Brexit and Employment Law: what now?

  • Insight

18 October 2019

It’s clear many areas of law and business will be affected by Brexit. While many are grappling with what Brexit and the WTO terms mean for them, research on preparedness for Brexit carried out at Anderson Strathern across Scottish small and medium-sized businesses showed over half identified the EU workforce as their biggest Brexit exposure point. One area which has been much discussed is employment law.

Some key employment law concepts such as unfair dismissal, minimum wage and breach of contract aren’t directly related to the EU at all. The UK had anti-discrimination laws in place before joining and that was also the case for the UK law on equal pay and the right to maternity leave and pay. Many UK laws are more generous than the EU requires; maternity leave and pay are examples.

That said, UK membership of the EU has clearly had a major influence on our employment law, and it continues to do so. For example, prior to the UK joining the EU, we did not have in place any specific protections for agency workers.

In addition, judgments of the European Court of Justice (ECJ) on how a particular European Directive should be interpreted are binding upon UK Tribunals. This has extended employee rights beyond what UK courts would have done. A good example of this is in the calculation of holiday pay.

Some areas where the EU has had a material influence include the Working Time Directive/Regulations and TUPE. But will they change?

Working Time Regulations give employees the right to certain rest periods and breaks and to paid holiday. While the UK has extended holiday entitlement, beyond the European minimum of four weeks, to 5.6 weeks, other aspects of the legislation have been more controversial in the UK. For example:

For an employer to lawfully permit an employee to work more than an average of 48 hours a week, it is necessary that the employee has signed an ‘opt out’ form – but the employee can cancel that agreement for any reason. A week’s pay for holiday pay purposes must now include certain overtime and commission payments as a result of European law. Those who have been off sick or on maternity leave continue to accrue holiday entitlement while off and can carry forward unused holiday from one year to the next and return to work with a year’s worth (or more) of annual leave still to take.

That said, the 48-hour working week and obtaining opt-out forms is not an everyday problem for most businesses. Most have become familiar with the issues in relation to holiday pay, holidays and rest periods. Other than some changes around the edges in things like on-call working and perhaps the calculation of holiday pay in due course, no great change is anticipated.

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) ensure employees have continuity of employment, on the same terms and conditions, if a different employer takes over. This can happen where part of a business is sold or where a contract was lost to another provider. TUPE means the successful organisation/the purchaser must employ the individuals on their existing terms and conditions and it gives employees certain rights if the employer fails to do so.

There are potentially cumbersome obligations in TUPE that might be tweaked, for example in relation to the consultation process or in changing terms and conditions after the transfer. Other than that, TUPE is a law that protects employees and can potentially be helpful to businesses where those who lose work to a competitor no longer need as many staff but cannot afford to make redundancies. Again, no great clamour for change.

Given the numerous other priorities that the UK Government will have following Brexit, it appears unlikely that a material shift in employment law will reach the top of the to-do list.

However, future ECJ judgments will not have the binding effect on UK courts and Tribunals that they have now. The UK Government will not be obliged to implement any future EU Directives, unless there is a post-Brexit agreement to that effect. Over time, there will be a gradual divergence in rights between those in the UK and those in the EU.

But anything can change. Theresa May said, in 2016: “Let me be absolutely clear: existing workers’ legal rights will continue to be guaranteed in law – and they will be guaranteed as long as I am Prime Minister.”

For any queries regarding Employment Law, please contact Andrew Brown or someone from our Employment team.  

This article was first published in The Scotsman.