This article was published prior to the publication of the post-Brexit agreement between the UK and EU which covers the relationship between the UK and EU following the end of the implementation period (commonly referred to as the “transition period”) created by the European Union (Withdrawal Agreement) Act 2020, and should be read in that context. For up-to-date commentary and information on our services, please see our Beyond Brexit page.
There are few areas of law so influenced by the European Union than that of employment law. From regulations over working time, to discrimination and family friendly rights, to the rights of employees on the transfer of a business, it would be fair to say that the EU has been the leading source of legislation on workers' rights in the UK in recent times.
So, now that the UK has voted to leave the EU, what will the impact be on employment law in the UK?
Immediately, very little. All EU directives are incorporated into UK law by regulations and by statute. The fact that the UK is leaving the EU will not of itself repeal those, now UK, laws. We would need to positively repeal each and every piece of UK legislation. This seems highly unlikely for two main reasons.
- Firstly, as has been reported so widely, the UK's key priority in negotiating its exit from the EU will be to maintain strong trading relations and agree appropriate trade deals. There are a number of models which may ultimately be adopted, but it seems inevitable that whichever route we take will involve us remaining bound by some of the key European employment law rights, particularly in relation to working time. If we were able to employ workers on less onerous terms, we would be able to undercut other European countries as a result of our lower staffing costs which is simply not going to be acceptable to the EU.
- Secondly, most of the laws derived from the EU are now so embedded in our culture that it is inconceivable that they would be repealed on a wholesale basis. In many cases, the minimum standards set out by the EU are now viewed as fundamental rights which simply reflect the accepted standards of practice in employee relations. Indeed, the UK goes beyond those minimum rights prescribed by the EU in some areas such as paid annual leave, and maternity rights.
So, does that mean nothing will change at all?
Probably not. There are some laws inherited from the EU which have never sat comfortably within UK law and have been criticised by employers as cumbersome and overly restrictive.
Our top three contenders for repeal or amendment:
- Working Time
As mentioned previously, the rules set out in the Working Time Directive, as implemented into UK law in the Working Time Regulations, have generally become embedded into our culture and are unlikely to be negotiable in the face of potential trade deals with the EU. However, recent years have seen decisions from the European Court of Justice ("ECJ") interpreting those rights in a manner which has been both unpopular and confusing for UK businesses. In particular, the decisions relating to the right to accrue holiday whilst on long term sick leave and for remuneration beyond basic pay (for example, certain overtime payments and commission) to be included in the calculation for holiday pay, have left questions unanswered and increased costs for employers. It would be no surprise if the UK government used the opportunity of exiting the EU to provide much needed clarity in this area, and a potential retreat from the ECJ decisions.
One of the biggest problems employers face when taking on a workforce following a transfer under TUPE, is that TUPE only allows a transferee employer to make changes to the terms and conditions of transferring staff if the changes are unconnected to the transfer, or if there is an economic, technical or organisational ("ETO") reason for the change entailing changes in the workforce. This has proved an exceptionally difficult hurdle to get past when employers look to harmonise terms and conditions between their existing and new workforce. It seems likely that, free from the constraints of EU law, the government may look to remove these fetters from employers seeking to harmonise terms and conditions following a transfer.
- Agency workers Regulations
The UK's Agency Workers Regulations implement the EU Temporary Agency Workers Directive and require employers to offer agency workers, who have been working for them for 12 weeks, terms and benefits equal to their employees. These regulations have been heavily criticised and are unpopular with employers. Given the ambivalence of the unions towards these regulations, it seems highly likely that this legislation may find itself under attack following the exit from the UK.
Other areas which may be affected could be the introduction of the long suggested cap on awards in discrimination claims and the reining in of the collective consultation requirements in redundancy situations. Arguably more significantly, we may not see workplace rights in the UK progressing and developing at the pace it has in recent years, without the influence of the EU behind it. However, for now at least, it is likely that the status quo will be sustained.