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Brexit and the implications for employment law

Posted on 22nd September 2016
Briefing note

The major news over the summer was the 'Brexit' vote. Currently we are waiting for Theresa May to trigger article 50 of the Lisbon Treaty to formalise the UK’s exit from the European Union (‘EU’). Work has already commenced within the Civil Service to work out how the UK will extricate itself from the EU. This includes considering what will happen about laws that the UK has derived from the EU.

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Marsha Robinson Marsha
Robinson
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Although difficult to say with any certainty, the impact of Brexit on UK employment law is unlikely to be significant

What impact has the EU had on UK employment legislation?

EU laws have had a significant impact on domestic employment legislation.  For example, regulations surrounding working time, discrimination, family leave and health and safety have all been influenced by EU law.

The European Council enacts an EU Directive and then the UK and other member states are obliged to implement the substance of that Directive by whatever means they choose.  For example, the Working Time Regulations 1998 (‘WTR 1998’) implements the European Working Time Directive, which limits the working week and sets daily and weekly rest breaks.

As part of the EU we are also bound by decisions from the European Court of Justice (‘ECJ’), which influences not only new legislation but the decisions of domestic judges.

There has been much discussion about whether the European influence has been a force for good in respect of workers’ rights or has led to unnecessary and unworkable red tape for UK businesses. Whatever your opinion, we do have a comprehensive, and in many ways complex, body of employment law partially as a result of the EU.

Are we likely to see changes once the UK withdraws from the EU?

It is doubtful we will see significant changes, particularly in the short term. Any attempts to repeal laws that provide what are fairly accepted standards of protection for employees are likely to prove unpopular with the voting public.  For example, we are unlikely to have a UK government that would attempt to remove the right of workers not to be discriminated against on the grounds of a protected characteristic (e.g. age, race, gender and disability).

The UK may also choose to continue to observe key elements of EU law in order to facilitate brokering a trade agreement with the EU.

If the government were to make significant changes this would also potentially increase the burden on employers in respect of compliance. Many employers will already be aware that ensuring compliance with existing laws can be a challenge and so making changes just for the sake of it is also unlikely to be popular.

It is also worth noting that in some areas UK law goes further than is required by EU law, and in fact gives workers and employees increased rights or entitlements. For example, the EU Working Time Directive requires full time employees to be given a minimum of 20 days annual leave, whereas the WTR 1998 increases this to 28 days per annum.

What does all of this mean?

The reality is that some of our domestic UK legislation does not come from the EU. For example Shared Parental Leave legislation is home grown and it is likely the UK government will continue to consider new legislative proposals on a case by case basis.

Some areas of legislation are particularly unpopular with employers, none more so than the Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘TUPE’). TUPE is a complex area of law, which prohibits any changes to an employee’s terms and conditions of employment by a new employer upon the transfer of a business entity, unless that change is for an ‘economic, technical or organisational’ reason. This can be difficult for employers who want to harmonise the terms and conditions of employment of their new transferring employees with their existing employees. This is an area of change the government may target.

Another unpopular area of legislation is the Agency Worker Regulations 2010, which provide agency workers with some of the same basic employment conditions as employees. Employers have found this restrictive, making it more difficult access to a temporary and flexible work force. The government may also decide to review this.

The UK may also take the opportunity to clarify or change some areas of law that ECJ decisions have left confused or which are particularly unpopular. For example, in the case of Lock v British Gas Trading Ltd the ECJ held that commission payments should be taken into account when calculating holiday pay rather than basic salary alone. This has proved unpopular with employers and may be something the government will address.

Summary

Although difficult to say with any certainty, the impact of Brexit on UK employment law is unlikely to be significant, particularly in the short term. Extricating ourselves from the EU is anticipated to take a minimum of 2 years (probably longer). So watch this space for updates once we are all a little clearer on when and how our exit will take place.

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