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20 July 2016
On June 23 2016 the United Kingdom voted to leave the European Union. The implications for the workplace could be major, as a significant proportion of UK employment law comes from Brussels. Once out of the European Union, the UK government could theoretically repeal laws such as those related to discrimination, collective consultation, transfer of undertakings, family leave, working time and duties to agency workers. But would the government do that?
Many EU employment protections – such as equal pay, race and disability discrimination laws, and the right to return from maternity leave – existed in some form in the United Kingdom before they were imposed by Europe. It seems unlikely that a UK government would rescind rights that pre-date European laws. Another reason that the government might be reluctant to repeal employment law protection is that much of it is regarded – by employers, employees and even politicians – as a good thing. Employment rights such as family leave, discrimination rights and the right to paid holiday are now widely accepted; indeed, family leave rights in the United Kingdom go further than those required by EU directives.
One pragmatic reason for the United Kingdom to continue to follow European employment law is so that it can continue to have a trading relationship with the European Union, its biggest export partner, but without full EU membership. The arrangements that Switzerland and countries in the European Economic Area such as Norway have with the European Union involve adherence to a significant amount of EU employment law. Any trade agreement between the United Kingdom and the European Union is likely to require something similar.
It will take some time for the United Kingdom to extricate itself from the European Union. Two years' notice is required, during which period the parties will negotiate the terms of departure and possibly put in place new trading arrangements. Some commentators believe that it will take considerably longer to agree exit terms.
Even after the process has been completed and the United Kingdom has left the European Union (and assuming no other restrictions imposed by another free trade agreement), European law may continue to apply in one way or another because disentangling it from UK law will take some time. Some EU-derived laws are contained in secondary legislation made under powers granted by the European Communities Act 1972, the law that implements EU law in the United Kingdom. If the European Communities Act is repealed, all secondary legislation made under it (eg, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE)) will fall away unless preserved by another piece of legislation. The repeal of the European Communities Act would not, however, affect EU law implemented through primary legislation, such as the Equality Act 2010. Primary legislation would remain in force until it was repealed piece by piece.
It is therefore unlikely that all EU law will be removed at once. A gradual approach is more likely, with legislation being repealed or merely modified over time. So, if freed from European constraints, what is it likely that the government would actually change?
The most likely contender for complete revocation is the Agency Workers Regulations 2010. These are unwieldy, unpopular with business and not noticeably popular with workers either.
Discrimination and family leave
Any wholesale repeal of equality protection or family leave seems improbable. Although the government could repeal the Equality Act after exiting the European Union, it would be a controversial move. It is difficult to imagine many employers arguing that they should be free to discriminate and any change to the existing regime of direct discrimination, indirect discrimination and harassment seems unlikely. There may, however, be some small modifications. It is possible that, following Brexit, a cap could be imposed on compensation for unlawful discrimination. Another possibility is that the government could change the law to allow positive discrimination in favour of under-represented groups in a way that is currently impermissible under EU law.
Rights to parental and family leave in the United Kingdom are a mixture of rights deriving from the European Union and rights originating in the United Kingdom. UK maternity leave and pay preceded the EU rights and are more generous in some respects. The new right to shared parental leave and the right to request flexible working are both purely domestic in origin. Accordingly, although some critics consider these rights to be a burden on business, there seems little political appetite to repeal them or even to water them down.
Transfer of undertakings
TUPE can attract a bad press, but the principle that employees should transfer when a business changes hands or is contracted out is often useful for business and is incorporated and priced into many commercial outsourcing agreements. For this reason, although some businesses might like to get rid of TUPE, it seems more likely that the government will make some small changes to make it more business friendly, such as permitting the harmonisation of terms following a transfer.
Holidays and working time
The right to statutory paid holiday under the Working Time Regulations 1998 is also now broadly accepted. However, there are aspects of this right, and of other rights under the Working Time Regulations, that the government might want to amend if not prevented from doing so by EU membership. Various European Court of Justice (ECJ) decisions on holiday pay are unpopular with UK businesses – for example, the right to keep accruing holiday while on sick leave and the fact that holiday pay should be based on all aspects of remuneration, not just basic pay. The government might choose to tweak these laws to make them more commercially acceptable, such as by retaining a right to paid holiday based on basic pay while limiting rights to accrue and carry over holiday pay. The United Kingdom may also wish to remove the cap on weekly working hours under the Working Time Regulations. It is less clear that there is demand to limit the Working Time Regulations rights to other rest breaks or the protections for night workers.
Collective redundancy consultation
Collective redundancy consultation obligations were reduced by the last government. The requirement is now not particularly onerous and it is not clear what might happen to it following Brexit. Trade unions are likely to fight against any proposal to remove it altogether, but employees arguably do not feel strongly about this right (and many do not know about it). On the other hand, it is not obvious that businesses regard it as a burden that should be removed. Similarly, other collective consultation rights such as national and transnational works councils are possible candidates for repeal, but the obligations they impose on UK businesses are relatively light.
If the United Kingdom retains some EU law following Brexit, the UK courts are likely to continue to regard judgments of the ECJ on those laws as persuasive, even if not binding. In any event, pre-Brexit UK court decisions incorporating ECJ reasoning would remain binding on lower courts and tribunals. It is not clear how far UK courts would be able to treat Brexit from the European Union as a material circumstance that would allow them to depart from precedent. They might do so, but could feel obliged to follow precedent to preserve legal certainty.
It seems likely that UK employment law will not change significantly, particularly in the short term.
For further information on this topic please contact James Davies at Lewis Silkin by telephone (+44 20 7074 8000), fax (+44 20 7864 1200) or email (firstname.lastname@example.org). The Lewis Silkin website can be accessed at www.lewissilkin.com.
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