity clause ban being extended?

Business Minister Paul Scully said:

“We are creating a high skilled, high productivity labour market that supports workers by removing unnecessary red tape, helping the British people boost their incomes and keep more of what they earn.

By extending the ban on exclusivity clauses, we are putting more control into the hands of the lowest paid, giving them the freedom to decide who they work for and how often, including the option to top up their pay packet if they wish.”

When is the exclusivity clause ban being extended?

Exclusivity clauses were banned in 2015 for workers on zero hours contracts. 

The government has said legislation for these latest plans will be laid before Parliament later this year. 

If it happens, extending the ban to those earning below the Lower Earnings Limit will also perhaps enable those workers who have been moved to reduced hours contracts, due to the pandemic, to increase their income.

Andy Chamberlain, Director of Policy at IPSE said:

The extension of the ban on exclusivity clauses is welcome. By cutting back on these restrictive clauses, the opportunity to find more flexible work will be open to more people.

Will this extension actually happen?

Paul Burton, Employment Partner, said: “The government has announced many plans relating to employment law and workplace practices over the last few years, but virtually none of them have, so far, come into effect. 

We will therefore have to see if this latest announcement is different.  It is also the case that many have asked for the plans to go further, banning exclusivity clauses in all contracts of employment apart from in limited circumstances.”

Other options for employers

Employers looking to have some sort of say over an employee’s future employment can include a non-compete clause in their contract.

This can prevent an employee from joining a rival company for a ‘reasonable’ period of time after their employment.

Read how you can ensure that your non-compete clause is well drafted here.

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Employment solicitors in Bournemouth, Christchurch and Ringwood

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