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Brexit and employment law: What you need to know

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You will not have been able to escape the fact that there is a referendum in the UK later this month in relation to our membership of the European Union (EU), commonly referred to as Brexit.

There has been much media coverage about this impending “in-out” referendum but what would be the likely implications for employment law?

Possible implications of a Brexit

Currently, as the polls stand it looks hard to call as to whether we will remain in the EU or vote to leave.  However, if the “in” vote succeeds then little will change.

But what if we do elect to Brexit?

A significant proportion of the UK’s employment law comes from the EU. This includes:

  • Discrimination rights;
  • Collective consultation obligations;
  • TUPE;
  • Family leave;
  • Working time regulations; and
  • Duties to agency workers.

In theory, therefore, if the UK votes to leave the EU, the UK government could repeal all of this legislation.  Clearly, this would lead to massive changes to the landscape of employment law.  However, even if we do Brexit, the government is very unlikely to throw out all of our current laws on the above.

What is likely to happen?

Instead, it is far more probable that EU law will continue to exercise a significant influence on us even after a potential Brexit.

Why?  A common perception is that EU law can “tie us up in knots”, so why wouldn’t we abandon it if we were able to?

Some EU employment laws merely incorporated protections that were already provided by UK law. For example, UK equal pay, race and disability discrimination laws preceded EU anti-discrimination obligations. Similarly, there was a UK right of return to work from maternity leave before EU maternity leave rights were implemented. It is not likely that the government would want to roll back on these protections that they pioneered initially.

Some of our laws go further than the EU law on the same subject – such as our family friendly leave rights.  It would be unlikely that the government would implement enhanced rights over and above the EU requirements and then seek to repeal it.

An even more compelling reason for the UK to continue to observe EU law is the need to remain in a relationship with the EU. The price of a trade agreement with the EU is likely to be an adherence to a certain amount of EU employment and social protection.

So, what, in reality, may happen if we vote for Brexit?

Discrimination rights and Brexit

Significant changes to the Equality Act 2010 would be highly unlikely.

Some commentators have suggested that free from EU constraints, a cap could be imposed on discrimination compensation similar to that for unfair dismissal. Another possibility is that the government could change the law to allow positive discrimination in favour of under-represented groups in a way that is currently impermissible under EU law.

Collective consultation obligations and Brexit

Collective redundancy consultation obligations were reduced by the last government.  The obligation is now not particularly onerous and trade unions are likely to fight any plan to remove it altogether.

Other collective consultation rights such as works councils and transnational works councils are possible candidates for removal, but the obligations imposed by them on UK businesses are relatively light.

TUPE and Brexit

TUPE can attract a lot of negative press, but the principle that employees in a transferred business or undertaking should transfer with it is often useful for businesses and is incorporated and priced into many commercial outsourcing agreements.

Although there may be some businesses that would like to get rid of TUPE, it seems more likely that, following a Brexit, the government would make small changes to make it more business-friendly. For example, it might choose to make it easier to harmonise terms following a TUPE transfer.

Family leave and Brexit

Rights to parental and family-related leave in the UK are a mixture of rights deriving from the EU and rights originating in the UK.

UK maternity leave and pay preceded the EU rights and are more generous than those rights in some respects. The relatively, newly launched, right to shared parental leave and the right to request flexible working are purely domestic in origin. Accordingly, although some critics consider these rights to be a burden on business, there seems little political appetite for their repeal or even for watering them down.

Working time regulations and Brexit

The right to a statutory paid holiday is now well established and it would be deeply unpopular with workers and trade unions if it was removed. This right is also now broadly accepted by most employers.   For these reasons, a wholesale repeal of the Working Time Regulations 1998 (WTR) s unlikely.

However, there are aspects of the right to paid holiday and other rights under the WTR that the government may want to amend if it was not prevented from doing so by the membership of the EU.   Various ECJ decisions on holiday pay are unpopular with UK businesses, for example, the right to keep accruing holiday while on sick leave and the fact that holiday pay should be based on all aspects of remuneration, not just basic pay.

Following a Brexit, the government may choose to deal with these unpopular elements by legislating to clarify the position.

Duties to agency workers

The most obvious candidate for complete revocation is the Agency Workers Regulations 2010 (SI 2010/93) which are complex, unpopular with businesses and have not yet become embedded in a way that might make them politically difficult to remove.

What does this mean for you?

If we do Brexit, the process of disentangling the UK from its EU commitments will be a lengthy process.

The UK is required to give two years’ notice of an intention to leave the EU. During this period, the parties would negotiate the terms of the departure and it is likely that new trade arrangements would be put in place. The government could then gradually repeal EU-derived employment laws (if it chooses to), or, as is perhaps more likely, modify them to make them more palatable to UK businesses.  Alternatively, of course, they may decide to take no action at all.

What is clear is that it is unlikely that the government would want employers to have to deal with an avalanche of legal changes following a potential Brexit.  What seems more likely is that the government will take a piecemeal approach, keeping the majority of EU employment law but with minor modifications.

Ultimately, even if the UK were to leave the EU, it seems unlikely that UK employment law would be transformed in significant ways, particularly in the short term.

If you want any advice in relation to how a potential Brexit may affect you and your business, or on any other aspect of employment law or HR please do not hesitate to contact me on 01332 227 595 or emma.tice@flintbishop.co.uk for a confidential chat.

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