Impact of Brexit on UK Employment Law

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Many in the UK are in a state of shock. The vote, narrowly, and with significant geographical and demographic variations, is to leave.  What impact will this have in relation to UK employment law?

  1. Significant elements of UK employment law derive from EU Directives
    Currently, many significant elements of UK employment law derive from EU directives.  For example, TUPE, of significant relevance to business acquisitions, derives from the Acquired Rights Directive, obligations to collectively consult derive from the Collective Redundancies Directive, many aspects of discrimination legislation, the Working Time Regulations and many elements of UK family friendly legislation; for example, protecting employees over periods of maternity and providing paternity leave. UK case law on these issues has also developed in line with European Court of Justice decisions on these European wide directives.  In due course, therefore, it is clear that the decision to leave the EU has the potential to have a significant impact on UK employment law.  It also means that the likelihood of divergence between employment law in the UK and in other European countries will increase.
  2. Timeframe for change
    Technically the UK is required to give two years’ notice to leave the EU.  There will not, therefore, be any immediate change.  It is, however, noteworthy that the instant reaction from Jean-Claude Juncker, the Head of the European Commission, was that the UK should begin the process as soon as possible, to avoid prolonging uncertainty.
  3. What is likely to happen?
    The recent vote is itself a reminder of the danger of making predictions.  Certainly, in due course, it may be that elements of current UK employment legislation are repealed.  It seems unlikely, however, that this will happen on a wholesale basis as many elements of this legislation provides for  significant employment rights, and ,removing these rights would be politically difficult.  What is more likely is that much of the current legislation will be retained, but that UK legislators will take the opportunity to amend or remove particular parts of the legislation perceived to be most burdensome to business.
  4. Possible impact key areas

    TUPE


    The concept of TUPE applying to a business acquisition has been a central element of UK employment law for many years, since the TUPE regulations first came into force in 1981.  Business, therefore, is very familiar with TUPE applying in this scenario.  Further many perceive certain advantages in this legislation, in that TUPE provides an automatic mechanism for the transferring of staff.  The UK also chose of its own volition to add an additional element to TUPE, not required by the Acquired Rights Directive, that the service provision change transfer, a specific type of transfer, with a view to providing certainty that TUPE will apply in an outsourcing scenario.  

    Given this, it may well be that the TUPE regulations are retained. Even if retained, however, certain provisions may be amended.  For example, the issue which has caused much frustration to those acquiring work forces under TUPE, has been the difficulty of harmonising terms and conditions after transfer.  It could well be that the opportunity would be taken to simplify this provision.

    Working Time Regulations
    These Working Time Regulations provide for a cap on maximum working hours and a right to minimum periods of holiday. Removing the right to minimum periods of holiday would be politically controversial as it would be seen as a significant reduction of employee rights. What may be less controversial, however, and more consistent with seeking to remove unnecessary burdens, would be to remove the cap on maximum weekly working hours.

    Discrimination Law
    UK discrimination legislation was consolidated within the Equality Act 2010, a UK act of Parliament  To repeal the Equality Act and, therefore, the various forms of protection against discrimination which it provides, would be very politically controversial and seems unlikely.

    Family friendly rights
    Family friendly rights encapsulates a number of rights including maternity leave and pay, paternity leave and parental leave.  Whilst much of this derives from EU directives, there are also important elements, some of them recently introduced, for example, the right to shared parental leave, which is UK specific.  Both major political parties have also, in recent elections, stressed the importance of this type of right.  It, therefore, seems unlikely that there would be significant change in this area.

    Collective redundancy consultation
    The Collective Redundancies Directive requires an employer to carry out collective consultation with its workforce in advance of significant “collective” redundancies.  In the UK, this currently applies where an employer proposes to dismiss 20 or more employees.  These obligations were relatively recently reduced within the UK, so that the requirement to engage in consultation is for 45 rather than 90 days, as previously, where proposing 100 or more redundancies. Further watering down, or removing, this particular right, would again be politically contentious and is, therefore, probably unlikely.

    The Agency Workers legislation
    This particular legislation, deriving from the Agency Workers Directive, has always been particularly unpopular with UK business.  In short, it requires no less favourable terms for temporary agency staff than permanent employees after a 12 week qualifying period.  It is far from straightforward for UK employers to deal with.  It is certainly likely that those who pushed for Brexit would seek change here and this would be unlikely to be strongly opposed by business, and possibly even Trade Unions, insofar, as their members are generally permanent employees rather than agency workers.
  5. Conclusion - a period of uncertainty
    There are, of course, very significant issues for UK businesses to grapple with following on the recent vote.  What will happen in relation to UK employment law is, by no means, the most important of them.  There is certainly, however, the potential for significant change to UK employment law, in due course, following on from the decision.  This will not happen overnight, however. In practice, it seems likely that those obligations deriving from EU Law which are perceived to be unnecessarily burdensome to business will be removed, but that those providing core employee rights will remain in place.  We will keep you informed of significant developments.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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