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Employment law implications of Brexit

25/07/2016 | Andrea London

In the run up to the EU Referendum held on 23 June 2016 one of the arguments focused on by the leave campaign was the amount of ‘red tape’ imposed on the United Kingdom by European law and the ability to remove this should the UK leave the EU. Whichever side of the EU debate you were on, there can be little doubt of the direct and substantial influence that European law has had on the UK’s domestic law, especially employment law.

So, what now for UK employment law following the result of the referendum? Here are some answers (or perhaps just further considerations) to some of Brexit’s big questions and a look at several issues that employers may be faced with immediately.

What will happen to EU Directives and Regulations currently applicable in the UK?

In the short term there is a simple answer to this question; nothing. At least not until the UK has actually triggered Article 50 (see http://rosenblatt-law.co.uk/bulletins/brexit-what-happens-next/), undergone the negotiation process and officially left the Union.  Additionally, David Davis – the Brexit minister – has given a “strong indication” that existing employment law will not be radically changed once the UK has left the EU, although the “flood” of new regulation from Europe would be halted. That said, he was not specifically referring here to employment law, but also other market-related regulations many of which he considers to be “wholly unnecessary”.

However, after leaving the EU, which European laws, rules and regulations will continue to have effect is dependent upon the ‘type’ of exit negotiated and the UK government’s subsequent requirement and willingness (or not), to repeal existing regulations that implemented European law in the UK.

For example, should the UK stay within the European Economic Area (the EEA) then based on a relationship with the EU not dissimilar to that of Norway’s, the UK would likely remain subject to most of the key aspects of EU employment law such as the Acquired Rights Directive (implemented in the UK as TUPE), the Working Time Directive (implemented as the Working Time Regulations) and the Part-Time Workers Directive (implemented in the UK as the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations), amongst others.

If the UK negotiates a bespoke deal then of course the terms of that deal could well, potentially, not require the UK to remain subject to any European laws. At the moment a complete release from European law seems highly unlikely, but we are of course in unchartered territory. Should such a deal be negotiated then, which (if any) employment laws are repealed, will largely depend on the political persuasion of the UK government in power.

If the UK is unable or unwilling to reach a specific agreement with the EU and starts to trade with countries in the Union under the World Trade Organisation’s rules – the UK will not necessarily be forced to accept free movement, make financial contributions or adopt EU legislation. If this is the outcome, the UK may start to divest itself significantly of EU laws.

Will the UK courts still be bound by the findings of the European Courts of Justice (the ‘ECJ’)?

Again, this will depend on the type of exit negotiated. Brexit could potentially mean that ECJ decisions will cease to be binding on the English courts. However, as UK case law and legislation has been construed/decided in light of previous ECJ decisions, it is likely (at least in the short term) that the UK will continue to have some regard to the rulings of the ECJ, even if it is merely viewed as persuasive.

However, it is also possible that certain decisions will now be challenged on the basis that, after Brexit, the ECJ will no longer have jurisdiction to preside over UK employment law. A good example of this is the recent developments in holiday pay [http://rosenblatt-law.co.uk/bulletins/holiday-pay-is-this-the-end-of-the-issue/]. In the case of Lock v British Gas Trading Limited the Employment Tribunal followed a ruling of the ECJ which held that (on the facts of the case) an employee’s holiday pay should have included an element of commission. The decision was appealed to the Employment Appeal Tribunal who upheld the Employment Tribunal’s decision, but this is now being appealed to the Court of Appeal. On the face of it, and in light of the ECJ’s decision, it would appear to be a difficult appeal for British Gas to win. However, if ECJ decisions were to become non-binding, then it is likely that this appeal (or an appeal on amended grounds) would potentially have a much greater prospect of success.

What will happen to EU citizens within the UK and British expatriates?

Until the UK leaves the EU, then EU citizens in the UK and British expatriates in other EU member states will still enjoy freedom of movement across the EU member states.

What happens beyond the termination of the UK’s EU membership again depends on the deal agreed between the UK and the EU regarding free movement. Without a deal, or without a deal that provides for free movement, EU citizens will no longer enjoy the automatic right to live and work in the UK – and vice versa. That said, most experts believe that any trade deal with the EU will be contingent upon free movement or some level of free movement. Accordingly it remains possible that a referendum which many people believe was lost on a strong concern about UK immigration levels, will actually have little impact on that issue.

Brexit workplace bullying?

Since the referendum, there has been a reported increase in hate crime and racial abuse.  At work, it is the responsibility of the employer to ensure that employees do not become victims of bullying and/or harassment as a result of Brexit, or their EU nationality.  Employers should therefore be mindful of this potential increase in such behaviour and seek to nip it in the bud, wherever possible.  Employers can go some way to protecting their position by, in the first instance, re-issuing or reminding employees about their harassment and discrimination policies and that such behaviour is likely to be tantamount to at least misconduct (if not gross misconduct) warranting a disciplinary sanction which could include summary dismissal.

Data privacy, intellectual property and information technology after Brexit

The Data Protection Act 1998 (the “DPA”) which implemented the European Data Protection Directive will remain in force unless it is repealed by the government or replaced by the General Data Protection Regulation (the “GDPR”). The GDPR was adopted by the EU in May 2016 to replace the Data Protection Directive and is due to come into force throughout the EU in May 2018. The impact of the GDPR in the UK will depend on whether, at the point of implementation, the UK is still a member of the EU, a member of the EEA or the terms of any trade arrangements reached.

Irrespective of when/if the UK withdraws from the EU, the government is unlikely to pass legislation that would differ substantially from European data protection law requirements, given the links that this area of law has to trade and finance.  The DPA and the upcoming GDPR both prohibit the transfer of data to countries that do not offer adequate data protection, unless certain conditions are met. It is therefore likely that the European requirements will continue to apply following Brexit and UK companies should continue to prepare for the implementation of the GDPR.

Moving forward?

Unfortunately, although big changes may well be afoot, certainty as to what those changes are to be is currently in limited supply.  The government, including the new Prime Minister, appear keen to maintain UK market confidence by holding the status quo insofar as possible. However, only time will tell how Brexit affects UK employment law going forward, despite the current political promises of no major reform.

We will be providing regular updates on employment law changes following Brexit, so watch this space.

If you need help or advice on how the Brexit will affect you or your business, please do not hesitate to get in touch with any member of Rosenblatt’s Employment team on 020 7955 0880

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