Zero hour

Britain is finally doing something about non-compete clauses for minimum-wage workers

June 25, 2014
June 25, 2014

A bill submitted to the British parliament today would ban a practice that it’s hard to believe exists in the first place—contracts that do not guarantee employees shifts, yet prohibit them from working anywhere else. Some 125,000 largely low-wage workers are locked into so-called “zero-hours” contracts that feature what are essentially non-compete clauses.

Zero-hours contracts—which allow employers to schedule employees for different hours week-to-week—have become a hot-button political issue in the UK. This reflects the broader unease and the fact that the average Brit’s standard of living is not keeping pace with the country’s accelerating economic growth.

More than 580,000 workers are on zero-hours contracts (though less than a quarter have exclusivity clauses), according to the latest official estimate. That accounts for 2% of all workers:

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Some argue that there’s a place for zero-hours contracts (which differ from standard contracts that guarantee certain shifts). Common in the hospitality and food-service sectors (and also sometimes used by the political parties which are campaigning against them), zero-hours contracts “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,” according to Vince Cable, the government’s business secretary. It’s just the “unscrupulous employers” that insert exclusivity arrangements into these contracts that thwart this flexibility, Cable says.

But labor unions say the problem goes beyond exclusivity, allowing employers to exploit workers without affording them benefits such as holiday pay and pensions. “The only winner is the employer, and these measures do nothing to tackle the insecurity or uncertainty of zero hours contracts,” said Steve Turner, the assistant general secretary of Unite, Britain’s biggest union, in a statement on the bill.

The average employee on a zero-hours contract last year worked 20 to 25 hours per week, according to the Office for National Statistics. Around two-thirds of these workers chose to work part-time, but a third say they would like to work more hours. Depending on the survey, between 14% and 24% of people on zero-hours contracts are looking for another job—which is difficult if their current employer forbids them from working anywhere else.

High rollers such as hedge fund managers are routinely employed under non-compete clauses, to keep them from sharing valuable company secrets with competitors during and immediately after they leave a firm. It seems odd to lock up part-time fry cooks with similar arrangements, however you feel about the relative merits of their chosen professions.

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