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The Small Business, Enterprise and Employment Act 2015 proposes a number of changes to employment law which will have an impact on employers in the manufacturing sector. Two of those changes came into force on 26 May 2015, and more are to follow.

Zero hours contracts These are, in essence, contracts under which employees are not guaranteed any work by their employer and were the subject of much political debate in the run up to the general election. The unions are strongly opposed to them, whilst many employers rely on them to meet fluctuating levels of demand whilst keeping a control on wages.

There has not previously been any legal definition of zero hours contracts, and the Act introduces one. In essence, it defines zero hours contracts as contracts under which the employee or worker only has to work if the employer offers them work, and where there is no certainty that any work will be offered.
It is not clear whether the definition only applies where the person has to accept work if it is offered.

It does however try to make it harder for employers to include exclusivity clauses in zero hours contracts, so that workers on such contracts can work elsewhere if they wish to (or need to in order to pay the mortgage!) The Act renders legally unenforceable any term in a zero hours contract which prohibits workers from working for other employers, or from doing so without their employer’s consent. This applies to both existing and new zero hours contracts. The impact of the change is that employers using zero hours contracts will no longer be able to insist that those on zero hours contracts do not work for anyone else. Exclusivity clauses in such contracts will be unenforceable.

In practice this may not be such a big deal, as there are ways around it. An employer could still insist, for example, that workers are available for work ‘as and when required’ and refuse to offer work to those who cannot comply with this (including where they are working for someone else).

National minimum wage 

The second change made by the Act is to the maximum £20,000 penalty for non-payment of the minimum wage – a penalty which, it has to be said, is seldom awarded in practice. Since the Act came into force, the penalty has applied in respect of each worker who has not been properly paid (rather than a total of £20,000 for all workers). The penalty is, of course, in addition to payments due to the worker to bring their wages up to the level of the national minimum wage and is designed to be punitive.

Other changes are also proposed by the Act, but we don’t yet know when they will come into force. The other changes include financial penalties for unpaid tribunal awards and settlements made via ACAS, restrictions on the number of postponements of tribunal hearings, and the introduction of gender pay gap reporting for those employers with over 250 employees.

Key Contact

Kirsty Ayre