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Brexit: Implications for Employment

Under the trade and co-operation agreement reached with the EU on 24 December 2020, the UK must not weaken or reduce the level of employment rights in place as at 31 December 2020 (the end of the transition period) in a manner affecting “trade or investment”. This reflects the “level playing field” commitments designed to prevent either party seeking a competitive edge in various regulatory areas. 

In relation to existing EU derived domestic employment legislation, anything in effect on 31 December 2020 continues to be effective. This is subject to the ability of the Court of Appeal and Supreme Court to deviate from existing ECJ decisions “where it appears right to do so”. The UK is not bound by future decisions of the ECJ but can still have regard to them if it is relevant.  The UK is not, however, required to follow new EU employment rights, but the EU can take “rebalancing measures” if the UK diverges significantly from the EU in a way that materially impacts “trade or investment”. It is not yet clear how it will be determined whether particular measures affect trade or investment. 

However, as far as any significant alteration to employment rights is concerned, although the Business Secretary confirmed on 19 January 2021 that BEIS had been carrying out a consultation with business leaders on EU employment rights including the Working Time Directive, on 28 January 2021 it was announced that this review was no longer going ahead.  

It should be noted though, that a substantial amount of employment law is entirely domestic for example, unfair dismissal legislation, national minimum wage and the right to request flexible working. 

The current immediate risks for employers primarily concern the potential impact on staffing as a result of changes to immigration control

In the meantime, employers should in any event consider what measures can be put in place to protect their businesses.

Significant Impact post Brexit
  • Review practices and consider the most innovative and cost-effective options for attracting, retaining and rewarding talent e.g. new models for agile and flexible working, training programmes and incentivisation plans linked more directly to individual and company performance on a wider scale.
  • Assess the potential impact upon operations and staffing needs.  Where appropriate, employers should reassure employees that the organisation is following the situation closely – particularly migrant workers with shortage or specialist skills who are in high demand. Our immigration team can advise further.
  • If not done already, review restrictive covenants applicable to key staff to ensure that they are sufficiently narrowly drafted to prevent such staff likely to leave from poaching clients, prospective clients, employees or teams. If the current restrictions are insufficient or there are none, consider introducing them now, subject to legal advice.
Potential Significant Impact post Brexit
  • Employers should consider whether they are able to objectively assess their staff should they need to reduce the workforce in any way. They should ensure that appraisals are up to date and that management has actively dealt with poor performance, misconduct and long-term sickness absences.
Lower Impact post Brexit
  • Most UK employment contracts reflect EU-derived rights particularly on holiday and working time. If the government makes changes to legislation such as the Working Time Regulations, the contractual terms on holiday will still be enforceable until they are varied by the employer and agreed with the staff. Employers may wish to consider whether to change contractual terms and if so, this should be through carefully negotiated changes rather than the mechanism of wide-scale termination and re-engagement on revised terms.
  • Consider whether any key personnel rely on non-UK qualifications for their role. Under the trade and co-operation agreement the UK and EU have agreed that authorities responsible for professional qualifications in the UK and EU member states can submit joint recommendations to the UK-EU Partnership Council for profession-specific arrangements.  Once approved, these mutual recognition agreements will provide routes for non-UK professionals to have their qualifications recognised in the UK.
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