24 June 2016

How will Brexit affect employment rights and obligations?

The referendum in the UK has returned a result that confirms that the majority of those who voted wish to leave the EU. What is the impact of Brexit on employment rights, many of which, it is said, depend on European law?

As the UK Government considers its next steps domestically and internationally, the Withers employment team takes a first look at how the decision to leave the EU might affect employment rights and obligations in the UK. We have focused on the rights that employers are likely to encounter during the course of employing people. We have not looked at some specialist issues such as data protection or the impact of Brexit on employers who operate in more than one EU country.

Click here to view our table which shows that the picture is not entirely clear cut. Over the forty plus years that the UK has been an EU member, UK and EU laws have become entwined. Many of what began as purely domestic rights, are now interpreted in line with EU law principles. So for example, UK law made provision for what should go into a statement of terms and conditions before the UK joined the EU. Since 1991, we have had an EU Directive on employment contracts and our domestic law is currently interpreted in line with that Directive.

In addition, some employment rights, such as the right to join a trade union, are protected by the UK's status as a signatory to the European Convention on Human Rights, rather than by its membership of the EU. Adherence to the Convention does not stand or fall with EU membership so Convention rights are unaffected by Brexit.

In our view however prime candidates for reform would be Transfer of Undertaking (Protection of Employment) Regulations, also known as TUPE, dismissals, the ability to harmonise terms and conditions after a transfer, introducing a cap on discrimination awards and simplifying holiday pay rights.

The Government has a range of options open to it and it may be many months before any real clarity emerges about how the relationship between the EU and the UK will continue into the future and how that will affect the legal framework. One potential outcome is that the Government may introduce exemptions for small businesses from certain employment measures. Here the Government would have to give careful thought to possible unintended consequences. If, say, employers of fewer than 20 employees were exempt from certain employment law would this have the unintended consequence of creating a disincentive for those employers to grow?

Finally, there is a wide range of non-legislative and commercial influences which have become embedded in the way in which businesses deal with employment issues. The demands of investors, supply chains, consumers and corporate social responsibility initiatives may limit the scope and appetite for substantial deregulation even if a future Government is now free to amend the law.

To read more, please click here.


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