Proposed crackdowns on restrictive employment contracts would ensure up to 1.8m low-paid workers across the UK can pick up extra work if they want to. Other reforms would remove unfair barriers that prevent workers in technology, legal and other sectors from starting up or joining competing businesses. Further plans would give workers more freedom over where and when they work which, the government says, would help millions boost their incomes “during this difficult time”.

In what the government is calling “a major win for the UK’s lowest-paid workers”, the government will consult on banning the use of exclusivity clauses in contracts. This would apply to a worker whose guaranteed weekly income is below the Lower Earnings Limit, currently £120 a week.

This would allow the low-paid workers to top up their income with additional work if they want to.

A government statement said: “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 clauses.”

The plans announced today [4 December] 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,” the statement said.

Sharma said that the 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,” Sharma said.

The government is also seeking views on whether it is necessary to go further and ban non-compete clauses altogether.

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 offers, in 2015.

The deadlines for responding to both consultations is 11.45pm, 26 February 2021.
View the two consultations below:

• measures to reform post-termination non-compete clauses in contracts of employment
• measures to extend the ban on exclusivity clauses in contracts of employment

Other countries have also restricted exclusivity clauses in order to stimulate innovation, including Germany and France, the government pointed out. 

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 not prohibited.

Germany has also created mini-jobs to promote higher employment rates through income tax-free marginal employment with workers making at most €450 (£400) 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 jobs are in the fields of catering, retail and domestic work. 

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