The reform means workers will be protected against exclusivity clauses in contracts where the guaranteed weekly income is on or below the lower earnings limit of £123 a week – an estimated 1.5 million workers in the UK.
Those affected will no longer be prohibited from performing services under another contract or arrangement without their employer's consent.
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Clare Davis, senior associate at law firm Charles Russell Speechlys, said employers will need to make sure their confidential information is protected.
Speaking to HR magazine, she said: "Understandably employers want to ensure they are both getting the best from their employees and protecting their legitimate business interests, including their confidential information which is why they may seek to prevent employees working for others during their employment, but this should only apply where it may detract from the employee’s role or where such work would benefit their competitors."
The new regulations will also ensure employers cannot terminate employee contracts for breaches of the exclusivity clause.
The use of exclusivity clauses was first banned from zero hours contracts in 2015.
Davis added: "With the exclusivity ban for lower paid workers, if these workers have access to confidential information and customers, employers should ensure they have provisions in their contracts of employment to protect their confidential information and, where applicable, prevent non-solicitation and non-dealing with customers and non-interference with suppliers.”
