What’s The Next Move? The Potential Impact of Brexit on UK Employment Law

Following the resignation of David Davis as Brexit secretary, the impact of the government’s plan for Brexit appears more uncertain than ever. Amid speculation that the consensus reached between Cabinet ministers last Friday has now collapsed, it is unclear what direction the coming negotiations with EU representatives will take and what concessions the UK government will be forced to make.

Some clarity regarding the impact on UK business of the Brexit process has been supplied by the EU Withdrawal Act 2018 which recently received the Royal assent, but this itself was subject to fierce debate as it passed through Parliament.  In the House of Commons, the government was defeated once, in December, over giving Parliament a “meaningful vote” on the final Brexit deal.  The EU Withdrawal Act will repeal the 1972 European Communities Act which took Britain into the EU and meant that European law took precedence over laws passed in the UK Parliament.

Whilst the EU Withdrawal Act does not result in any immediate changes in employment law, and existing legislation and case law continues to apply, employers would be wise to consider how those areas of legislation which are likely to be affected by Brexit will impact their business.  Whether the UK can depart from current EU requirements in the future will depend on the shape of the UK’s future relationship with the EU. Alternative trade arrangements may involve accepting some, or all, EU employment legislation.

Even if the UK has scope to diverge from EU employment law, the EU Withdrawal Act means that changes may not necessarily be immediate on the point of Brexit or as far reaching as had once been feared.

Much of EU employment law has been brought into effect via UK legislation, which will remain in force post-Brexit unless and until amended.  Changes to primary legislation require Parliamentary approval and the government of the time will need to consider whether reform is politically desirable. The UK has come to expect a certain level of workplace protection, and wholesale changes to the likes of, for example, discrimination law, seem highly unlikely and in fact many employment rights, including unfair dismissal and the minimum wage, do not in fact stem from the EU.

In other cases, the UK deliberately provides protection which exceeds the EU minimum: prime examples being maternity leave and the right to 5.6 weeks’ holiday (as opposed to the EU four-week minimum). Withdrawal from the EU is therefore unlikely to prompt a change to government policy in these areas.

Although, post-Brexit, UK courts and tribunals would not refer cases to the European Court of Justice or be obliged to follow new decisions from that court, it is less clear how they would deal with existing UK case law stemming from EU decisions. High profile examples include sickness absence and holidays; and the inclusion of certain payments in holiday pay. It is likely that tribunals would continue to apply the previous decisions of a higher UK court unless or until that higher court or Parliament took a different approach.

Employers’ internal policies and even contracts of employment often reflect certain EU rights relating to, for example, working time, sickness absence and equal opportunities. Reducing these entitlements could be difficult both from a legal and employee relations perspective.

David Davis, the former Brexit secretary, indicated that existing employment law will not be radically changed. He blogged that “Empirical studies show that it is not employment regulation that stultifies economic growth… Britain has a relatively flexible workforce, and so long as the employment law environment stays reasonably stable it should not be a problem for business. There is also a political or perhaps sentimental point. The great British industrial working classes voted overwhelmingly for Brexit. I am not at all attracted by the idea of rewarding them by cutting their rights.” However, it is so far unclear whether the new Brexit secretary, Dominic Raab, will share these views.

If a future deal gives the UK scope to diverge from EU employment law, and in an effort to bring some certainty to a very unclear situation, this table sets out what might happen to some key employment rights, although changes would of course be highly dependent on the future political make-up of Parliament.