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26 October 2016

The Brexit vote and the future of employment law in the UK

The Brexit vote gave rise to a great deal of speculation as to what would happen to employment rights. Also the vote in favour of Brexit gave rise to a great deal of uncertainty as to when and how the UK would leave the EU. Immediately after the result we speculated what Brexit would mean for employment rights. Despite the rhetoric of the leave campaign concerning the purported burden of EU regulation of the employment market we said we did not anticipate the vote to leave would result in any drastic change in employment rights. Since our first report politicians of all parties appear to accept that there will be little change to UK employment legislation linked to the decision to leave the EU. But has Theresa May election signalled further change.

On becoming Prime Minister she set out a new political agenda that sought to change direction from her predecessor. The Prime Minister appears to have accepted the Brexit vote was a vote that indicated more than dissatisfaction with the EU. She has decided to take action to address equality issues, to curb executive pay and increase worker representation. These objectives were reaffirmed by Philip Hammond.

With regard to employment rights Ministers have suggested there will be little change but suggest change is more likely in order to take action to free the UK market from what are perceived to be restrictive market related regulations. David Davis said “stopping the flood of unnecessary market and product regulation” would improve UK growth but said there were no plans to cut workers’ rights.

The Prime Minister prior to the conservative party conference in October 2016 announced that there would be a review of employment law in the light of the employment market changes. She said she wanted to ensure workers’ rights were protected under changing business models and a growing trend towards flexible or self-employment. In particular the review will look whether existing employment law can cope with the country’s growing number of nonstandard terms of employment. The growth of what is becoming known as the “gig economy” has attracted publicity and whilst flexible working practices are to be welcomed this should not be at the expense of minimum standards of protection for workers.

At the conference itself the Prime Minister affirmed the no change Brexit employment agenda. The Prime Minister said “And 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.” The Government’s views about the impact Brexit will have on employment rights and the direction of the travel on the issues have been summarised in a House of Commons Briefing Paper published on the 12 October 2016. The briefing paper sets out the legislative impact of the Brexit vote and confirms the government will put before Parliament a Great Repeal Bill which will remove from statute the European Communities Act which is the Act that gives direct effect to all EU law in Britain.

On this happening it is the government’s intention to convert existing EU law into British Law. Whilst it is possible at this point to repeal or improve any law it chooses it is clear it has no current intention of withdrawing workers’ rights. The Great Repeal Bill would not necessarily have an impact on some secondary legislation eg agency workers and working time regulations and these could be subject to change given the governments dislike of this legislation. But change even on these areas seems unlikely given the Prime Ministers guarantee. Given the long time line to achieve a “smooth Brexit” and given the steps that have to be taken to adopt the principles in the secondary legislation the government may be tempted to make changes and indeed some of these changes may add to employment rights.

Of course the final exit route from Europe remains unclear and could be subject to change as the government seeks to negotiate the best deal for the UK. Continued access to the EU market, and indeed access to the other markets under the terms of new trade agreements with other countries, may require the UK to reaffirm that minimum employment standards are preserved.

One difficult question that remains to be answered is the status of the European Court of Justice (ECJ) and its continuing impact on employment case law. Whilst post Brexit UK courts will no longer be required to follow existing decisions but they will have persuasive effect. We anticipate that some areas of case law that remain unclear may well be brought before the UK courts to seek to remove the uncertainty that currently exists eg such as the thorny issue of holiday pay. It is possible that legislation could be introduced “to freeze in place principles derived from case law” to prevent fresh litigation to reopen previous controversial judgements.

We are still waiting for the Governments review of employment tribunal fees which is seriously overdue. It is unlikely the review will lead to change as the Government believes it has brought about what it refers to as the “right kind of behavioural change”. The Unison challenge continues but the hearing is still months away. It must be hoped that there will be a growing acceptance that the employment tribunal fee structure has not simply had an impact on the spurious claims but has denied many employees’ from being able to exercise their basic employment rights.

So as we predicted there will be little change in the protection of employees and existing EU law enshrined in UK law will remain. It may only be safe to say that for the time being there is little likely hood of radical change taking place but the Prime Minister may introduce improved employment rights unrelated to the Brexit decision.

We would suggest what is of greater concern to employers is how their businesses may be affected by the continued uncertainty over the rights of existing EU citizens to remain and to work in the UK. The Prime Minister has given those workers no guarantee as to their rights post Brexit. In view of the dependence of many sectors on foreign workers this is a key issue for the future with many employers already seeking to reassure their workers as to the likely decisions that will be taken.