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25 August 2016

What does Brexit mean for pharmacy owners as employers?

The vote for Brexit leaves the UK with a huge amount of uncertainty, but one thing is clear: there is potential for significant changes to UK employment law. What is really likely to happen in practice? How could this affect pharmacy owners and how they manage their staff?

Immigration control

Restricting immigration control was a fundamental driver of the Leave campaign. Many employers are keen to understand what will happen to the right to employ European nationals. However, there will be no immediate impact of the vote to leave the EU as the free movement principle will continue to apply until the UK actually leaves the EU. Whilst the future remains uncertain, it would appear that radical changes to migrant working are unlikely for the following reasons:

The UK government will need to negotiate its trade relationship with the EU and this is expected to take at least two years. It is anticipated that the UK will be required to allow the free movement of people in exchange for access to the single market.If that is not agreed, it is widely accepted that it is not in anyone's interests to require EU migrants to leave the country. It is likely that there would be an "amnesty" whereby EU migrants already in the UK could stay for some period of time, in return for not requiring UK citizens living and working in the EU to return to the UK.

Changes to employment law

Reducing employment regulation derived from the EU was another key driver of the Leave campaign. Now that the UK has voted to leave the EU, it is inevitable that there will be a review of UK employment legislation. From a legal perspective, once the UK leaves the EU, it is theoretically free to reduce or even remove some employment rights. However, in reality it would appear that drastic changes to employment rights are unlikely for a number of reasons:

If the UK wants to remain part of the European Economic Area single market, the EU is likely to require the UK to continue to be bound by EU Directives on labour law. If that happens, the UK could be left with exactly the same obligations to comply with EU employment law.

  • Contrary to popular opinion, a significant amount of employment law is actually entirely UK law, implemented by UK governments without any influence from Europe. Such UK law includes, for example: the rules on unfair dismissal; equal pay; sex, race and disability discrimination; enhanced rights to maternity and paternity leave (which are more generous than the EU minimum); shared parental leave; and the National Living Wage. It is unlikely that the government will want to undo these existing UK rights.
  • A large number of employment laws derived from the EU have become ingrained into UK working culture and are unlikely to be completely removed. It would be politically and socially unattractive to attempt to remove rights to family leave, protection from discrimination, and paid holiday for example.

Exactly what is changed will depend on the government in place at the time, and what is politically feasible and has public support. Changes made are likely to focus on areas of employment law where the rules can be simplified or tailored to be more suitable for the UK workforce. By way of example:

Working Time rules: these are the most often criticised EU-derived employment rights; however, the right to paid holiday is now deeply embedded in UK working culture. In implementing the EU legislation, the UK enhanced the EU minimum entitlement of 4 weeks' paid holiday to 5.6 weeks' paid annual leave. It is therefore very unlikely that the UK would support a return to US-style minimal holiday rights. Recent European court decisions have caused significant confusion in the UK about how to calculate holiday pay. This new case law requires employers to include overtime, commission and other remuneration (in addition to basic pay) in calculations for holiday pay. Many pharmacy owners have been following the developments closely, concerned that they have been miscalculating holiday pay, and new legislation has been passed in the UK to avoid the courts being flooded with historic claims. Further UK legislation may be passed to return to a simpler calculation of holiday pay to assist employers.

Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE): although TUPE can be unpopular, the basic principle of automatically transferring employees when a business is transferred is often in businesses' interests. Although the fundamental aspects of TUPE are likely to stay, less popular aspects such as the rules preventing post-transfer changes to employees' contractual terms, the consultation requirements, and potentially some outsourcing provisions may be subject to revision.

Agency Worker rights: these are likely to be the most popular candidate for complete repeal. Rules which allow agency workers the same rights as permanent employees after 12 weeks are unpopular with businesses and are not likely to be as closely protected as other employment rights.

Points to note for pharmacy owners
  • Like most employers, pharmacy owners can do little but wait and see how the exit negotiations play out.
  • Most UK employment contracts reflect EU-derived rights, particularly on holiday and working time, and the contracts will still be enforceable until they are lawfully varied by the employer after the UK leaves the EU.

This article was written by Becky Lawton, and first published in Pharmacy Business on 1st August 2016. For more information please contact Becky on +44 (0)1483 252 612 or