Brexit and Employment Law

As has been widely reported, we are still some way off knowing precisely the effect that Brexit will have for businesses going forward. The UK government will first need to invoke Article 50 which will formally notify Brussels of the intention to leave the EU. Following this, at least 2 years of negotiations will take place. Depending on the terms reached and whether the government agrees to retain the EU employment regime as part of any deal, post-Brexit, the UK will no longer be bound by EU directives dealing with the workplace.

From this point the UK will be able to make its own workplace laws and repeal any existing rules that the government of the day dislikes. The general consensus is that any post-Brexit changes are likely to be modest, rather than a wholesale rewriting of the rules. Any changes will also depend on the makeup of the government of the day if and when a formal Brexit eventually occurs. The reasons for this include the fact that many UK laws which originate from the EU have become accepted into the workplace. It is difficult to see that a future government will get a mandate to claw back some of the developments in employment law which are popular with workers.

A complete rewriting of the statue books in relation to employment law would be a huge undertaking and would cause more uncertainty in an already unprecedented situation. This would make a complete rewriting of the law unattractive. Furthermore, much UK employment law is entirely home grown, such as unfair dismissal rights and some pre-dates the EU. The UK government has also extended some legislation that has its roots in the EU, taking it beyond what was originally envisaged by Brussels. Taking TUPE as an example, this was derived from an EU Directive. In 2006, it was the UK government that introduced the idea of “service provision change” to cover outsourcing situations. These domestic concepts are unlikely to be amended as a result of Brexit.

We are also unlikely to see a scaling back of family friendly rights or discrimination protection because these have been extended over time. Any attempts to remove these rights are likely to be seen as a backward step and to be unpopular with workers. Furthermore, a fair proportion of these rules are domestic rather than EU based. For example the extension of the right to request flexible working was an entirely domestic decision. Maternity rights also go beyond the basic EU requirement.

So what might change?

Clearly there are some unpopular laws that have their roots in Brussels, these include:

• Agency Worker Regulations which are generally unpopular with employers.
• Working Time Regulations, the recent case law and current uncertainty about holiday pay calculations have probably increased employer’s distaste for these regulations.
• The headline grabbing compensation limits in discrimination claims may be capped, the CBI has argued for this in the past.
• Caps on banker’s bonuses introduced by the Capital Requirements Directive may go, not least because this may give the UK a competitive edge in terms of enticing banks to locate within the UK and to attract talent unimpeded by these rules which apply throughout the EU.
• TUPE is unlikely to be abolished, but there may be changes to the rules around harmonisation of terms and conditions between the existing and incoming workforce post transfer. This is a key area that causes headaches to employers and a loosening of the rules is likely to be popular with employers.
• It is possible that domestic courts will interpret differently any EU laws that are retained post-Brexit because they will no longer be required to follow the Court of Justice of the EU. Any difference between the two courts’ approaches is likely to cause difficulties for employers operating across the EU and UK.

Another issue for employers is the concept of freedom of movement. It is likely that there will be a degree of free movement in exchange of free movement of goods. At the moment it is impossible to predict what this may look like. For now the existing arrangements will continue and there are likely to be transitional arrangements before any changes are introduced.