Brexit, deal or no deal – what does it all mean for employment law?

How we got to where we are

March 2018 - Transition in principle.

The UK government and the EU reached political agreement on a post-Brexit transition period to run from 30 March 2019 (11pm UK time on 29 March 2019) until 31 December 2020. The terms of transition would be set out in a withdrawal agreement to be implemented into UK law by The European Union (Withdrawal Agreement) Bill (WAB)

June 2018 - Positioning EU law post Brexit

In June 2018  The European Union (Withdrawal) Act 2018 (EUWA) became law covering:

  • Repeal of the European Communities Act 1972 (ECA 1972) and ending of the supremacy of EU law after ‘exit’ day. 
  • Retention of existing EU law – converts EU law as it stands at the moment of exit into domestic law, and preserves laws made in the UK to implement EU obligations. Pre-exit case law of the Court of Justice of the European Union (CJEU) is given the same precedent status in UK courts as decisions of the Supreme Court or the High Court of Justiciary in Scotland
  • Creates temporary powers to make secondary legislation to enable corrections to be made to the laws that would otherwise no longer operate appropriately once the UK has left
  • Enables the content of a withdrawal agreement (if approved by Parliament) to be reflected in domestic law .

July 2018  - Brexit white papers on withdrawal and the future relationship

Two white papers were published in July 2018, one on proposals for the future relationship entitled  Future Relationship Between The United Kingdom And The European Union and the  second on transition  entitled Legislating for the Withdrawal Agreement between the United Kingdom and the European Union

The proposals for the future relationship included committing to high levels of employment protections through a non-regression requirement for domestic labour standards and that the UK and the EU should commit to uphold their obligations deriving from their International Labour Organisation commitments. 

As to the withdrawal process, that white paper stated that:

  • The European Union (Withdrawal Agreement) Bill (WAB) will be introduced once Parliament has approved the final deal and must pass before the UK leaves the EU on 29 March 2019 in order for the Withdrawal Agreement to have domestic legal effect.
  • The implementation period will run from the moment of exit until 31 December 2020, a period of 21 months period
  • 29 March 2019 remains Exit day and the EU (Withdrawal) Act 2018 (EUWA) – passed June 2018- will repeal the European Communities Act 1972 (ECA 1972) but the WAB will amend the EUWA to ensure that the effect of the ECA is saved for the time-limited implementation period.  i.e. EU law continues to apply in the UK during the transition period (to the extent required by the withdrawal agreement).

November 2018 – draft withdrawal and declaration on future relationship 

The draft withdrawal agreement

On November 14th the text of the draft withdrawal agreement was agreed at negotiators' level between the UK and the EU. Relevant terms include:

In the context of the Protocol on Northern Ireland,  the UK commits not to diminish rights, safeguards and equality of opportunity as guaranteed under the Belfast (Good Friday) Agreement. Annex 4-article 4 provides - 'The United Kingdom shall ensure that the level of protection provided for by law, regulations and practices  such as fundamental rights at work, occupational health and safety, fair working conditions and employment standards, information and consultation rights at company level, and restructuring is not reduced, at the end of the transition, below the level provided by the common standards applicable within the Union and the United Kingdom'

Article 18 provides for states to require EU residents in the UK or UK residents in the EU to apply to apply for a new residence status or residence document

Article 132 provides that the Joint Committee may, before 1 July 2020, adopt a single decision extending the transition period for up to one or two years  i.e. December 2021 or December 2022 – six months after the next scheduled UK general election in May of that year.

Parliament voted down The European Union (Withdrawal Agreement) Bill (WAB) in January 2019.

Declaration on the future EU-UK relations

On 25th November 2018 EU leaders  endorsed the Withdrawal Agreement and issue the Political Declaration on the future EU-UK relations. This included:

Section 79. 'The future relationship must ensure open and fair competition. Provisions to ensure this should cover state aid, competition, social and employment standards, environmental standards, climate change, and relevant tax matters, building on the level playing field arrangements provided for in the Withdrawal Agreement and commensurate with the overall economic relationship'.

So, what does it all mean for employment law post 29th March 2019?

If the current  proposed withdrawal agreement is in place:

The current position whereby the UK is subject to EU laws, whilst retaining our right to make national laws which are no less favourable remains until 31st December 2020 or it could be until the  end of 2022 if the transition period is extended as the Withdrawal Agreement permits

In accordance with The European Union (Withdrawal) Act 2018 (EUWA) see above, post 2020 (or post 2022 if the transition period is extended) the UK will be able to amend employment  laws, subject to the commitments in the UK Withdrawal Agreement.  Any amends will be dependent on the political complexion of future governments of the day although future trade deals may involve commitments on labour law to ensure the level playing field which the Declaration on the future EU-UK relations envisages .

A court or tribunal will not be bound by any principles laid down, or any decisions made, on or after exit day by the European Court, and  cannot refer any matter to the European Court on or after exit day but  may 'have regard' to anything done on or after exit day by the European Court, another EU entity or the EU so far as it is relevant to any matter before it.  ( EUWA section 6 (1) and (2)).

If the proposed withdrawal agreement is not in place:

Fundamentally this means that there would be no transition period.

In August 2018, as part of series of paper  on preparing for a no deal Brexit, the government published, guidance on Workplace rights if there’s no Brexit deal.  In this event, The European Union (Withdrawal) Act 2018 (EUWA)  would apply as above with effect from 29th March 2019. This means that workers in the UK will continue to be entitled to the rights they have under UK law, covering those aspects which come from EU law.

The Guidance does identify two areas of difficulty – insolvency and European Works Council. As to insolvency, it counsels UK and EU employees working in an EU country to confirm whether they will still be protected under the national guarantee fund established in that country. As to EWCs it suggests UK businesses with European Works Councils, and trade unions that are parties to European Works Council agreements, may need to review those agreements in light of there no longer being reciprocal arrangements between the UK and the EU.

The Guidance stated that the government would make small amendments to the language of workplace legislation to ensure the existing regulations reflect the UK is no longer an EU country and hence in November 2018, two draft statutory instruments were published making various technical amendments to employment legislation in accordance with matters set out in the Guidance. These statutory instruments which are intended to take effect only  if there is no withdrawal agreement (and anticipated to be revoked or amended if the UK and EU do reach a withdrawal agreement) are the Employment Rights (Amendment) (EU Exit) Regulations 2018 (the SI) and The Employment Rights (Amendment) (EU Exit) (No. 2) Regulations 2018. Both make amendments to ensure the legislation is clear by removing or amending language that is no longer appropriate once the UK has exited the EU.  With regards to EWCs, the Employment Rights (Amendment) (EU Exit) Regulations 2018 amends The Transnational Information and Consultation of Employees Regulations 1999 so that no new requests to set up a European Works Council or information and consultation procedure can be made. However, provisions relevant to existing European Works Councils, which can continue to operate, are maintained.

Meanwhile, in December 2018  The Equality (Amendment and Revocation) (EU Exit) Regulations 2018 (Draft)  were published to take effect from exit day. They set out to address failures of retained EU law to operate effectively and other deficiencies arising from the withdrawal of the United Kingdom from the European Union in the  field of equality legislation. 

An employment bill  before exit day to protect workers' rights?

Leaving the EU inevitably raise concerns about a regression in employment rights after exit day. In an effort to dampen those fears and garner support for her withdrawal agreement, the Prime Minister made a statement to the House of Commons on 12th February 2019 which led to speculation that a bill might be introduced to commit the UK to follow suit whenever the EU changes its standards in the area of worker rights. The Prime Minister's statement included the following:

' I believe we have a shared determination across this House not to allow the UK leaving the EU to mean any lowering of standards in relation to workers’ rights, environmental protections or health and safety.... We have already made legally-binding commitments to no regression in these areas if we were to enter the backstop (see above November 2018 – draft withdrawal and declaration on future relationship) and we are prepared to consider legislating to give these commitments force in UK law. And in the interests of building support across the House, we are also prepared to commit to asking Parliament whether it wishes to follow suit whenever the EU changes its standards in these areas. And of course we don’t need to automatically follow EU standards in order to lead the way - as we have done in the past under both Conservative and Labour Governments'.

There followed on 6th March 2019, a Policy Paper setting out draft legislation regarding worker rights after the UK withdrawal from the EU. In order to provide some protection against non- regression, the Withdrawal Agreement Bill will be amended so that post Brexit legislation changing EU retained laws in the field of employment or workplace health and safety standards, will be assessed as to whether they uphold the commitment to non-regression. Also,Parliament will have the right to consider any future changes in EU law that strengthen workers’ rights or workplace health and safety standards, and vote on whether they too should be adopted into UK law.

It was also announced that the new process will start with two EU Directives that come into force after the UK has left the EU and following the Implementation Period – the Work Life Balance Directive and the Transparent and Predictable Working Conditions Directive. The government has voted in favour of both of these directives in the European Council and intends to ask Parliament if it wants to adopt them into UK law.