New proposed measures to allow workers’ greater freedom to find
new or additional work have been unveiled by Business Secretary
today (4 December 2020).
In a major win for the UK’s lowest paid workers, the government
will consult on banning the use of exclusivity clauses in
contracts, which prevent workers from taking on additional work
with other employers, This would apply to a worker’s who’s
guaranteed weekly income is below the Lower Earnings Limit,
currently £120 a week.
This change will put more power into the hands of an estimated
1.8 million low paid workers across the UK to top-up their income
with additional work if they want to – ending an unfair penalty
on hardworking Britons who want the freedom and flexibility to
make a living and support their families.
It will also greatly expand the pool of talent available for
businesses who rely on part-time and flexible workers, as those
already in low-paid part-time employment will no longer be bound
by restrictive contracts.
Today’s plans also look to reform the use of non-compete clauses,
which can prevent individuals from starting up or joining
competing businesses after they leave a position. The move will
ensure talented individuals have the freedom to apply their
skills in another role if they wish while unleashing a wave of
new start-ups across the country.
Business Secretary said:
“We want to ensure every worker has the freedom and flexibility
to work in the way they want, where they want – whether that’s
topping up their pay packet by taking on additional work, or
being able to start their own business with the skills they’ve
gained throughout their career.
“Today’s reforms are another step on our path to making sure the
UK is the best place in the world to work, start and grow a
business as we build back better from the pandemic.”
Plans involve introducing a mandatory compensation requirement
for any employer that wishes to use non-compete clauses, ensuring
that workers receive a fair settlement if they are restricted
from joining or starting a business within their field of
expertise. This aims to discourage the unnecessary and widespread
use of non-compete clauses by employers.
The government is also seeking views on whether it is necessary
to go further and ban non-compete clauses all together.
Exclusivity clauses were banned for workers on zero hours
contracts, where employers are not obliged to provide any minimum
working hours and the worker is not obliged to accept any work
offered, in 2015.
Andy Chamberlain, Director of Policy at IPSE (the Association of
Independent Professionals and the Self-Employed), said: “It is a
welcome step in the right direction that the government is
consulting on ways to crack down on restrictive contracts.
“Paring back restrictive contract features such as exclusivity
and non-compete clauses should, we hope, help open up
opportunities for the self-employed and support them in adapting
to these challenging times.”
The two proposed reforms form part of the government’s plans to
build back better, ensuring the UK’s recovery from Covid-19
creates new jobs, increases competition and maximises
opportunities for the most talented innovators, job creators and
entrepreneurs in the UK.
NOTES TO EDITORS:
- Other countries have also restricted exclusivity clauses in
order to stimulate innovation, including Germany and France.
- In Germany, exclusivity clauses are not used in employment
contracts, and taking on an additional job (as long as it is not
in competition to your first employer) is never prohibited.
- Germany have also created mini-jobs, to promote higher
employment rates through income tax-free marginal employment,
with workers making at most €450 a month in part-time jobs (under
the limit for social security contributions and exempt from
income tax). All German industries are allowed to offer mini job
contracts, but the most common types of mini jobs are in the
fields of catering, retail, and domestic work.
