Brexit: How would it affect UK employers and employees?

Brexit: How would it affect UK employers and employees?

There has been a lot of political discussion around Brexit, but if the UK votes to leave the EU in June, how would this affect ordinary employers and employees? The short answer is, likely not very much in the short term but it would usher in the capacity for reform by virtue of a change in the steer of case law and legislation.

EU law has been enmeshed into UK laws over many years and to untangle these laws would be no easy task. The TUPE Regulations for example are made by the Secretary of State by exercise of powers under the European Communities Act 1972 whereas the Equality Act 2010 is an example of primary legislation. In theory, after a Brexit, the government would have the right to repeal laws bedded in EU Treaty and Directive obligations but wholesale reform seems highly unlikely. 

This article highlights the potential for change but what form that change will take depends on the politics of future UK governments and the subject matter of the cases that come before the courts

The question of the Court of Justice of the European Union

One significant area of uncertainty is the effect of the judgements of the Court of Justice of the European Union (CJEUJ) (known as the ECJ until 2009) on UK law. Should the UK quit the EU, the courts would no longer have to abide to the ECJ’s earlier decisions.

Currently the UK courts must interpret EU-derived law in line with ECJ decisions, which have been integrated into UK case law over many years.These decisions would still be binding on lower courts in most instances, but the UK courts may treat the fact that they are no longer forced to apply ECJ judgements as a materially different circumstance, justifying a departure from precedent. Alternatively they may adopt them as persuasive, continuing to follow rulings for the sake of legal certainty and clarity.

What can be said is that, without doubt, CJEU precedents would be challenged by advocates for their clients’ advantage and there is plenty of capacity for legal argument and consequent change.

Political factors

The UK still wants an ongoing trade relationship with its biggest export market. But a free trade agreement will come at a price, which may well be the acceptance of EU social and employment laws. This is the case for other non-EU members of the European Economic Area (EEA) such as Norway and to some extent, Switzerland.

Timing

The UK has to give two years’ notice of an intention to leave the EU. During this time the parties will negotiate the terms of the departure and only after that period could the government could start modifying the EU-derived employment laws.

Some areas that could be affected:

Discrimination law:

The Equality Act 2010 represents a mix of EU obligations with aspects of UK equality law which predated them. This, together with the fact that anti- discrimination law is now firmly rooted in this country, means that repeal is not foreseeable.

However, depending on the persuasion of future governments we might see changes such as a cap on discrimination compensation or changes with regards to justified retirement ages.

Transfer of undertakings

Brexit does provide scope for the abolition of TUPE although that seems unlikely, certainly in the short term, given the degree that it is currently embedded into sales and outsourcing agreements and because it would call for a whole new regime around employee rights on business transfers. Areas where exiting the EU would present more flexibility for reform would include harmonization of terms following a TUPE transfer.

Family leave

Some of the more significant UK family friendly rights such as the right to request flexible working or the right to shared parental leave have originated in the UK, so a Brexit would have no impact there. In other areas there will be some capacity to change and no doubt challenge CJEU precedents. An example might be around rights to benefits during maternity leave but again any reform will depend on the political appetite for change.

Holidays and working time

The government is unlikely to change the right to statutory paid holiday introduced as a result of the Working Time Directive, but there are some aspects of the Working Time Regulations 1998 which are unpopular with UK businesses and may be challenged, For example, the CJEU decisions calculating holiday pay to include matters such as such as incentive bonuses and shift allowances.

Freedom of movement

A Brexit would mean that UK nationals living and working in EU countries would no longer have an automatic right to do so, and vice versa, but to change this in the short term would present a challenge to business interests, particularly in lower paid sectors. One option could be an amnesty whereby the UK government would allow existing EU migrants to stay (for some time at least) in return for permission for UK citizens to remain abroad.

Any longer term change e.g. the introduction of an immigration system similar to the current system for non-EU citizens, would be controversial and could have political implications for future trade agreements.

In conclusion

For all the above reasons, most employers and employees would be unlikely to face major changes as a result of a Brexit but would need to brace themselves for a change in the status quo both with regard to increased pressure for changes in legislation and more testing of existing precedents in the courts

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Other Information

The TUC has published a 66 page legal opinion on the implications for workers and employers if the UK votes to leave the European Union. The Press Release attaches the opinion.