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.

 

Key Employment RightPotential impact of Brexit
 

Unfair Dismissal

 

UK-based right – does not stem from the EU: Brexit will have no direct impact.
 

Minimum wage

 

UK-based right – does not stem from the EU: Brexit will have no direct impact.
 

Unauthorised deductions from wages

 

UK-based right – does not stem from the EU: Brexit will have no direct impact.
 

Statutory redundancy pay

 

UK-based right – does not stem from the EU: Brexit will have no direct impact.
Industrial action

 

The detailed provisions on strike action are purely UK-based and Brexit will have no direct impact.
 

Pregnancy and maternity

 

 

 

 

 

Mixture of EU and UK-based rights.

UK rights go further than the EU minimum, for example providing 52 weeks’ maternity leave as opposed to the EU minimum of 14 weeks. Wholesale changes seem unlikely, however there may be a reversal of the current entitlement of workers on maternity leave to carry-over unused holiday entitlement to another leave year.

Paternity leave

 

UK-based right – does not stem from the EU: Brexit will have no direct impact.

 

Shared parental leave

 

UK-based right – does not stem from the EU: Brexit will have no direct impact.

 

Parental leave

 

 

 

 

EU-based right providing up to 18 weeks’ unpaid parental leave for each child – in the UK the age limit for this was increased in 2015 so it can now be taken up to a child’s 18th birthday. Given that the right is unpaid (which limits its actual uptake), and the age limit was recently increased in the UK, it is unlikely to feature high on a list of potential targets for change.
 

Flexible working

 

UK-based right – does not stem from the EU: Brexit will have no direct impact.
 

Working time

 

 

 

 

EU-based right.  The UK has its well-known opt-out provisions in relation to the 48-hour working week, and a future government might be keen to remove this limit altogether. There may also be calls to change the rules which mean that some on-call and travelling time counts as working time.
Holidays and holiday pay

 

 

 

 

 

EU-based right. Basic holiday provision is unlikely to be a target, given that the UK exceeds the EU minimum (providing 5.6 weeks’ holiday as opposed to the EU minimum four weeks).However, there may be a desire to reverse the current entitlement of workers on long-term sick or maternity leave to carry-over unused holiday entitlement to another leave year. A future government might also seek to exclude payments such as commission and overtime from holiday pay, contrary to the current direction of EU travel.

 

Collective redundancy consultation

 

 

 

 

 

 

 

EU-based right. Consultation periods were reduced in 2013 from 90 to 45 days for redundancies of 100 or more employees. This may have dampened the appetite for further change, although there might be calls to increase the threshold number of affected employees, so that collective consultation is only triggered for redundancies of 100-plus rather than 20-plus. Trade unions would be likely to strongly oppose any change. Other collective consultation rights which derive from  EU-based rights may be subject to change post-Brexit.

 

TUPE

 

 

 

 

 

EU-based right. The government previously stepped back from proposals to repeal the rules on service provision changes (which go beyond the EU minimum) on the basis that the rules provided certainty. We might, however, see changes making it easier to harmonise terms and conditions following a transfer, or the watering-down of information and consultation rights.

 

Rights on insolvency

 

 

EU-based right of employees to claim certain sums from the Secretary of State if their employer becomes insolvent.

 

Agency workers

 

 

 

 

 

 

 

EU-based right. The right of agency workers to the same basic working conditions (for example, pay and annual leave) as equivalent permanent staff after 12 weeks wasn’t popular at government level when it was introduced, and is a likely candidate for change if a future government has a deregulatory agenda. On the other hand, given the low level of employment protection available to agency workers at present, a government from the opposite end of the political spectrum might consider it a priority to increase protection (which is possible under current EU law).
 

Discrimination

 

 

 

 

 

 

 

 

 

 

 

 

The UK had protection against sex, race and disability discrimination pre-EU, but these rights have been extended by the EU, and additional protections added, including discrimination on the basis of age, religion / belief and sexual orientation. Discrimination laws have become accepted in workplaces and society as a whole, and wholesale changes seem unlikely. However, there may be a desire to introduce a cap on discrimination compensation (which is not currently allowed under EU law), similar to that for unfair dismissal. Some commentators have indicated that age discrimination might be a target as there is less political consensus on the need for this, but our view is that given the political desire for older workers to continue in employment beyond traditional retirement age, this seems unlikely.
Fixed-term employees

 

 

 

 

 

EU-based right protecting fixed-term employees against less favourable treatment in comparison to permanent employees.

Those arguing for a removal of ‘red tape’ and an increasingly ‘flexible’ labour market may target these rules.

Part-time workers

 

 

 

 

 

 

EU-based right protecting part-time workers against less favourable treatment in comparison to full-time workers. Those arguing for a removal of ‘red tape’ and an increasingly ‘flexible’ labour market may target these rules, however, some female part-time workers may still be able to claim that any less favourable treatment amounted to indirect sex discrimination (since the majority of part-time workers tend to be female).

 


Fitchett & Co, Employment Law Specialists, are able to offer employment law advice and support to employers who have been affected by any of these issues. Call 01483 243 587.