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The implications for employment law
Brexit: the potential impact

Brexit: the potential impact

Author
Greg Campbell
Date
24 June 2016

There are large parts of UK employment law that have their source in European law and so there may, over time, be major changes in UK employment law, but that is more likely to be a consequence of domestic politics than Brexit itself. All material employment rights are enshrined in UK legislation which has been introduced by our Parliament, so to make any changes to those laws will require politicians to follow the normal parliamentary procedures.


The implications for employment law

There are large parts of UK employment law that have their source in European law and so there may, over time, be major changes in UK employment law, but that is more likely to be a consequence of domestic politics than Brexit itself.   All material employment rights are enshrined in UK legislation which has been introduced by our Parliament, so to make any changes to those laws will require politicians to follow the normal parliamentary procedures. As far as judicial interpretation of laws in line with European law, that will continue until the departure from the EU, as European law will continue to have primacy even during the exit negotiations.  Once the UK exits, judges may continue to use ECJ judgments as precedents, but there will be no new referrals to the European Court of Justice and no ongoing obligation to interpret UK legislation in line with European law. Whether that will mean judges ignoring precedents which were decided previously in line with European law, is unclear.

Over the medium to long term, some legislation may well be overhauled. In our view, it is unlikely that the government will take steps to dismantle the unfair dismissal regimes, or limit the discrimination protections given under the Equality Act, but it is possible that some of the provisions may be diluted; for instance, caps may be introduced on the amount of compensation available for a claim of discrimination, and exemptions may be introduced for small businesses. That said, as the government and judiciary are freed from the precedents set by the European Court of Justice - and the obligation to have laws consistent with the European Directives - it's possible that we will see material changes.  The most obvious targets based on the Leave campaign's positions are the Agency Worker Regulations, protections for Part-Time staff and the Working Time Regulations relating to holiday pay and working hours. TUPE (Transfer of Undertakings (Protection of Employment)) may also be affected – we may see liberalisation of the rules around outsourcing and  the harmonisation of terms following a transfer. 

Withdrawal from the European Convention of Human Rights is not an automatic outcome of Brexit, but is something that Leave campaigners have discussed.  Any change, though, will be a complicated and lengthy process and the domestic courts will be bound by their own precedent until there is a change in the legislation.

For both employers and employees, the most significant impact is likely to be on the free movement of labour within the EU.  Frankly no-one can say with any certainty what rights EU citizens will have to work in the UK, or vice versa, until the exit negotiations have been completed.  Whilst David Cameron has said there will be no change in the short term, given Leave's focus on immigration in the campaign, it would seem surprising if free movement remained in its current state.  Of course, other countries outside the EU (such as Norway) have been required to grant freedom of movement as a condition of access to the single market, so much will turn on the outcome of the exit negotiations.

If you have any questions arising from this, please contact Greg Campbell; 020 3321 7234