With the European Union Referendum results now the subject of much furore both nationally and internationally Julie Dalzell, Senior Associate, Jacksons Law Firm, takes a look at the employment landscape moving forwards.
There has been a great deal of highly charged speculation as to what a future outside of the EU will hold for UK businesses and individuals in the long run up to the referendum. Employment is one of the principle sectors in which the influence of the EU is most significant. A large proportion of the UK’s employment law comes from the EU, including discrimination rights, collective consultation obligations, transfer of undertakings regulations, family leave, the Working Time Regulations and duties to agency workers.
In theory, in the wake of Brexit, the UK Government could repeal all of this. The reality is that the Government is unlikely to take such a step and it is much more probable that EU Law will continue to exercise a significant influence, even after a Brexit, for the foreseeable future.
The reasons for this are the following:-
- Some EU employment laws merely establish protections that are already provided for by UK law. UK equal pay, race and disability discrimination laws preceded EU anti-discrimination obligations. There was a UK right of return from maternity leave before EU maternity leave rights were implemented. But even without such pre-existing UK rights it is highly questionable how far the Government will be able to go in reality to repeal such imbedded employment protections.
- The price of a trade agreement with the EU is likely to be adherence to a certain amount of EU employment and social protection.
- As everyone following the news today will be aware, disentangling the UK from its EU commitments will be a lengthy process. The UK is required to give 2 years notice of an intention to leave the EU. During this period, the parties would negotiate the terms of the departure (with a mechanism for extending the negotiating period should both sides agree to do so) and it is likely that new trade arrangements would be put in place. The timing of the notice to quit is entirely a matter for the UK Government and with David Cameron announcing his resignation this morning it seems that notice to quit will not be served until there is a new leader in place which may not be till October. It could therefore take a lengthy period to reach any concluded agreement (commentators this morning are talking about two and half years) which would then need to be placed before the UK Parliament for ratification with the possibility that either house might refuse to ratify the agreement. Whilst all of this is going on the influence of the EU will be preserved.
- Assuming that the continuation of favourable trading arrangements with the EU is the desired outcome the options for what the UK’s relationship with its former EU partners might look like following Brexit range from continuing membership of the European Economic area in the same manner as Norway, bilateral Trade Agreements with the EU in the same manner as Switzerland, or a bespoke UK solution, as yet unknown.
Subject to whatever deal is done and the current government still being in place when the exit is finally achieved it seems that the most likely area for complete repeal is the Agency Workers Regulations 2010 because of their complexity, unpopularity with businesses and the fact that they have not become imbedded in a way that might make them politically difficult to remove.
It is unlikely that there would be a wholesale repeal of the Working Time Regulations 1998 as the right to statutory paid holiday is now so well established. There are undoubtedly aspects of the right to paid holiday and other rights under the Working Time Regulations that the Government may want to amend such as the right to keep accruing holiday while on sick leave and the fact that holiday pay should be based on all aspects of remuneration and not just basic pay. The UK may also wish to remove the cap on maximum weekly working hours under the WTR.
All things being equal other likely candidates for amendment are compensation limits in discrimination cases, with the imposition of a cap similar to that for unfair dismissal. There may also be an appetite to amend the rules in relation to compensation for injury to feelings in discrimination cases and the burden of proof rules that apply in such cases.
Aspects of the Transfer of Undertakings (Protection of Employment) Regulations 2006 may be amended to make more business friendly such as the rules in relation to informing and consulting and the ability to harmonise terms following a TUPE transfer.
The last Government reduced collective redundancy consultation obligations with any further reduction likely to be subject to a fight with the Trade Unions, particularly in light of the restrictions on the ability to take industrial action that will come into effect when the Trade Union Bill 2015/16 receives royal assent. Other collective consultation rights such as work councils and transnational work councils are possible candidates for removal although the obligations imposed by them on UK businesses are relatively light.
During the period over which negotiations to leave the EU will occur the UK will of course still be subject to EU legal obligations. There are a number of potential reforms that the EU institutions are currently working on including a directive that would extend the principle of equal treatment outside the labour market; a directive that aims at improving the gender balance on boards of listed companies; and a new posted workers directive relating to pay equality. The European Commission has also undertaken an impact assessment of the working time directive. There are no definitive timetables for the introduction of any new law on the back of these initiatives and any changes to the legislation are likely to be in the form of directives, with member states being given time to implement their own domestic legislation. Therefore, it is possible that the UK would not be obliged to comply with any new legislation in these areas before leaving.
One change that is likely to come into force before departure, however, is the General Data Protection Regulation, which is likely to be applicable from the spring of 2018. The Regulation will introduce common standards across the EU relating to the protection of individuals with regards to the processing of their personal data and the movement of such data. The proposed standards are more onerous than those currently applicable in the UK under the Data Protection Act 1998 and their application is likely to be a topic for negotiation between the UK and its EU partners relating to any Brexit arrangements.
In summary, it is a case of watch this space for those with an interest in employment laws and the vote yesterday has certainly not signalled the end to the speculation and debate from all sides as to what a future outside the EU holds for employers and workers alike.
In the immediate aftermath of the vote, if the markets cannot be stabilised quickly, one unwelcome but probable consequence, will be at best a restriction on recruitment and at worst a loss of jobs.
The employment team at Jacksons Law firm will look to provide further updates as the legislative landscape for businesses becomes clearer in the weeks and months to come.
Please contact Julie Dalzell on 01642 356510 or email mailto:jdalzell@jacksons-law.com for more information.
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