Brexit... Employment

All indications from the UK Government suggest that Brexit will not result in any immediate changes to employment rules.

Here we examine the latest thinking and the most likely areas where new measures could be put in place.

If you have any questions about this topic or other Brexit related topics, please get in touch

How will Brexit affect employment?

At the end of 2020, aside from the significant changes in relation to immigration and the right to work in the UK, we reported that the UK Government has no immediate plans to make sweeping changes to employment law, whether or not a trade deal was agreed.

The position has now changed somewhat – but it would be premature to treat recent announcements as harbingers of radical change or to anticipate a ‘bonfire of rights’ in the UK. Two issues have emerged since the UK and the EU reached the trade and co-operation agreement on 24 December 2020, that was signed, following ratification, on 30 December 2020.

The first is the terms of the agreement itself. Part Two of the agreement contains ‘level playing field’ commitments designed to prevent either party undermining the other via deregulation in several key areas. Title XI, Chapter 6 concerns employment law and includes the commitment that the parties will not weaken or reduce their labour and social standards below the levels in place at the end of the transition period in a manner affecting trade or investment, including by a failure of enforcement. This commitment applies to certain key employment rights, health and safety standards, fair working conditions, employment standards, information and consultation rights, and the restructuring of undertakings. There is a separate section on road transport requiring the signatories to comply with working time rules (including rest periods and breaks) for drivers transporting goods between the UK and EU. The agreement also contains a renewed commitment to the rights set out in the European Convention on Human Rights.

It is at present unclear how the requirement for measures to ‘affect trade or investment’ will be interpreted. Any allegation that the requirement is engaged must be ‘based on reliable evidence and not merely on conjecture or remote possibility’. If there is any dispute involving the level playing field, it must be referred to a panel of experts, following a 90-day discussion period. There will be no role for the Court of Justice of the European Union in the process. The mechanism for enforcement of the level playing field will be the ability of the aggrieved party to apply tariffs and/or to trigger a review and suspension of the trade and trade-related parts of the agreement. This is expected to operate as a real disincentive to undermine the level playing field.

The second issue is the confirmation by the UK Business Secretary, Kwasi Kwarteng, on 19 January 2021 that the government had begun a post-Brexit review of UK employment law. He nevertheless insisted that the review would not lead to a reduction in workers’ rights – although commentators have pointed out that there seems little point in a review if no reductions are envisaged. There had been considerable speculation in the run-up to the announcement that a significant reduction in UK workers’ rights was on the table, based in part on the fact that the Government omitted from the European Union (Withdrawal Agreement) Act 2020 previous commitments not to diverge from the EU on workers’ rights. Mr Kwarteng was at pains to emphasise on 19 January that no significant reduction in rights was contemplated. It is also the case that there appears to be no appetite for significant rights reductions amongst industry representatives such as the CBI.

As we have written previously, all the Government’s pre-agreement announcements had suggested that the laws conferring employment protection will largely remain in place for the time being. Many key UK employment rights, in any event, are domestic in origin – the right not to be unfairly dismissed and the right to a redundancy payment, the framework of protection for whistleblowers and shared parental leave are all examples of rights that had their origin in the UK rather than Europe. The UK was furthermore well ahead of Europe in introducing protection from discrimination in the fields of race and disability.

There was speculation during 2020 that the Government could introduce changes such as:

  • Amendments to the rules on collective consultation where there are large scale redundancies;
  • Limiting the protection conferred on employees when a business is transferred;
  • Capping the amount of compensation in discrimination cases;
  • Simplifying the rules on holiday pay.

The current reports suggest that the target of potential reform measures will be certain aspects of the rules on working time, including the maximum 48-hour working week (which is often, in any event, disapplied in practice) and certain rules on holiday pay and overtime and the logging of working hours. There have still been no policy announcements suggesting that any of the other measures listed above are on the Government’s agenda at present.

What should employers do?

Employers should continue to watch for further announcements – there are many steps between a Government review of rights and legislation amending those rights. Many employment protections that are sometimes considered onerous are now well embedded in commercial practices and, as noted above, employers are not clamouring for change. Substantial changes might not suit some employers and would furthermore be deeply unpopular with unions.

The landscape has been completely changed moreover by the advent of Covid-19 and the radical measures the UK Government has taken to protect jobs and the economy. Almost every aspect of the employment relationship has been changed by events that no-one could have foreseen 12 months ago. In the employment field at least, the effect of Covid-19 is likely to be wide, deep and long-lasting.

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