How will Brexit Impact on UK Employment Law?

On 23 June 2016, 52% of UK citizens voted to leave the European Union (EU), otherwise known as “Brexit”. What effect will this have on current employment protections in the UK?

Pam Sidhu, Head of Employment at The Wilkes Partnership, considers the impact of leaving the EU on UK employment laws.

No immediate impact in the short term

Firstly, there is no need to panic. A two year notice period is required prior to the UK being able to officially leave the EU, so any potential changes will not be implemented before late 2018 at the earliest.

The Government is yet to invoke Article 50 of the EU Treaty, in order for the notice period to start running. It appears that the Government is in no great hurry to start this process until it has a clearer idea as to what agreements it will be able to negotiate with EU countries.

What will happen when the UK finally exits the EU?

The UK’s main trade union body, the Trade Union Congress (TUC), previously expressed some concerns that many workers’ rights protected by EU law may come under attack if the British people voted to leave the EU.

Pam Sidhu comments: “Any major change to UK employment law following Brexit is unlikely. Some employment rights granted to workers in the UK are actually more favourable than the equivalent rights conferred by EU law, for example maternity and certain other family friendly rights. These seem likely to stay, regardless of Brexit. Certain other rights like the right to claim unfair dismissal and statutory redundancy pay are in fact pure “English” rights and are therefore also likely to remain”.

“It seems unlikely that the Government will remove significant employment protections currently in place – although Brexit means that there is now the power for the Government to make changes in order to limit the scope of some employment protections, if it wishes to do so”.

Here are the possible implications of a Brexit in relation to different areas of employment law:

• Discrimination: The UK already had sex, race, equal pay and disability discrimination laws, but the EU extended their scope. There has been some discussion by commentators that the Government may consider placing a cap on the compensation available in discrimination claims, similar to the cap in place for unfair dismissal claims. (Currently compensation for discrimination is uncapped, but compensation for unfair dismissal claims are limited to a year’s pay or £78,962 whichever is lower.)

• Transfer of Undertaking Regulations: The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) give workers quite far reaching protections where businesses/services are sold or outsourced. Although many businesses may prefer to remove TUPE altogether, it seems more likely following Brexit that the Government may amend TUPE in certain limited respects, for example, make it easier for businesses to harmonise employment terms following a TUPE transfer.

• Family Leave: The current provisions relating to maternity and paternity leave are a mixture between UK and EU law. Although some employers consider these provisions to be a burden on businesses, they are now so entrenched within the UK system that it seems unlikely that the Government will repeal or reduce the rights currently in place.

• Working Time Regulations: These rights derive from the Working Time Directive was implemented in the UK in 1998. Undoubtedly, certain aspects of the regulations remain unpopular amongst employers, for instance, the 48 hour cap on the number of weekly working hours which the Government may consider repealing. Also, after Brexit is finally implemented, the UK Courts will be free to interpret UK legislation without having to follow decisions of the European Court of Justice, which sometimes interprets employment rights set out in the legislation more widely than UK judges (for example, discrimination rights and more recently with regard to calculation of holiday pay under the Working Time Regulations).

• Agency Workers: The Agency Workers Regulations 2011 resulted in a pay rise and improved holiday entitlements for some agency workers. It appears that this would be the most obvious area for complete revocation as the changes made under EU law were not popular with many UK businesses and have not become entrenched in the same way as other EU legislation.

• Freedom of Movement: It is possible that UK nationals living and working in other EU countries (and vice versa) would no longer benefit from having the automatic right to do this. The UK Government has made clear that such people do not have to immediately return to their country of origin, however in the longer term that may be the case.

The Government is yet to negotiate a trade agreement with EU countries and currently, the view taken by a number of EU leaders is that the UK must accept freedom of movement and acceptance of certain employment protections, if it is to operate within the European Economic Area (EEA). Alternatively, the UK may negotiate trade agreements outside of this option, which may be more complicated and involve little or no acceptance of EU employment protections and/or freedom of movement. Therefore, the abolition of freedom of movement or repeal of any employment law whatsoever, is far from clear at this stage. For now, it is business as usual.

To discuss anything arising from this update, please contact Pam Sidhu or any member of the Employment Team on 0121 233 4333.