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Brexit and employment law: Watch this space

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28th Jun 2016
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Last week’s unprecedented vote to leave the European Union could have far-reaching consequences for those seeking to do business in the UK. Toni Trevett, director of CompleteHR, outlines the key HR and employment law changes of Brexit, and examines their potential impact on businesses.

Immigration and Employment

The rights of EU citizens living in the UK may not be guaranteed and now could well be part of the negotiation with Europe. Although no change is likely in the short term, one inevitable consequence could be that people may need new documentary evidence of their right to remain.

The University of Oxford’s migration observatory unit recently revealed that employers in certain industries would face real difficulties recruiting the right number of skilled workers through their usual channels if the UK left the EU.

More than one in five EU migrants working in the UK last year were in the ‘distribution, hotels and restaurants’ sector – yet just 6% of all employees in that sector earn enough to qualify for the tier two visa that is required for non-EU labour migrants to move to the UK.

Our tier two visa system is currently the main route for visa applicants and operates on a points system similar to that of Australia, with salary, English-language fluency and other factors scored. After five years of continuous residency, visa holders can apply for the permanent right to remain in the country.

So the big questions are around what the EU negotiations will bring and whether work visa rules similar to the current ones we already have for non-EU citizens will be put in place. We will simply have to wait and see.

As for the 1.3m Britons living in other European Union countries, Thursday’s vote will also mean a period of uncertainty for them.

It could be that British expats may in theory become illegal immigrants if Britain does not maintain some form of freedom of movement as part of its settlement with the EU. However, not many of the specialists out there are predicting mass expulsions as a realistic possibility.

Again it appears to be a “watch this space” comment.

UK employment law after Brexit

Some existing UK employment laws have come about from the EU that the UK has been required to implement into domestic legislation. These usually take the form of directives. For example legislation protecting agency workers from the EU, the working time directive, was implemented into UK law by the working time regulations 1998, and then there is the often-hated acquired rights directive, implemented into UK law by the TUPE Regulations 2006.

In some cases we then also enhanced the requirements imposed. For example, the UK annual leave entitlement of 5.6 weeks goes beyond the minimum four weeks required by EU law.

There is also the equality act 2010, which is a combination both of various anti-discrimination EU directives and domestic discrimination protection in place prior to the relevant EU directives came into play. For example, the UK passed the legislation against racial discrimination, the race relations acts of 1965 and 1968, before we even joined the EU. Protecting employees against discrimination was therefore not a new concept to UK employment law and not one imposed on the UK by Europe.

Of course, EU court decisions have an impact upon our case law too as we are currently required to follow judgments of the court of justice of the European Union (the ECJ). This means that EU law is built into our own courts’ interpretation of domestic legislation, sometimes leading to amendments to our legislation to ensure compliance with EU law.

Nothing will change overnight

Remember the referendum itself does not have any legal effect and is simply an indication of the wishes of the voting public.

Having been an EU member for over 40 years, the form of relationship that will be maintained with the EU after a Brexit is a relative unknown. However, the expectation is that, as a minimum, some form of trade relationship would be maintained. Article 50 is unlikely to be invoked for at least three months i.e. post Cameron.

Then there is at least a two-year negotiation period that will follow. During these negotiations, the UK will remain a part of the EU and it will effectively be business as usual. Employee rights and freedom of movement for workers within the EU will remain, UK nationals will be able to travel freely and work in the rest of the EU, and EU nationals will be able to do the same in the UK. UK and EU nationals will continue to enjoy freedom of movement rights until the UK completes the legal processes for leaving the EU.

We may find that the UK remains bound by elements of EU law depending on the extent of the resulting trade agreement with the EU.

If, for example, the Norwegian or Swiss models are followed, many of the existing EU directives, such as on working time and TUPE transfers, would have to be followed. In addition, the decisions of the ECJ would likely still have to be adopted or would at least be persuasive on our UK tribunals and courts. In these situations, the scope for significant amendment to UK employment law will be limited.

The rights employees have when working in the UK are well known, regardless of their origin: paid holiday for 5.6 weeks pa, protection from discrimination and various family friendly rights, to name but a few. Making changes to them is unlikely to go down well amongst employees or trade unions.

Partial changes could be one outcome to those elements of UK employment law that have their origin in the EU. We might want to look again, if we can, at collective consultation obligations or the EU holiday pay case law, which requires the accrual of holiday entitlement for workers on long term sick leave.

What about the recent case law on the calculation and inclusion of elements other than basic pay on the holiday pay calculations such as overtime and commission? Then there is the restriction on an employer’s ability to harmonise terms and conditions following a TUPE transfer, another area where employers may be keen to see some movement. But for all those that may like to see amendment there will be a strong body of people whom will no doubt resist such change.

We are looking at least two years into the future and therefore simply cannot predict what parts of our existing law will be changed if any at this time.

So watch this space!

Replies (3)

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By neiltonks
28th Jun 2016 13:41

In my view, Brexit was never really about things like holidays and agency workers' rights. It's all about immigration and the rights of non-UK workers. Most of the changes can therefore be expected to affect this group. Even so, I think changes will largely affect future immigration. I doubt if there's an appetite for any removal of people who're already settled here and in work, as this would achieve nothing positive either for the individuals concerned or their employers.

Apart from that, I think changes may be limited to some tinkering with the more esoteric aspects of EU decisions such as holiday carry-forward during sick or maternity leave and perhaps the infamous "Alabaster" ruling on SMP.

As always, though, this is just speculation - we'll probably have to wait until early 2019 to know for sure.

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By mwngiol
30th Jun 2016 16:19

It'll be interesting to see what the Tories do on employee rights without having to adhere to any EU laws. We all know how much Tories hate employee rights.

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02nd Jul 2016 10:02

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