Vince Cable has said clauses in zero-hour contracts that ban workers from jobs with other employers are "offensive".
Dr Cable told Radio 4's Today programme: "What happens is that people turn up for work under a zero-hours contracts, they’re not guaranteed any work, but they’re banned from working for other people...I think it’s that aspect of it that was offensive and constituted an abuse that we want to stop."
The Business Secretary is bringing forward plans to outlaw these 'exclusivity clauses', although he has said that the broader idea of zero-hours contracts can be "perfectly sensible" for some workers.
Britain's biggest trade union has criticised the Government's decision to only ban exclusivity clauses in zero-hours contracts.
General Secretary Dave Prentis said zero-hours workers were unable to secure credit, loans, or mortgages because of the uncertainty created by the employment tactic.
Tying workers to one business when they are employed on a zero-hour contract is "rigid and archaic", according to a business chief.
Director general of the Institute of Directors (IoD), Simon Walker, came out in support of Vince Cable's move to ban the use of exclusivity clause but allow businesses to continue to use zero-hours contracts.
The Business Secretary has hit out at "unscrupulous employers" who abuse the exclusivity clause in zero-hour contracts, tying workers to one company.
Vince Cable announced a clampdown on employers who take on staff with no promise of hours or benefits, and insist they work for no one else.
Despite calls from unions to ban zero-hours contracts outright, Mr Cable said the controversial practice had a place in the labour market - offering working opportunities especially for students and older people.
However, an estimated 125,000 zero-hours workers will benefit from the exclusivity clause ban as they can now look for additional work without fear of losing their current employment, the Business Department said.
A recent report by the Office for National Statistics estimated that employers held 1.4 million contracts that did not guarantee a minimum number of hours.
Lack of clear information and exclusivity clauses in zero hours contracts can leave employees "feeling vulnerable", the Business Secretary has said.
Vince Cable said Acas' research supported what the Government had found in their review of zero hours contracts:
Many workers "did not seem to even know" they were employed on zero hours contract, with some believing they were permanent staff because of their length of service, a study has shown.
Data from conciliation service Acas showed workers on zero hours often experienced deep seeded insecurities about their long-term employment prospects.
Acas chairman Sir Brendan Barber, said:
Employees on zero hours schemes are too afraid to search for a new job and feel excluded from the sense of security other full-time workers enjoy, a study has shown.
Conciliation service Acas said it was receiving around 70 calls a week about zero hours contacts, and a feeling of "effective exclusivity" of being tied to a single employer was emerging as a major concern.
Their data showed many zero hours workers experienced "a deep sense of unfairness and mistrust".
The Government has been consulting on the use of zero hours contracts amid calls from unions and campaign groups to have them banned.
Labour has pledged to tackle abuses of zero hours contracts if it wins the next general election.
Jobseekers could face temporary benefits bans if they refuse to accept some forms of zero-hour contracts under welfare reforms from the coalition government.
Claimants risk losing payments for more than three months if they fail to accept certain positions on such terms as part of the new universal credit system.
Employment minister Esther McVey outlined the change in a letter to Labour MP Sheila Gilmore in an exchange about benefits sanctions, according to the Guardian.
Jobcentre "coaches" will be able to "mandate to zero-hours contracts" if they consider the role is suitable for a claimant, the letter added.
About 1.4 million workers are on contracts that do not guarantee a minimum number of hours, a study by the Office for National Statistics has revealed
The estimate includes all those contracts under which some work was done during a two-week period between late January and early February 2014.
Non-guaranteed hours contracts (NGHCs) include, but are not exclusively, “zero-hours contracts”, as they also include some other contract types that do not guarantee a minimum number of hours
About 13% of employers surveyed reported use of NGHCs, including almost half of all businesses in the tourism, catering and food sectors.
More than one in five employers in health and social work reported using them, although they were found to be relatively rare in financial and professional services and the manufacturing, energy and agricultural industries.