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Brexit - what it means for UK employment law

Employers and employees alike will wonder what the vote to leave the EU will mean for UK employment law going forwards.  

Our article in May set out the potential implications of Brexit. The same considerations apply now that the referendum result means negotiations for a UK exit will likely begin later this year. Here are the key points:

  • Article 50 of the Treaty on European Union has to be triggered to start the process of the UK's exit from the EU. There will then be a two year period of negotiation, which could get extended if agreed by the other Member States.  As such, the UK will remain a member of the EU for at least a two year period during which EU law will apply in full throughout.  This means that the EU-derived elements of UK employment law will remain the same until that period is over.
  • What then happens will depend on the exit deal negotiated by the UK government. Given the current political uncertainty, it cannot be predicted what model that may take.  
  • Two models that have been put forward as possibilities are based on the relationship with the EU maintained by Norway and Switzerland, involving either membership of the European Economic Area or a series of bilateral trade agreements with the EU. Both would see the UK bound by most if not all EU employment legislation (amongst other things), with the decisions of the Court of Justice of the European Union binding or at least persuasive.  As such, if a similar model is adopted it is unlikely that significant changes to the EU-derived elements of the UK employment landscape will result.
  • A third possibility is that the UK negotiates its own stand-alone trade deal with the EU. The ramifications for employment law will depend on what aspects of employment law the EU requires compliance with in return for the trade agreements sought.
  • If the UK is able to negotiate an exit deal whereby it is released from its obligations to comply with EU employment law then the most likely candidates for change are the holiday accrual when off sick and holiday pay rules originating from the Working Time Directive, the inability to harmonise terms and conditions following a TUPE transfer derived from the Acquired Rights Directive and the rights of agency workers contained in the Agency Workers Directive.  
  • Whilst a consequence of repealing the European Communities Act 1972 (the UK legislation providing for incorporation of EU law) may be that the domestic regulations (such as the TUPE Regulations and the Working Time Regulations) enacted under it fall away, this would leave such a lacuna that the status quo is expected to be maintained, at least initially.  The expectation is that any subsequent changes to secondary legislation would be made on a piecemeal basis depending on what is allowed within the remit of the deal reached with the EU.
  • It seems doubtful that anti-discrimination or family friendly rights would be subject to significant watering down (bar the potential introduction of a cap on discrimination compensation) due to both the risk of political backlash as well as the fact that these protections have become embedded into our day-to-day working culture.
  • The impact of EU case law on UK employment law is likely to remain significant for at least the short term due to the system by which our courts have to take into account the decisions of higher domestic courts, many of which have been influenced by European decisions.
  • Areas of UK employment law that do not have their origins in EU law, such as unfair dismissal, shared parental leave and the national minimum wage, are unlikely to be subject to change as a result of Brexit alone.
  • Any potential changes will take time to implement, even after the minimum two year negotiation period is over. As such, it is expected that employers will have sufficient advance warning to be well placed to prepare for any changes as part of their business plans.

We are in an unprecedented situation and no one can predict exactly what will happen and the potential impact on UK employment law. However we will monitor and keep you up to date with developments. For now, the message is business as usual.

Contributor: Amy Whiting

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at June 2016. Specific advice should be sought for specific cases. For more information see our terms & conditions.

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