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Brexit: Employment Law Exit Stage Left?

01 April 2016 #Employment


In a word, unlikely.

Will Brexit mean exit?

Firstly, what do we mean by Brexit? Although the question that the electorate will answer on 23 June 2016 is simply framed – “should the UK remain a member of the EU or leave the EU?” – the ramifications of an “out vote” will be anything but simple.

What will actually happen following an out vote will be primarily politically driven (much like the fact and timing of the Conservative Government’s offer of a referendum in the first place).  The immediate concern for the Government will be to commence the lengthy withdrawal process – taking a minimum of 2 years.  The withdrawal process would essentially be a negotiation of the UK’s future relationship with the EU.

A complete separation is extremely unlikely.  Instead, the UK would seek a trade deal and the EU would likely impose conditions on such a deal including the UK’s compliance with key EU laws and some form of agreement on the movement of people.  Norway, for example, is not a member of the EU but instead is part of the European Economic Area (EEA); as such, it pays nearly as much per head of population as the UK does now, is still subject to many EU laws yet has no say in the law-making process.

Impact on employment law

So, if there is an out vote, and assuming that the UK Government negotiates an alternative relationship with the EU, what will this mean for UK employment law?

Very little would change overnight. The Government’s priority would be to minimise uncertainty whilst it focuses on negotiating exit terms.  The status quo as far as employment law is concerned would remain, at least for the medium-term.  Once the exit process is complete and the new relationship with the EU settled, then the Government of the day would set about unravelling the complex body of employment law to strip out those EU derived laws for which there is no political will to retain. Another General Election must take place before 7 May 2020 and so it may well be the Government appointed following that election which has the task of reforming the law; the colour of that new Government will determine the extent of legal reform.

Our membership of the EU is often blamed for the increasingly complex and burdensome legislation which employers have to grapple with. Recent decisions of the Court of Justice of the EU (CJEU) on the Working Time Directive (accrual of holiday during sick leave, working time and mobile workers and calculation of holiday pay) have added fuel to this particular fire. It is true that much of the employment legislation in the UK is derived from the EU: part-time and fixed term discrimination legislation, TUPE Regulations, Data Protection Act. However, this is not to say that the UK would not have had similar or equivalent legislation in place if it was not within the EU.  Many EU laws reflect established international standards and simply replicate or augment existing UK laws; for example, equal pay and most other discrimination laws.  Other laws, although derived from the EU, were voluntarily extended by the relevant UK Government when implemented into national law. The recent Coalition Government did attempt to remove some of this “gold-plating” for example by consulting on the removal of the service provision change provisions in the TUPE Regulations (added in 2006). However, ultimately, despite having the opportunity to strip back the law, Government retained the service provision change provisions. There is a strong likelihood that many laws would be retained voluntarily because it would cause too much disruption to business to remove them.

Although change to employment law would likely be slow and modest, the prime suspects for removal/serious reform would be the Agency Worker Regulations and aspects of the Working Time Regulations. Tweaks are likely to TUPE (for example, making it easier for employers to make changes to terms and conditions following a transfer) and discrimination legislation (some commentators consider that a cap to compensation, currently unlimited, is likely).  The other likely, and more immediate, change would be the increased flexibility UK Judges would have to interpret domestic legislation. At the moment, Judges are obliged to interpret UK legislation which implements EU law in a manner consistent with the purpose of the EU law. This has led to Judges effectively rewriting UK legislation, most infamously recently on the issue of holiday pay.

What will Brexit mean for your EU national employees?

Currently, of course, there is no restriction on the movement of EU citizens and so UK businesses are free to employ any EU nationals and vice versa, British nationals are free to work anywhere in the EU.

As with the impact on employment law, it is highly likely that any trade deal with the EU would involve agreement on a relaxed (as opposed to free) movement of workers regime. It is again likely that there would be a moratorium in the immediate aftermath of a Brexit vote and then a transitional arrangement for those EU nationals who are already working in the UK. 

In conclusion…

A Brexit vote would create a significant amount of uncertainty which would extend for years as successive Governments grapple with the difficult tasks of negotiating a new relationship with the EU and then deciding whether, how and when to extract long-established EU laws from our legal system.

Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at employmentunit@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.

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Helen Beech

Helen Beech
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