Brexit – UK employment law implications?

As has been widely reported, the Prime Minister, David Cameron has announced that the referendum on the UK’s continued membership of the European Union (EU) will take place on Thursday 23 June 2016. The Prime Minister will campaign for the UK to remain in the EU following negotiations last week in Brussels which secured an agreement on changes to the UK’s relationship with Europe.

The political parties’ positions

The Conservative Party has pledged to be neutral in the run up to the referendum while Labour, the SNP and the Liberal Democrats are all officially in favour of remaining in the EU. There are some high-profile conservatives who will campaign to leave the EU notably, Boris Johnson and Michael Gove. Labour’s Kate Hoey and Graham Stringer are also backing a UK exit.

Brexit – UK employment law implications

This post examines the implications for employment law if the decision is taken that the UK will leave the EU. If that were to happen, the UK would have to give notice to the EU which would begin an irreversible process of negotiation, limited to a period of two years. During that time it is likely that the UK would seek to put in place agreements with the EU on trade.

Much UK employment law comes from the EU, particularly many discrimination rights and family rights, the requirement to undertake collective consultation, transfers of undertakings (TUPE), working time and the rights of agency workers. If the UK were to leave the EU then the government could decide to scrap all of this legislation. However, that seems to be very unlikely for a number of reasons. Repealing discrimination law or family rights would be very unpopular and even though most commentators agree that TUPE could be significantly simplified, it would be unlikely that any government would remove completely protection on transfers.

Wholesale repeal of UK employment law unlikely

Wholesale repeal may also be difficult if the UK wants to retain trade relationships with the EU. Members of the European Economic Area (EEA), Norway, Iceland and Liechtenstein while unable to vote on EU law are in large part governed by its requirements because of their trade relations with the EU. It seems likely, if the UK were to leave the EU, that most employment law would remain unchanged, at least in the short term. If nothing else, it would be extremely difficult to dismantle the existing arrangements quickly.

However, commentators are suggesting that a post-exit UK government might decide to place a cap on discrimination compensation, in the same way that compensation for unfair dismissal is presently capped. It could put in place changes to make it easier to harmonise terms and conditions of employment following a TUPE transfer and may remove the legislation on works councils. The 48 hour working week, which has never been popular in the UK might be repealed as might the existing case law on the accrual of holiday while an employee is absent from work due to sickness.

Immigration

Of significant interest to employers would be the UK’s position on immigration after a decision to exit the EU. There would be no automatic right for EU citizens to work in the UK meaning that UK businesses may find themselves banned from recruiting labour they are used to recruiting from inside the EU.

Whatever happens following the referendum, it seems unlikely that there will be radical change in employment law, at least in the short term. In any case, even if the UK does decide to leave the EU the process will take up to two years before the ties are finally broken.

23 February 2016

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