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"Brexit Means Brexit": But what does it mean for employers?
 Article 
Author
Sharon Tan
Source
CIPD: HR-Inform
Date
14 December 2016

"Brexit Means Brexit": But what does it mean for employers?

This article was first published by CIPD: HR-inform

We are living through unprecedented times.

There is, of course, nothing new about the judiciary grappling with the application, in modern times, of legal principles that are centuries-old. Nor is there anything new about politicians wrangling over the United Kingdom's place in the world, alongside domestic policies and taxes, seeking all the while to spin everything to their political advantage. But what we have witnessed in the last six or so months has been revolutionary, in many senses of the word.

At the time of writing, we are a couple of weeks away from the hearing of the government's appeal to the Supreme Court on the issue of whether the Prime Minister acting alone is lawfully able to give notice, pursuant to Article 50 of the Treaty on European Union, for the United Kingdom to withdraw from the EU. The High Court concluded that she is not, and that only Parliament is empowered to repeal the European Communities Act 1972 (being the legislation by which the UK's obligations and rights under the original European Treaty became binding as a matter of UK law). 

However, and whenever, the mechanics of triggering Article 50 are resolved, the UK's withdrawal from the EU will lead to both challenges and opportunities for those who employ workers in the UK. The challenges will, undoubtedly, be many and varied. What does this mean for the non-UK citizens I employ? What will happen to the plethora of employment rights and obligations that have their genesis in the EU? What will the future of employment look like?

At this point, there are unfortunately no conclusive answers. That is not least because the final situation will depend on the outcome of the exit negotiations and whether the UK will go for a "hard" Brexit, essentially opting out of the single market and restricting free movement of workers, or a "soft" Brexit. The latter could include the so-called "Norwegian model", i.e., remaining part of the EEA and continue complying with the rules of the internal market (including minimum employment standards, or the "Swiss model", which is comprised of a series of bilateral treaties and would open the door to some greater freedoms from EU employment law, but may still require preservation of certain minimum employment rights. The government believes that a third way is possible, which would include tariff-free trading, at least for some sectors, while still controlling immigration and removing the majority of EU membership obligations.

But, will any of these really be that different in practice? An examination of the Swiss experience is instructive. The official position is that judgments of the European Court of Justice are persuasive only, but as this necessitated an equivalent Swiss judgment to explain the meaning under Swiss law, Switzerland now applies ECJ judgments unless there is a good reason not to do so.

So what does Brexit really mean for UK employers?

If Theresa May's promises come to fruition, the change to UK employment law should, in the short term, be minimal. She pledged at the Tory party conference to give businesses and workers "maximum certainty" and to "guarantee in law" existing workers' legal rights.

The suggestion is that all EU law will be converted into UK law, following implementation of the Great Repeal Bill. On one analysis, this should be a straightforward process, as much of the employment law required by the EU already forms part of existing UK law. On the other, it is a task of enormous complexity, involving an estimated 40,000 legal acts, 15,000 court verdicts and 62,000 international standards, some of which are already incorporated into UK law, others of which are not, and which will therefore need to be introduced.

Once implemented, the Great Repeal Bill will deliver to us a strangely frozen-in-time version of EU employment law. From that point forward, subject to any restrictions imposed as a result of the exit negotiations, we will have the opportunity to take a new direction and to unpick aspects of EU derived employment law that are regarded by the UK, for cultural reasons or otherwise, not to be desirable. There are some obvious candidates which are particularly unpopular with employers and which may well be first in the queue to be discarded once free from EU constraints. These areas are highlighted in the box below.

In the meantime, the doubt surrounding the status of current employees who are EU citizens may be a more pressing issue for many employers. Ministers have indicated they want to protect EU nationals' rights, but it is not yet clear how this will be done, and whether there will be a cut-off date for more recent arrivals who will lose their right to stay. This could have a significant impact on the workforce, and there are practical steps that employers may now wish to take to prepare for this.

Brexit indisputably means upheaval and uncertainty for employers. But it also presents potential opportunities, albeit over the longer term, to take a different path and to mould employment laws that could perhaps be a better fit for the UK. How and when this will transpire remains to be seen.

Whilst everything is speculative at this stage, the areas ripe for change over the longer term would seem to be:   

Holiday

  • Holiday pay might revert to base salary only, rather than include other forms of remuneration (such as commission payments) which the worker would usually earn in addition to base salary.
  • The right to accrue and carry forward holiday during periods of long-term sickness absence is likely to be curtailed, as is the ability to swap holiday for sick leave after the event, due to illness contracted while away.

Agency Workers Regulations

  • The Agency Workers Regulations are generally regarded as unnecessarily burdensome for employers and an obstacle to employers' ability to staff their businesses in a manner that is responsive to their changing needs. They are currently the most likely laws to be repealed entirely.

Discrimination Law

  • There is little desire, societally or politically, to alter the protected characteristics or the types of discrimination covered by the current anti-discrimination regime, as these are widely regarded as part of the fabric of society. This aspect of employment law is therefore likely to remain the same.
  • Having said that, a cap could be imposed on discrimination compensation (at present, damages are unlimited), albeit that it is likely to be higher than the current unfair dismissal cap. This is something the UK government has attempted in the past before being prevented from doing so by EU law. There is also a possibility that age discrimination will be further restricted.