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Extension Of Ban On Exclusivity Clauses – Employee Benefits & Compensation


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Now is a good time to review the contracts being used in
your business and ensure that any zero hours contracts don’t
contain exclusivity clauses.

Exclusivity terms that seek to prevent individuals from doing
work for other people (or doing so without their employer’s
consent) have been unenforceable when included in zero-hours
contracts since 2015. However, in order to provide protections
specifically for low-income workers, from 7 November 2022, the
principle has been extended to apply to all workers whose net
average weekly wages do not exceed the lower earnings limit for the
purposes of National Insurance (currently £123 per week),
rather than just those on zero hours contracts.

Under these new regulations, it is automatically unfair to
dismiss an employee if the reason or principal reason for doing so
is that they breached an exclusivity term. There is no qualifying
service requirement for the employees wishing to pursue such claims
– it is a protection that they have as soon as employment
starts. The regulations also protect workers from suffering any
detriment if they breach an exclusivity term, with employment
tribunals being entitled to award compensation up to the value of
the award made for unfair dismissal claims.

This serves as a good prompt for you to review the contracts
being used in your business and ensure that any zero hours
contracts or contracts issued to those earning less than the lower
earnings limit don’t contain exclusivity clauses. While having
the clauses present in the contract is not, of itself, unlawful
provided they are not enforced, their presence does create a risk
that managers may seek to enforce them, or that staff can use their
presence to allege a motive for an employer’s actions.

Vanishing dismissals

Where an employee is dismissed and uses their employer’s
internal procedure to successfully appeal against their dismissal,
their employment is reinstated with wages paid for the intervening
period. The dismissal ‘vanishes’ in legal terms, meaning
there is no longer a dismissal for them to pursue any unfair
dismissal claim in relation to, even though the original dismissal
decision may have been unfair. The Employment Appeal Tribunal
recently confirmed that this was the case even if the employee
chose to appeal their dismissal but did not wish to be reinstated
to their role.

In Marangakis v Iceland Foods Limited [2022] EAT 161,
Ms Marangakis was dismissed in January 2019 for alleged gross
misconduct. She appealed, initially indicating that she wished to
be reinstated to her role. However, she later changed her mind
about wanting to be reinstated, believing that mutual trust and
confidence had broken down between her and her employer and said
that she wished to receive compensation and an apology instead.

Ms Marangakis’ appeal was successful, and her employment was
reinstated. However, she refused to return to work and was then
dismissed for that in June 2019. Ms Marangakis brought an unfair
dismissal claim in relation to the original January 2019 dismissal.
The employment tribunal decided that it could not hear the case as
the January 2019 dismissal had vanished, based on Ms
Marangakis’ successful appeal and reinstatement to her

Ms Marangakis appealed the Tribunal’s decision to the
Employment Appeal Tribunal, who agreed with the Tribunal that if an
appeal against dismissal is successful, the parties are obliged to
treat the dismissal as having not occurred, irrespective of the
employee’s own wishes. The only way to prevent that would have
been if the employee had withdrawn her appeal before an outcome had
been issued. In this case, Ms Marangakis saying that she no longer
wanted to be reinstated was not sufficient evidence that the appeal
had been withdrawn, particularly as she had stated that she instead
wished to receive an apology and compensation indicating an
intention to continue the appeal process.

While this case doesn’t move the legal position, it does
serve as a timely reminder that reinstatement of employment on
appeal can assist employers to avoid unfair dismissals in
circumstances where the initial decision to dismiss (or procedure
followed) may have been unfair and likely to give rise to an unfair
claim. As in this case, employees may well refuse to return to work
if their appeal is granted, justifying their fair dismissal on
conduct grounds based on their refusal to attend and offering the
employer a second chance to achieve a fair dismissal.

National Minimum Wage Increase

The Chancellor of the Exchequer has delivered the 2022 Autumn
Statement announcing wide-ranging tax increases and other measures
to support the economy. One of the key announcements affecting
employers was the increase in National Minimum Wage rates. The move
is expected to benefit more than two million of the country’s
lowest-paid workers and will see the rates increase from 1 April
2023 as follows:

  • Age 23 or over (National Living Wage rate): £10.42 (up
    9.7% from £9.50).

  • Age 21 to 22: £10.18 (up 10.9% from £9.18).

  • Age 18 to 20: £7.49 (up 9.7% from £6.83).

  • Age 16 to 17: £5.28 (up 9.7% from £4.81).

  • Apprentice rate: £5.28 (up 9.7% from £4.81).

  • Accommodation offset amount: £9.10 (up 4.6% from

The new rates represent a much more drastic increase than the
annual increases we are used to seeing, with the National Living
Wage rate applicable to those aged 23 or over increasing by more
than we have ever seen before at 9.7 per cent. In the context of
steep increases to operating costs generally, this may cause
concern to some employers who fear the additional staffing costs
could trigger a need to review efficiencies and streamline their
workforces through redundancies or restructures.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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