INSIGHT: What effect might the Brexit have in the workplace?

Posted on June 27, 2016

Susan Mayall looks at how employment laws might be affected by the UK’s vote to leave the EU.

(This is an updated version of Susan’s article of 21st June.)

A substantial element of the UK’s employment laws come from the European Union (the EU). Now that the UK has voted to leave the EU (the “Brexit”) some fundamental changes to the laws that cover the workplace may lie ahead. I say “may” because the reality is, no one really knows what will happen next.

My colleague, Keith Kennedy, has outlined the general issues that face businesses in the event of a Brexit. Click here to read his article.

In this article, I look specifically at what might happen to our employment laws. Could the Government now get rid of (or “repeal”) those laws?

The general approach to employment law in the UK

The UK’s employment laws incorporate a whole body of EU law that cover the relationships between employees and employers in the workplace. Those laws ensure the fair treatment of all employees by providing for equal pay, the right to paid holiday leave, race, disability and anti-discrimination laws. They allow parents to take maternity or paternity leave to spend time with their families. They regulate the conditions of those working through agencies as well as employees’ working hours through the Working Time Regulations and also protect those who work for businesses that have been sold (under the “TUPE” regulations – see below).

Will those employment laws now change following the vote for a Brexit?

Many of our employment laws were in place in some form before the EU laws were applied and it is at the very least arguable that the gradual application of the latter in the UK over the last few decades has benefitted life in the workplace. While most people might complain to some extent about Brussels’ over-enthusiastic application of “red tape”, it could be argued that many of the regulations have improved working conditions.

The government is hardly likely to change laws that protect employment rights and provide fair and safe working environments. Many of these laws are therefore likely to stay at least in the short to medium term. And don’t forget also that any changes in favour of employers are likely to be resisted by the trade unions in particular.

That said, businesses are likely to want some adjustments to ease the onerous effect of some of the laws on the day to day running of their business. For example:

The Agency Workers Regulations give employees the equivalent rights of pay to agency workers as those given to permanent employees, once the agency worker has been in 12 weeks of employment. These rules are deeply unpopular with employers for obvious reasons and it is likely that opponents of the regulations will welcome the chance to repeal these laws.
Holiday pay laws: employers must calculate holiday pay based on all elements of an employee’s pay. This might be changed to a calculation based on just their basic salary.
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246) (TUPE) provide that employees of a business being sold must be transferred with the business. This can make life difficult for some buyers although most businesses buying a new business tend to regard it as an advantage and plan for the transfer of the employees. The government may however, make changes to make the transfers smoother.
Businesses trading with EU businesses will still have to ensure that they meet the current high standards of data protection of their customers’ and trading partners’ personal information under the Data Protection Act 1998 if they want to continue with such trade. It is likely that the government will ensure the UK laws keep up to date with those under the EU laws. (And note that there are changes ahead – under the General Date Protection Regulations which are due to be implemented in 2018).
Anti-discrimination laws under the Equality Act 2010 are unlikely to change – although there is a possibility that the government may introduce a cap on the amount that can be awarded for discrimination and may also allow positive discrimination in favour of those groups that are under-represented.
Some businesses depend heavily on both the skilled and unskilled labour of EU workers or on their UK workers working in businesses in the EU. Currently, all EU nationals have an automatic right to live and work in EU countries. David Cameron has provided some comfort that workers’ rights to free movement within the EU will remain in the short term – but as he leaves 10 Downing Street in October, the uncertainty for EU workers in the UK and vice versa remains. The UK may have to make some emergency provisions to cover these workers. There could be a short term “amnesty” to allow workers to stay where they are. Or new immigration laws might be introduced to allow such workers to apply for visas or citizenship. Whatever is decided, the loss of the current freedom of movement in the EU, could prove difficult for those who rely on overseas labour.
Decisions of the EU Court of Justice after the terms of the UK’s departure are agreed and in place would no longer be binding on the UK courts. However, the UK courts are likely to continue to apply previous EU judicial precedents at least in the short term if only to maintain basic judicial certainty about the law as it stands.

Remember that the UK will have to renegotiate its trade agreements with the EU and as part of those negotiations, our former EU partners might insist we keep some of the EU laws despite the decision to leave.

Be prepared!

In conclusion, I wouldn’t count on any radical changes to our employment laws in the near future - but do be prepared for some staffing issues particularly if you rely on EU workers.

To discuss how Brexit might affect your business, please contact Susan Mayall on 0161 684 6948 or email enquiries@pearsonlegal.co.uk

Also in this issue of Insight

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.