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By Mini Setty

Jun 15th, 2016

What Does Brexit Mean for UK Employment Law?

A significant proportion of current UK employment law is based on legislation introduced by the EU and cases decided by the ECJ.  If the UK votes to leave the EU then what would happen to those pieces of legislation and those decisions?

The vast majority of UK employment law is likely to remain unchanged if the UK left the EU. A lot of UK employment law is purely domestic and has nothing to do with the EU, such as unfair dismissal, and other areas such as maternity leave and pay were part of UK employment law before EU legislation was introduced.

In addition, employment law changes would be dependent on what relationship the UK will have with the EU if it  leaves.  For instance Norway is not a member of the EU but is a member of the European Economic Area for trade purposes and so they have been obliged to accept most EU employment legislation domestically.   Similarly, if the UK wanted to be a member of the European Economic Area then it too will be obliged to accept most EU employment legislation.

If the UK did vote to leave the EU, the legislation based on EU employment law will not just fall away. The UK will need to either repeal legislation in the future or what is more likely (at least in the short to medium term) is that it will have to make amendments to the legislation which are not possible while the UK remains part of the EU. 

The most likely changes are set out below:

1. Holiday Pay

The right to paid holiday was introduced by the Working Time Directive which is a piece of EU legislation and so is not one which existed in UK law before the Working Time Directive’s introduction. However this right is now one which has become ingrained within UK employment law and the UK is more generous with its holiday position than it is required to be under EU law, offering 5.6 weeks paid holiday as opposed to the 4 weeks paid holiday provided for under EU law.

It is therefore highly unlikely this will be changed but the UK may introduce legislation to overturn recent decisions made by the European Court of Justice which are unpopular with businesses.  One of the decisions likely to be overturned in this way is the inclusion of certain types of overtime and commission into holiday pay.  This has proven to be unpopular with businesses and the UK has already legislated in this area to limit historical claims to go back no more than two years.

2. Discrimination Law

The UK’s current laws on discrimination are set out in the Equality Act and it is unlikely that this legislation will be significantly changed.

However many businesses have been pushing for a cap on discrimination related tribunal awards, which unlike unfair dismissal awards are potentially unlimited, and a YouGov survey carried out in 2012 found that 55% of people were in favour of a cap on compensation in discrimination cases.

In addition to a cap on compensation changes to legislation to allow positive discrimination may be introduced and the UK may revisit the ECJ’s recent decision on aspects of obesity being classed as a disability.

3. TUPE

TUPE is a piece of legislation which comes from EU law and so could be considered to be at risk of changes if the UK votes to leave the EU.  However it has been part of UK employment law for a number of years and while TUPE is not popular with many businesses most accept it as a cost of doing business and it is already so entwined in so many commercial agreements that making major changes may be impractical.

One change however that would be popular with businesses and should be more practical to introduce is a measure which would allow businesses to harmonise employees terms and conditions post transfer.

4. Agency Workers

Again like TUPE the Agency Workers Regulations come entirely from EU law. However this is one area which might be significantly amended or even repealed if the UK were to leave the EU.  The increased rights given to agency workers is unpopular with UK businesses and has not been enshrinedinto UK employment law in the same which TUPE has and so this is an area which is likely to change.

5. Freedom of movement

If the UK did vote to leave the EU it is highly unlikely that employees from other EU member states at the date of the UK leaving the EU will suddenly become ineligible to work in the UK overnight.

It is likely that there will be some form of transitional arrangements or an amnesty for any EU citizens who lived and worked in the UK before its decision to leave the EU.  Therefore employers should not be concerned that they will all of a sudden find themselves in a position where they have members of staff who may not be eligible to work in the UK.

6. ECJ Decisions

If the UK leaves the EU, then the European Court of Justice will no longer have jurisdiction over UK related matters and any future ECJ decisions will not be binding upon the UK.

However decisions made by the ECJ have been considered by UK courts for a number of years now and have factored into their decisions.  Therefore while ECJ decisions may no longer be binding on the UK, decisions made by UK courts that applied ECJ decisions will be.  Therefore in the absence of legislation overturning specific ECJ decisions it is unlikely that leaving the EU will make much of a difference to the impact the ECJ has had on employment law.

CONCLUSION

It is hard to judge just how big an impact on employment law a UK vote to leave Europe will be.  While there is a potential for a big change in employment law the scale of that change would be determined by politicians in the months and years after any vote to leave the EU.  The only big change which would appear to be very likely is the restriction on the free movement of new workers from the EU which may cause problems for recruitment in certain industries.

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