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Brexit: What are the implications for Employment law?

View profile for Louise Taft
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Unsurprisingly, given the impact of EU legislation on UK Employment law, workers’ rights formed a key part of both Leave and Remain campaigns: the former suggesting that UK business should be freed from the shackles of ‘red tape’ and left leaning Remain supporters pointing out that everything from holiday pay to protection from discrimination is governed by EU law.

You might therefore be forgiven for thinking that Thursday’s vote would have seismic implications for the future of UK Employment law; that we should expect a revolution in the world of work, with businesses able to hire and fire at will without any interference from Europe.

In fact, nothing could be further from the truth. Whilst it is correct that many employment rights are governed by EU law, many are home grown. Arguably the most important – the right not to be unfairly dismissed – is entirely domestic. Others, such as equal pay and discrimination legislation, have been implemented here and augmented by later EU law and jurisprudence. But most importantly, even those rights entirely emanating from Europe now form part of UK law because they have been implemented by way of UK Regulations. Even at the point we leave the EU, those UK Regulations will still be in force.

In fact, the biggest impact of Thursday’s vote could be a period of inertia. It is clear that the process of negotiating Brexit and whatever replaces it will take some time. Anyone wanting to reform Employment law in that period would be wise to wait and see to what extent we will continue to be fettered by EU regulation.

Perhaps an unintended consequence of Brexit will be uncertainty created by a lack of case law. Unions and employers are often willing to fund expensive appeals based not only on the value of a particular claim but the implications for their members and workforce moving forward. If we are negotiating exit from the EU, appeals based on areas covered by EU Directives (such as current cases involving payment of commission whilst on holiday) might not go ahead. Lawyers rely on the senior courts to interpret legislation. Without definitive decisions, we might never get answers to some of the questions raised by recent cases.

If, as proposed, we adopt Norwegian style EEA membership, this may well continue to involve not only free movement of workers but also the adoption of employment legislation designed to create a level playing field for business operating in the area. The only difference will be that we are no longer involved in the negotiation of such regulation.

If we do leave EU regulation behind entirely, we are likely to be in a new world with a new government. It is therefore difficult to predict the effect on employment legislation as much will depend on the key issues facing that new government, and indeed its ideology. However, based on current thinking, we suspect key targets will be the Working Time Regulations (covering issues such as the maximum working week, rest breaks and holiday pay), the Agency Worker Regulations (creating parity between agency workers and full time employees after 12 weeks on assignment), TUPE (transferring jobs when businesses are transferred and in contracting out situations) and perhaps a review of unlimited compensation in discrimination claims.

It may be that the most significant effect of last Thursday’s vote on the world of employment law will come not from the vote itself but the impact on the economy. Whilst markets seem to be rallying, there are fears the vote could lead to job losses both as multinationals move jobs into the EU proper and from a wider impact on areas such as banking and housebuilding. Historically, periods of recession have led to periods of greater litigation – directly arising out of redundancies and other job losses and because when it is harder to find alternative work, employees have a greater incentive to claim. We might also see further attempts to reform areas of employment law not covered by the EU: the last government used the impact of the 2008 crash to justify changes to unfair dismissal law, making it available to fewer employees and reducing the value of many claims.

Another unfortunate consequence might be the rise of discrimination claims. There have been reports of a rise in racist incidents aimed not only at immigrants from Eastern Europe but other ethnic minorities. One hopes this is short lived. Nevertheless, employers may find themselves defending claims arising out of incidents between work colleagues.

Our advice both to employers and employees is not to panic: Thursday’s vote doesn’t change anything for now, and might not change anything at all.

If however you are concerned about any of the issues raised in this article, or have any other questions arising from employment law, don’t hesitate to contact our Employment Specialist Louise Taft on 020 7935 3522 or lt@freemanssolicitors.net

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