What Are The Implications For UK Employment Law In The Event Of Brexit?

A referendum will take place in the United Kingdom (UK) on 23 June 2016 to determine whether the country remains or leaves the European Union (EU). This is commonly known in the media as ‘Brexit’. Much of the debate has focused on immigration, sovereignty and the economy. However, what is unclear in the event of Brexit is what will happen to employment rights in the UK and whether they are at risk of being dramatically watered down.

EU law is of course the source of many of the UK’s employment rights From TUPE to the Working Time Directive. Many of our employment laws were already in place before the United Kingdom’s membership, for example unfair dismissal and redundancy rights.

Given the significant uncertainty raised by the EU referendum and to assist HR with contingency planning, we have focused on some of the key issues that may arise in the event of Brexit:-

In the event of Brexit what type of relationship would the UK have with the EU?

This question has been raised many times during the course of the various debates that have taken place in recent months. No member country has ever left the EU (apart from Greenland when it left the EEC in the 1980’s) and therefore it remains unclear in terms of the type of relationship that will follow. It is especially unclear whether it will cost more to trade with the EU and its effect on the free movement of people and workers, and those who already live and work in another EU country. Other European countries who are not part of the EU but who are part of the European Economic Area (EEA), for example Iceland and Norway do business with the EU and are governed by various rules relating to the principle of the Single market and free movement of people and goods.

In relation to the rights of EU nationals working in other EU member states, transitional arrangements would no doubt form part of any negotiations and it is likely that EU nationals already working in the UK would be permitted to stay in return for similar arrangements for UK citizens working in other EU countries. The main issue will be on future immigration into the UK where a points-based system similar to the Australian model has been mooted.

In the event of Brexit how long would it take the UK to leave the EU?

In the event of Brexit, it is likely that it will take some time to withdraw from the EU and to negotiate various complexities for the process and eventual date of leaving. The most likely scenario is that it would take a minimum of two years’ for the UK to leave the EU and the fact of withdrawal will need to be ratified with the EU and the terms agreed. Once again we are stepping into the unknown because it is the first time that a member state will have left the EU.

What are the likely implications for UK employment law?

The current thinking from many lawyers and commentators is that a vote to leave the EU would not have any immediate impact on UK employment law and that many of our current laws, both domestic and EU orientated, would be retained. It is likely that it would take some time to formally withdraw as a member of the EU and in that period most employment laws will probably remain unchanged.

Another scenario depends on the UK’s post Brexit relationship with the EU and whether the UK will be required to retain any EU orientated employment laws in exchange for entering into any trade or other deals. It is also important to remember that many of the employment laws that have originated from the EU for example TUPE have become inherently built into work-place practices and procedures, especially where there is a trade union presence and recognition. It would also be politically unattractive for any political party to propose dismantling employee and workers’ rights even from businesses who now accept the need for minimum legal standards in the workplace.

Let’s have a look at some of our employment laws in more details and analyse the effect that Brexit might have on them:

1. Unfair Dismissal and Redundancy

These rights were implemented in the UK before our membership of the EU. There has been some tinkering with these rights over the years for example in relation to the qualifying period of continuous employment required in order to make a claim for unfair dismissal. This is currently two years. It is therefore likely that Brexit will have little impact on these rights and will be better protected in the event of a future Labour or Coalition government.

2. Parental rights

Here we are talking about statutory maternity, paternity, parental and adoptive leave and associated pay. It is a myth that but for the EU, workers in the UK would not receive these rights. The fact is that some of these rights for example shared parental leave which came into effect last year originated in the UK. In addition to this, many of these rights are more generous in the UK than in other EU member states. It is therefore unlikely that Brexit will have much if any impact on these rights and their maintenance and any improvement is likely to depend on the state of the economy and the political colour of the Government.

3. Unlawful discrimination

Once again the UK has been consistently ahead in implementing anti-discrimination laws, which first came into effect in the 1970’s with sex discrimination and race discrimination protections. Today various protected characteristics are now enshrined in law to include age discrimination, disability discrimination, sexual orientation discrimination and religious and/or belief discrimination. It would be politically suicidal for a future Government to scrap or water down these protections and it might be a condition of the EU to maintain these rights in principle for future trade deals. It might be more likely that a future Government might introduce some changes for example implementing a financial cap on employment tribunal awards.

4. Working Time rights

Statutory annual paid holidays (20 days plus bank holidays) in the UK were introduced in 1998 as a result of the EU Working Time Directive. This also protected worker’s rest breaks, and hours of work, although the UK won an opt-out in that workers could not be forced to work more than 48 hours per week. Although unpopular with some businesses, these rights have become entrenched into our employment culture and it would be not be a popular move for a future Government to abolish or significantly water down these protections. A future Government may abolish the 48 hour opt-out or may strengthen it.

5. TUPE

This is one of the earliest and most complex pieces of legislation to emanate from the European Economic Community (EEC) as it was then known. It is unlikely that Brexit will change the fundamental way in which employees are protected in the event of a sale or purchase of their employer’s business. Once again these rights have become entrenched into UK employment law practice. The more likely scenario is that there may be a few minor changes, for example in the arena of collective consultation. This is nothing new as the Government has already reduced the consultation period for collective redundancies from 90 days to 45 days for those proposing redundancies of 100 or more employees.

6. Data Protection rights

As the UK will want to continue trading with the EU, the UK will no doubt have to continue to comply with the ‘safe harbour’ rules relating to the transfer of data between countries including the USA. Data protection from an HR perspective has also become so entrenched into good HR practice policies and procedures that it is unlikely that these will be abolished.

7. UK case law and sovereignty

This is a difficult area to predict. Currently the UK is bound by decisions of the EU Courts, for example the European Court of Justice (ECJ), and current decisions are unlikely to be affected. However in the event of Brexit, all future decisions will be determined by the UK Courts, including the Supreme Court. It will be interesting to see what happens where the UK courts have to for example rely on old ECJ decisions, to facts that are similar in the future and whether they can deviate from those precedents.

Summary

It is difficult to forecast with absolute certainty the impact of Brexit, as we are stepping into unknown territory which brings with it many future uncertainties for UK employment law. However it does seem sensible to assume that Brexit would not result in an immediate wholesale change to our laws. The more likely scenario will be a negotiation of the UK’s relationship outside the EU lasting a decade or more. During that negotiation, it is likely that the UK will want to access the EU single market and in return it is highly likely that the UK will have to maintain minimum standards in relation to its domestic employment laws and the free movement of people both inwards and outwards. On the other hand the country might vote to remain in which case not much will change and our employment laws will continue to evolve at both a domestic and EU level.

Call Steven Eckett on 020 7998 7777 for more information or email him at steven.eckett@bloomsbury-law.com.

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What Are The Implications For UK Employment Law In The Event Of Brexit?

Leading Solicitors in London