Employment Law: The Impact Of A Brexit

The referendum on whether Britain stays in the European Union (EU) is being held on the 23rd June 2016.

As with all other areas of life, a Brexit (i.e. a British exit from the European Union) would have a significant impact on employment law. This is because a significant amount of employment law, as it currently stands, emanates from EU directives and law. Nevertheless, there are many areas that do not, and which would be unaffected by a Brexit. For instance, law pertaining to statutory redundancy pay, unlawful deductions from pay, vocational training, union activities, unfair dismissal, industrial action, and the national minimum wage, all stem from domestic law. Some domestic legislation also predates EU membership, such as the law on equal pay in the form of  the Equal Pay Act 1970, and on sex and race discrimination. Also, compared with the EU, some UK law provides enhanced rights, such as on flexible working, statutory holidays, and maternity and paternity rights.

How much legislation will be repealed? Much will depend upon what the UK’s subsequent relationship with the EU will be, and that will take some time to negotiate. Nevertheless, the EU is likely to require the UK to retain much of its EU derived employment law legislation as part of a new deal. Non-EU member Norway, for example, is a member of the European Economic Area (EEA), and as such is subject to EU employment policy. Accordingly, it has had to ensure that its law complies with EU employment law. Likewise, therefore, when renegotiating its relationship with the EU, the UK is likely to have to do the same, especially if it joins the EEA. Furthermore, repealing employment law and removing peoples employment rights is hardly likely to be a vote winner. Moreover, the withdrawal negotiation would likely take at least 2 years, and during that time, it is anticipated that nothing will change. A further consideration is that if there were an attempt to make significant changes by the UK Government, then that may prompt retaliatory action from the EU on the basis that it provides the UK with an ‘unfair’ competitive advantage.

One area in which a Brexit could potentially have a significant impact is on free movement, under which EU citizens have the right to work anywhere within the EU. That gives citizens of other EU nations the right to live and work in the UK, and vice versa. If the UK were to leave, then this automatic right would end. However, what would happen in practice is likely to be very different, as the EU would almost certainly demand an element of free movement during the negotiations over the new relationship. As part of the new deal, the two sides would probably also agree that those EU citizens already working in the UK could stay, in return for UK citizens living in other EU countries also being granted the right to remain.

What legislation could end up being repealed in the event of a Brexit? Most vulnerable are the following?

  • The Agency Workers Regulations 2010. This legislation is probably the most likely to be repealed, a move that would significantly reduce agency workers rights.
  • The right to be informed and consulted on collective redundancies
  • The Transfer of Undertakings (Protection of Employment) Regulations 2006. At present, there is a duty to inform and consult on a transfer, and employees terms and condition are preserved. These rights may be watered down in terms of providing greater scope to change the terms and conditions of employment to better suit the new employer.
  • The Working Time Regulations 1998. This legislation imposes a maximum 48 hour week and rest breaks, unless individual employees opt out. This is vulnerable to repeal or a dimishing of the rights it confers
  • Discrimination claims – a cap on damages awarded. Currently, claims for unfair and constructive dismissal are subject to a cap, whereas damages awards in discrimination claims are unlimited. This may change in the event of a Brexit, with a cap potentially being imposed on compensation awards for discrimination claims.

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