29 April 2021 - Events
At the end of 2020, aside from the significant changes in relation to immigration and the right to work in the UK, it seemed that the UK Government had no immediate plans to make sweeping changes to employment law, whether or not a trade deal was agreed. Did the position change once the UK and the EU reached the trade and co-operation agreement (the ‘T&C Agreement’) on 24 December 2020, that was signed, following ratification, on 30 December 2020?
For a short while, it seemed that it had changed. On 19 January the UK Business Secretary Kwasi Kwarteng announced that the Government had begun a post-Brexit review of UK employment law. There were a political backlash and considerable speculation that British workers were about to see a ‘bonfire of rights’, particularly in relation to working hours and holiday pay. That announcement was however followed six days later by an announcement to the effect that the review had been scrapped.
The speculation that a significant reduction in UK workers’ rights was on the table was based, in part, on the fact that the Government omitted previous commitments not to diverge from the EU on workers’ rights from the European Union (Withdrawal Agreement) Act 2020. The T&C Agreement reflects the fact that the Government has tried to reserve a room for maneuver in this area, perhaps in contemplation of seeking trade deals with countries that are not keen on high levels of employment protection. However, the T&C Agreement contains ‘level playing field’ commitments designed to prevent either party (the UK or the EU) from undermining the other via deregulation in several key areas, including employment. The parties to the T&C Agreement have committed to not weakening or reducing their respective 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’.
The language of the agreement is, therefore, not entirely clear and how this plays out in practice remains to be seen. If there is any dispute involving the level playing field, it will be referred to a panel of experts, following a 90-day discussion period between the parties. There will be no role for the Court of Justice of the European Union in the process. The mechanism for enforcement will be the ability of the aggrieved party to apply tariffs and/or review/suspend the trade and trade-related parts of the T&C Agreement. This is expected to operate as a real disincentive to undercut the other party.
For the time being it is clear that no review of employment rights of any kind is imminent in the UK, which is consistent with the Government’s pre-agreement assurances. 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. Many employment protections that are sometimes considered onerous are now well embedded in commercial practices and there is no evidence that employers are clamouring for change. Substantial changes would also be deeply unpopular with unions.
For now, employers and employees can take some comfort in knowing that employment law is unlikely to shift dramatically, if at all, for the foreseeable future.
For more information on the impact of Brexit on both individuals and businesses in the UK, please click here.