It's official! Britain has voted to leave the European Union!
Whether they are cheering or crying into their cornflakes, employers across the country need to start thinking about the implications of Brexit for their business and their workforce. So much of our employment law has originated from Europe so what will happen in practice once we are no longer part of the European Union?
The UK is required to give two years' notice of its intention to leave the EU so any changes to employment law will not be considered for some time. However it is useful to look now at the implications of Brexit on the legal framework which governs UK workplaces.
Most people do not appreciate just how much of UK employment law comes from the EU. Discrimination rights, collective consultation obligations, transfer of undertakings regulations, family leave, working time regulations and duties to agency workers all stem from European directives. In theory, the UK government could repeal all these laws. However most commentators believe that the government is unlikely to do this. Brexit is unlikely to have a dramatic impact on UK employment law, at least in the short to medium term. In particular:
- Some of the protections employees now enjoy under EU employment law 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 from maternity leave before EU maternity leave rights were implemented. It is not likely that the government would want to remove these longstanding protections.
- Even where there is no pre-existing UK law, the government is unlikely to remove well established protections such as family leave, discrimination rights and the right to paid holiday.
- The UK will have to retain a relationship with the EU going forward and the price of a trade agreement with the EU is likely to be adherence to a certain amount of EU employment and social protections. This is already the case, for example, for the non EU members of the European Economic Area such as Norway.
Free Movement of Workers
There are currently large numbers of UK nationals living and working in other EU countries and many nationals of other EU member states living and working in the UK. Going forward, these individuals will no longer have the automatic right to do this.
It is impractical for these people to be required to return immediately to their country of origin so some form of interim arrangement seems likely. In the long term it may be that people from EU member states who wish to come and work in the UK will go through an immigration system similar to that in place for non EU nationals, which may in turn result in a wholesale reform of the immigration system to cope with the increased number of people making applications to work in the UK.
The real question is whether in practice the UK will be able to negotiate a trade agreement with the EU without agreeing to the free movement of labour so it may be that after all the noise, very little will change when it comes to EU nationals coming to live and work in the UK.
The Equality Act 2010 which implements the UK's laws against discrimination, is primary legislation, so will remain in force even if the legislation that incorporates EU law (the European Communities Act 1972 (ECA 1972)) is repealed. The government could now repeal the Equality Act but this is extremely unlikely given the UK’s longstanding commitment to equality legislation.
Any fundamental change to the existing regime governing direct discrimination, indirect discrimination, victimisation and harassment also seems unlikely. It may be however that there will be an element of tinkering round the edges. For example, some commentators have suggested that a cap could be imposed on discrimination compensation similar to that for unfair dismissal. Another suggestion 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.
Parental Leave and Pay
Rights to 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. Both the right to shared parental leave and the right to request flexible working originate in the UK. It is unlikely that there will be any change to family related rights going forward.
Working Time and Holiday
Most employees take their right to statutory paid holiday for granted and do not realise that this right comes originally from Europe. A move to remove this right would surely be politically disastrous for the government. This right is also now broadly accepted by most employers. For these reasons, a wholesale repeal of the Working Time Regulations 1998 (WTR) is unlikely.
However, there are aspects of the rights under the WTR that the government may want to amend. In particular, the recent decisions of the European Court of Justice on the calculation of holiday pay, rolled up holiday pay, and the right to holiday during periods of sickness absence have been extremely unpopular and caused problems for UK employers. It is quite likely that the government will take steps to reign in or reverse the impact of these decisions.
The government may also consider the removal of the cap on maximum weekly working hours under the WTR, legislate to clarify what is considered as working time, particularly in relation to mobile workers, and look at simplifying and/or modifying the right to rest periods and rest breaks.
There will be many employers in the UK who hope that the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) will now be removed or watered down. However, this is a piece of legislation which has been in place since 1981 and most employers now accept that employees in a transferred business or undertaking should transfer with it and should enjoy some element of protection in the event of a transfer. It is quite likely however that the government will make some changes to TUPE to make it more employer friendly. The obvious candidate for reform is the issue of harmonisation of terms and conditions following a TUPE transfer, and this is an area where the government may well make changes which are aimed at making life easier for employers.
The other potential candidate for reform is the service provision change however the concept of service provision change was introduced into the 2006 TUPE regulations by the UK government and does not come from Europe. The government has already considered and decided against reforming this part of TUPE. It is unlikely to make any further substantive changes as a result of Brexit.
(Also see below - collective consultation)
The removal of collective redundancy and TUPE consultation obligations is likely to be resisted by the unions. However, given that many employees are not aware of or do not feel strongly about their right to be consulted, it is possible that these obligations may be watered down or removed altogether. Other pieces of legislation related to collective consultation providing for works councils and transnational works councils may also be under threat, although as the obligations imposed on UK businesses are relatively light, it may be that the government leaves them in place.
Perhaps the one piece of legislation most at risk going forward is the Agency Workers Regulations 2010. These regulations are complex, unpopular with employers, and have not yet become embedded in a way that might make them politically difficult to remove.
The Data Protection Act 1995 implements the European Data Protection Directive in the UK and so is a piece of legislation which could be repealed once we have left the EU. Most commentators believe this is unlikely given the widespread public concern about potential misuse of personal data.
The real impact of a Brexit will be in relation to the need to transfer personal data from UK companies to companies based in Europe. Under current arrangements, there is a built in facility for the transfer of personal data within the EU. Once the UK is outside the EU those arrangements will no longer apply. If UK businesses want to operate in the EU (or EU businesses in the UK) they will have to transfer personal data between the UK and EU member states and there will need to be adequate protections in place equivalent to the current ones. If the UK does decide to abide by the EU regime, it will have to update the DPA 1998 to take account of the new General Data Protection Regulation, which is expected to be adopted around Easter 2016 with an implementation date in 2018.