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25 July 2016

Brexit: Implications for Employers - Employment

The UK voted to leave the European Union in a country-wide referendum on 23 June 2016. The electorate turnout was 71.8% - with more than 30 million people voting - the highest turnout at a UK-wide vote since 1992. While London and Scotland voted overall to Remain a member of the EU, results from Wales, and the majority of England secured a Leave victory. Scotland voted to Remain by a margin of over 20%.

At Charles Russell Speechlys we work with clients from a range of backgrounds. The referendum result is likely to have significant implications for clients in a variety of ways across a range of industries. Our sector experts are working closely with clients to advise on the legal considerations for businesses and individuals and how best to manage their operations and investments in the short term within the current regulatory framework and beyond.

Below I have answered some of the questions which arose from the webinar about employment. Please also read the Q&A’s for immigration and pensions.


Can or should employers limit workplace discussions on Brexit?

The level of political discussion in the workplace is high at present, which is good, but if it becomes heated, it can cause tension. Employers can appeal for such discussions to be limited to those which are measured. There is a danger that a heated debate could damage working relationships. 

Unfortunately there have been examples of comments in the workplace which, intentionally or otherwise, could give rise to unlawful harassment. It is worth bearing in mind the definition of unlawful harassment:

“unwanted conduct that has the purpose or effect of violating a person’s dignity or creating an offensive, intimidating or hostile environment.  It is discriminatory if it is related to a protected characteristic (eg nationality or ethnic origin)”.

In relation to Brexit, comments such as a group of individuals or an individual will have to “go home” based on their actual or perceived nationality or ethnic origin, may be caught by this definition. There have been unexpected levels of racial harassment in public, which is being taken seriously by the police and should equally be taken seriously by employers.

What should employers do if they become aware of remarks or banter which could be unlawful harassment following the referendum result?

Primarily, employers should not ignore such remarks or banter, but should take steps to actively quash it.  In addition, the employers should be reaching for their anti-discrimination or harassment policy and ensure that staff are aware of its contents.  Where necessary, repeat or introduce training, particularly for those with supervisory or management responsibilities so that they are aware of what amounts to unlawful harassment or discrimination and are given tools to spot it.   NB – we can help with both of these!

What if the harassment occurs outside of work, can an employer intervene?

Generally no, but if an employee’s conduct is likely to damage the employer’s reputation, the employee’s reputation or the employee’s relationship with their colleagues, then an employer can intervene in such conduct irrespective of the fact that it occurred outside of the workplace.  The employer’s disciplinary policy may then be applicable.  

What if the harassment occurs on social media?

Social media, whether public or private, is not exempt from the employer’s reach. As above, if an employee makes public or private comments using their own social media accounts, which could potentially cause damage to the employer’s reputation, the employee’s reputation or their relationship with colleagues, then it is potentially a matter for the employer. Evidencing such adverse remarks may be difficult, but they can be brought to the employer’s attention either by concerned colleagues or, in some cases, clients. 

Employers should ensure that they have a sound social media policy, which makes it clear to staff that even private social media remarks which overstep these boundaries, will not be tolerated.

Protecting the business
What steps can employers consider to stabilise their workforce at this time?

If a business may be destabilised by the referendum result or a Brexit, employers will want to consider what retention arrangements could reasonably be put in place to ensure that key staff do not leave. These arrangements might include retention payments for milestones achieved, medium or long term incentive schemes or non-financial arrangements such as providing assistance with immigration or flexible working arrangements.

If staff are going to leave, what steps can an employer take to protect its business?

If staff are going to leave, employers will want to review the restrictive covenants applicable to key staff to ensure that they are sufficiently narrowly drafted to prevent such staff from poaching clients or prospective clients and stop them poaching employees or teams. If the current restrictive covenants are insufficient or there are none, employers should consider introducing them now, subject to legal advice.

Employers should also monitor staff moves in order to stem a team move or otherwise to ensure that remaining staff are not unsettled by departures. Employers may need to consider including contractual obligations that key staff report approaches to entice them away or plans by key staff to leave so that the employer has an opportunity to speak to the employees and either try to retain them or mitigate damage caused by their departure.

Key pressure points
How can employers prepare for staff shortages?

In the private sector, staff shortages will push up wages as employers try to retain or attract the best staff. It is likely that staff shortages will result in an increase in automation (particularly in retail) to reduce operating costs. However, employers will also need to consider creating appropriate training programmes to attract staff from a wider pool and/or to raise the employer’s profile so that it becomes an employer of choice.

Conversely, how can an employer prepare to rationalise if necessary?

Employers should ask whether they are able to objectively assess their staff should they need to reduce the workforce in any way. Are appraisals up to date? Has management actively dealt with poor performance, misconduct and long term sickness absences? If not, these steps should be considered now.

Which European employment legislation is most likely to be changed on a Brexit?

The Working Time Regulations 1998 (as amended), to a certain extent, gold plated the European Directive implementing minimum working time rules and rest periods across Europe. For example, the minimum annual paid leave under the Working Time Regulations is higher than under the European Directive. That is unlikely to diminish, but the amount of pay may be regulated. Until recently, holiday pay was based on salary (in normal circumstances), but recent case law has determined that this should be “normal remuneration”. This is a subjective decision on which Government guidance could be given in order to provide certainty as to what this means in practice.

Further, accrual of holiday for those on long term sick leave, which at present may be carried forward for up to 18 months (according to recent UK judicial decision), could be curtailed by Government regulation. Often long term sick employees leave the business, receiving a windfall of 18 months’ worth of accrued unpaid holiday.

The Agency Working Regulations 2010 are unpopular and in practice not well understood. It is likely that removal of these regulations, which give parity to agency workers to a vast quantity of employment rights after 12 weeks in situ, will be popular with employers.

The Transfer of Undertaking (Protection of Employment) Regulations 2006 (TUPE) have been with us in various forms since 1981. The principle that employees transfer with the business, or part of it, in which they work is generally in the interest of the business, but the service provision changes (i.e. outsourcing), which were extended by the UK in 2006, are not so popular as they can be confusing and unhelpful.

As the ability to change terms and conditions of employment post a relevant transfer is limited, this restriction can prevent business efficacy. This could potentially be relaxed further by a Government post Brexit.

Discrimination law, equal pay and family friendly rights are embedded in our national culture. Discrimination law was in its infancy in the UK prior to us joining the EU and its removal or paring back would be most unlikely in the event of a Brexit. However, following a Brexit our domestic Courts will cease to be bound by decisions or future directives from the European Courts. There won’t be the need for referrals on points of law to the European Court of Justice and the final appeal court will sit in the UK rather than Europe. It may mean that decisions will be reached quicker (marginally). However, it seems likely that our discrimination law will become less progressive and more conservative in its approach.

Collective consultation is likely to be a target following a Brexit. Works councils and transnationals works councils are likely to be removed, although this will have minimal impact on UK employers. It is possible that the trigger for collective redundancy consultation could increase from a minimum of 20 in order to free up an employer’s decision making process on a reorganisation, but this change will most likely be hard fought by the unions.

As for new employment legislation, there may be some but it’s too early to say!