MOrsel: A Zero-Sum Game? Exclusivity and Employee Status in Jersey

Jersey's States Assembly has voted this week to ban exclusivity clauses in zero hours contracts, rendering such clauses unenforceable in law. This article explores the legal and practical implications.

Ban on exclusivity in zero hours contracts

A new Article 6 of the Employment (Jersey) Law 2003 (EJL) will be implemented shortly. This will provide that any provision of a zero hours contract will be unenforceable by an employer to the extent it would:

• - prevent the employee from being employed by another employer; or, alternatively,
• - require the employer's consent to the employee being employed by another employer.

In this way, the new Article 6 is aimed squarely at the use of exclusivity clauses in zero hours arrangements, whereby an employee (i) has no guarantee of working hours, but (ii) is prevented from working elsewhere.

This seemingly simple provision gives rise to a number of observations, starting with the definition given of a zero hours contract.

Zero hours contract defined

According to the new Article 6, a zero hours contract means a contract of employment under which there is no minimum requirement for the employee to do any work for the employer.

Unlike in the United Kingdom, which distinguishes between 'employees', who enjoy full employment rights, and 'workers', who enjoy some but not all of the rights afforded to employees, there is no statutory concept of a worker in Jersey. An individual who is engaged to provide work is either an employee or not. This is integral to the zero hours contract analysis because an essential ingredient of an employment relationship is that there must be mutuality of obligation between the parties. In short, the employer must be obliged to provide work and the employee must be obliged to accept it.

The nature of a zero hours contract is that the individual has no guarantee that work will be provided to them; typically they are called on to work on an as-needed basis. Without mutuality of obligation, therefore, how can there be a concept of a zero hours employment contract?

Mutuality of obligation in Jersey employment relationships

Under the EJL, there are two types of employee provided by statute in Jersey:

• - a person who works for another person under a contract of service (or apprenticeship) with that other person (Art 1A(2) of the EJL); and
• - a person who undertakes to do or perform personally work or services for another person who is not their client or customer (Art 1A(3) of the EJL).

The Article 1A(2) scenario describes a conventional employment engagement. The Article 1A(3) scenario is much wider, and may encompass any personal work engagement where it cannot be established that the individual is in business on their own account.

Whereas mutuality of obligation is a fundamental requirement of an Article 1A(2) employee engagement, this is not the case where an Article 1A(3) employee is concerned. In Marchem (Europe) Limited v Carré (2015) JRC 075, the Royal Court considered whether a zero hours arrangement amounted to an employment engagement, and stated that:

'The key element is a mutuality of obligation, with the employer being obliged to provide work for the employee and the employee being obliged to accept and perform that work.'

However, a postscript to the judgment noted that the court had refused (on procedural grounds) to consider the individual's argument that, although she may not have fallen within the scope of Article 1A(2) of the EJL, she arguably would fall within the scope of Article 1A(3).

Whilst subsequent authorities (for example Lecrivain v RDC Studios Limited (2019) TRE 016) reiterated the need for an employee engagement to contain 'Marchem mutuality', it is clear from both the Marchem litigation itself and by authoritative subsequent statements by the Tribunal that this refers to an Article 1A(2) employee engagement only, not one involving an Article 1A(3) employee.

In particular, in Bisson v Doré and Red Appco Cabs Limited (2017) D-34/2016, the Tribunal drew a distinction between an Article 1A(2) employee, for which there must be mutuality of obligation, and an Article 1A(3) employee, for which mutuality may be present but equally may not be.

The Tribunal's distinction in Bisson has been adopted and relied upon in a number of ensuing cases, including two more recent decisions relating to employee status in Carey v JP Mauger Limited (2020) TRE 209 and Leech v The Car Clinic Limited (2021) TRE 43.

Returning to this week's amendment to the EJL to expressly ban exclusivity in zero hours contracts, it is therefore implicit in the wording of the new Article 6 that a zero hours contract in Jersey is a contract of employment relating to an Article 1A(3) employee.

What is the significance of the zero hours contract definition and exclusivity ban?

First, without the statutory concept of a worker as in the UK, an Article 1A(3) employee engaged on a zero hours contract is entitled to the same statutory protections as any other employee. This includes entitlements to rights such as holiday and parental leave, and the ability to bring claims such as for unfair dismissal and redundancy pay.

An important point in this respect is that an employee's statutory continuity of employment (essential to calculating their ability to bring certain claims) will not be broken by gaps in work of one week or more if their contract of employment governs relations with the employer during that time. Since the point of a zero hours engagement is effectively to retain an individual irrespective of the amount of work they might actually perform, this arguably has the result that a zero hours employee will continue to accrue continuity of employment for as long as their contract is ongoing.

Second, the wide scope of Article 1A(3) means that depending on whether an individual is genuinely in business on their own account, an ostensible contractor arrangement may inadvertently be an employee engagement (it is immaterial whether or not there are written employment terms, as such terms may be implied). In this scenario, the new Article 6 will have the effect of invalidating a commercial exclusivity requirement in what was thought to be a business supply arrangement.

Third, zero hours contracts are likely to be far less useful to both parties than they may appear. The policy behind the new Article 6 is to tackle the exploitation of individuals who are engaged on non-guaranteed – and therefore more vulnerable – terms. But in introducing the provision, the government noted that there is 'no evidence to suggest that exclusivity clauses in zero-hours contracts are causing an issue in Jersey'.

In practice, the new Article 6 means that any business engaging an individual on a zero hours basis may, depending on the individual's circumstances, now have to accept that the individual is potentially an Article 1A(3) employee who is free to accept work elsewhere. If that is an unacceptable risk, the business may have to dispense with the zero hours requirement, and instead give some commitment as to the anticipated work that the individual will be required to perform.

For any business reviewing its consultancy and other contractor engagements, the new Article 6 is also a clear reminder that the risk of an individual being deemed an employee in Jersey can be high, and goes beyond the written terms of engagement alone.

Finally, it is worth noting that in 2021 the States Assembly approved a broader review of the use of zero hours contracts, including enhanced protections for employees beyond the new Article 6. We will provide further updates as the review progresses.

To discuss any of the issues in this article, please contact Carla Benest or Laurie Child.