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Managing Brexits – Breaking up is hard to do?

04 November 2016

Whatever side of the debate you were on, there can be no doubt that the referendum vote on 23 June this year was one of the most significant political and economic events for many decades. The recent High Court decision on the challenge to the government’s right to implement Article 50, demonstrates the complexity of the issues, and the state of confusion that prevails.

Some commentators have suggested that an exit from Europe means an end to “red tape” for employers.  No longer will they be told what they can and cannot do, and they will be free to run their business as they see fit, hiring and firing whoever they wish.  

Douglas Strang
Douglas Strang, Senior Associate 

Such a (perhaps) Utopian vision is unlikely to come to fruition, however.  What will Brexit mean for employment law and employers?

To answer this is, quite simply, to speculate.  We do not know what the post-Brexit arrangements will be, even in relation to fundamental issues as to freedom of movement and freedom of trade (which may, in itself, require the UK to continue to observe EU law).  Whether we are heading for a “hard” or “soft” Brexit is inevitably a matter of speculation at this stage.  So what do we know?

The nature of our post-Brexit relationship with Europe could, under a “soft” Brexit, require that we continue to be subject to European Directives and other laws – it would not therefore be possible to abolish rights based on European law.  On the other hand, European-based rights could be abolished if the UK left the EU and EEA, and had no formal ongoing relationship that required compliance with EU law. Even in that event, would rights based on EU law simply vanish overnight?

What we do know is that current UK legislation, even where it is based on and/or required by European law, will continue in full force and effect, notwithstanding Brexit, until such time as it is repealed or amended by the UK parliament. 

European law itself (Treaties, Directives etc) would no longer have the potential for direct effect, however, and decisions of the European Court of Justice would no longer be binding. 

Existing decisions of the UK courts/tribunals, where EU law has been implemented, would continue to be binding until steps were taken, through legislation, to reverse the effects of these decisions. 

What employment law provisions will survive an exit from the European Union, assuming that Parliament would have the power to overturn any legislation based on EU law?  This requires an assessment of the political reality of whether it will be feasible to abolish employee rights that already exist.  Theresa May has recently stated that “existing workers’ legal rights will continue to be guaranteed by law” after Brexit, and for as long as she is Prime Minister.  We all know, however, that assurances from politicians do not always stand the test of time. 

The following is necessarily speculative but we have considered which areas of employment law might see some legislative change post-Brexit.

  • An area which may well see significant change (and is at the core of the entire Brexit debate) is the issue of free movement, and who has the right to work in the UK.  All EU nationals currently have the right to live and work in the UK and if access to the European free market is to be maintained, free movement is likely to have to stay.  Failing that, there will be new rules for who can work in the UK and these will inevitably be complex.  How to deal with those EU nationals who are already living and working here will be a key issue. 

  • Many employment rights are not based on European law, but were developed within the UK.  Logically, Brexit (of whatever nature) should have no impact on these areas at all.  Therefore provisions relating to unfair dismissal, the national minimum wage (living wage) etc are likely to continue unchanged

  • TUPE (the transfer of undertakings) is often seen as a particularly EU-based provision, and it is, but it must be remembered that TUPE in the UK goes beyond what is required by EU law.  The whole concept of a service provision change (which causes so much difficulty and uncertainty for contractors) is a UK development and not required by EU law.  It seems unlikely therefore, as we already go further than EU law, that any major changes to TUPE would follow Brexit.

  • Discrimination: it would take a very brave (and perhaps foolish) party to propose in its manifesto that it intends to make it easier for employers to discriminate against employees on grounds of a protected characteristic.  UK law has often been ahead of EU law in terms of introducing protections for persons with a protected characteristic, and there is no reason to think that this proud tradition would not continue.  

  • Other areas of law could see tweaks, but likely not any fundamental changes.  We could see reduced protection for agency workers, and perhaps changes to the thresholds required to trigger collective redundancy consultation.  The maximum 48 hour week may well be abolished entirely as this is something that has been repeatedly opposed in the UK.  Payment for holidays could well revert to “basic pay”, thereby avoiding the current “hot topic” in relation to overtime, bonuses, commission and other allowances.

A complete exit from the EU and its laws may simplify matters in the long run (as legislation will no longer be subject to interpretation in line with European law) but in the short term there may well be a raft of changes and tweaks to legislation, which employers will need to keep themselves aware of.  We are of course on hand to assist employers with any queries, and will keep our clients and contacts updated as to any changes as they occur.

Contact: Douglas Strang Senior Associate T. 0141 221 8012


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