Would you like to be exclusive? The New Working Reality!
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In a new world of work where buzzwords such as “side hustles”
and “the gig economy” are in common usage it is important for employment legislation to reflect and address these new working realities. The idea that an employee will have “a job for life” or that they will be entirely tied to one employer appears to be becoming unacceptable. A side hustle has no legal definition but is commonly considered to be “a piece of work or a job that you get paid for doing in addition to doing your main job”. We are all familiar with the gig economy as it relates to Uber or Deliveroo drivers. In fact, the gig economy is commonly described as “a labour market that relies heavily on temporary and part-time positions filled by independent contractors and freelancers rather than full-time permanent employees”. This concept reflects a world of work where employees want to work in more than one sector or for more than one employer.
Much of our employment legislation dates from a time where security and stability were in clear focus. Statistics now suggest employees are changing jobs more often and demanding more flexibility regarding job sharing arrangements or the ability to engage in parallel employment.
The Transparent and Predictable Working Conditions Regulations 2022 (“the 2022 Regulations”) came into effect on 16 December 2022. The 2022 Regulations transpose the EU Directive 2019/1152 on Transparent and Predictable Working Conditions (“the Directive”) which has the purpose of creating stability and transparency for employees with less predictable working conditions or terms. Although the intention of the Directive was to create stability for this cohort of employees, the 2022 Regulations as drafted directly impact on all employees in Ireland.
The Directive provides for an employer not prohibiting an employee from taking up employment with another employer, outside of the work schedule established with the first employer. The 2022 Regulations also address this issue of exclusivity in the employment relationship and the 2022 Regulations amend the Terms of Employment (Information) Act 1994 in this regard.
It has always been common for employers to include exclusivity clauses in their employment contracts to prohibit employees working elsewhere, with employers usually prohibiting employees from working for other employers without their specific consent. Generally, work which could result in a conflict of interest is entirely prohibited. The justification for these restrictions can range from reducing the risk of the employee working excessive working hours to concerns regarding intellectual property or confidentiality. The 2022 Regulations have now limited the use of exclusivity clauses to some extent which is likely to necessitate changes to contracts of employment.
The 2022 Regulations provide that an employer must not prohibit an employee from taking up employment with another employer, outside the work schedule established with the first employer. The 2022 Regulations also provide that an employer shall not subject an employee to adverse treatment for taking up employment with another employer outside the work schedule established with the first named employer.
However, such a restriction can be provided for where it is proportionate and is based on objective grounds. This is termed an “incompatibility restriction”. It is open to an employer to impose such an incompatibility restriction on a particular employee provided the employer includes details of the restriction and the objective grounds relied upon by the employer within either the contract of employment or separately in writing to the employee.
There is a wide ranging and non-exhaustive list of objective grounds contained in the 2022 Regulations, which include health and safety, the protection of business confidentiality, avoidance of conflicts of interests, the integrity of the public service, safeguarding productive and safe working conditions, the protection of safety of patients and people receiving care from the health service, the protection of national security, the protection of critical national infrastructure, the protection of energy security, the administration of vital public service functions, compliance by the employer and the employee with any applicable statutory or regulatory obligations and compliance by the employee with any professional standards for the time being in force. No further guidance has been provided in respect of the application of these incompatibility restrictions. Therefore, it remains to be seen how disputes relating to such restrictions will be addressed by the Workplace Relations Commission (“the WRC”).
Arguably, the simplest objective ground would appear to be health and safety, in circumstances where all employers have obligations to their employees under the Health, Safety and Welfare at Work Act 2005 and further obligations in relation to excessive working hours and breaks under the Organisation of Working Time Act 1997. With the development of new ways of working, in particular remote working, employers are already struggling to record and monitor employees working hours, rest breaks, daily breaks and weekly breaks. This issue is further exacerbated in circumstances where an employee may also be working for another employer in circumstances where the primary employer has no oversight of those additional working hours. However, proportionality of the restriction will also be examined by the WRC in any dispute under the 2022 Regulations and therefore an employer must be able to demonstrate that the incompatibility restriction was proportionate to the health and safety being raised by way of an objective ground.
An employee can take a claim to the WRC for a breach by their employer of these obligations. If that claim is successful, the WRC can take the following actions:
- Alter or add to the statement of employment for the purpose of correcting any inaccuracy or omission in the statement.
- Require the employer to give or cause to be given to the employee concerned a written statement of employment containing such particulars as may be specified by the Adjudication Officer.
- Order the employer to pay to the employee compensation of such amount (if any) as the Adjudication Officer considers just and equitable having regard to all of the circumstances, but not exceeding 4 weeks’ remuneration.
The clear purpose of the incompatibility restriction seems to be to limit the extent to which an employer can prevent parallel employment. They also encourage employers to tailor their incompatibility restrictions to specific cohorts of employees rather than applying blanket restrictions to all employees regardless of their position.
Despite the fact that the 2022 Regulations were introduced to manage the terms and conditions of unpredictable workers they are likely to have unanticipated consequences for executives. Employees in senior management or executive roles are often privy to extremely confidential information as well as having access to valuable contacts. In those circumstances a restriction on parallel employment for senior employees may be entirely objectively justified to protect the business. Although it is open to an employer to rely on health and safety grounds to restrict these employees it seems likely that incompatibility restrictions will need to be tailored very carefully (in a comparable manner to restrictive covenants) when addressing restrictions for this cohort of employees.
What should employers do now?
On foot of these changes, we would advise employers to take the following steps:
- Take the opportunity to consider their policy around exclusivity and parallel employment to determine what purpose it serves and what groups of employees should be restricted and why.
- Consider the impact exclusivity clauses may have on staff recruitment and retention.
- If exclusivity clauses are being retained, tailor incompatibility restrictions carefully for specific employees, especially those at a senior level.
This article first appeared on Industrial Relations News - IRN 19 - 18/05/2023. For further information, visit www.irn.ie