IMPLICATIONS FOR
EMPLOYMENT LAW
FOLLOWING BREXIT
It looks likely that there will be changes to employment law in England and Wales in the following years...
 
 
EMPLOYMENT:

Employment law changes

Given the expressed intention of the current government to follow through with the result of the EU membership referendum, it looks likely that there will be changes to employment law in England and Wales in the following years as a result of Brexit. But whilst the focus appears currently to be on the wider issues of free movement of persons and access to the EU single market for British traders and consumers, it is probably unlikely that employment law will change radically in the near future.

So much hinges, of course, on whether there is a change of government. We can, however, at least consider the probable areas of reform, assuming that the UK does indeed leave the EU.

Unfair dismissal

We think it can be safely assumed that unfair dismissal law will not change substantially, at least not as the result of Brexit. This statutory tort, which constitutes an enormous share of tribunal proceedings, exists independently of EU law and pre-dates the UK's entry into the EU. The current government has recently taken steps to restrict both access to tribunals (court fees), and liability arising from adverse findings against employers (a reduced, 'relative' cap on compensation), in this respect; so it seems unlikely that much will change

Upon the UK leaving the EU, those financial institutions would be unable to access the single market as far as financial services are concerned, until such time as the UK agrees a deal with all the other EU member states to retain membership of the single market for financial services, in which case the UK financial services industry could continue to enjoy its passporting rights and trade freely with the other 27 member states. Otherwise, if no deal is struck or one that does not preserve the single market rights which the UK currently enjoys, then UK financial institutions would need to set-up and operate a separate regulated entity within another EU Member State. Therefore, how could the UK achieve preservation of MiFID passporting rights? Potentially, by becoming a member of the European Economic Area ("EEA"), like Norway for example, or (taking the Swiss model) by becoming a member of the European Free Trade Association, with bilateral agreements between the UK and the EU governing, amongst other things, the single market for the provision of financial services.

TUPE

The law governing protection of employment in relation to the transfer of undertakings ('TUPE') is a creature of the EU, being the UK's way of implementing an EU Directive. In general, there are two types of transfer for this purpose – a 'standard transfer' (essentially the purchase of a business, or part of a business, including some or all of its assets) and a 'service provision change' (essentially, where the new provider of service to a 'client' may potentially 'inherit' employees of another organisation that is no longer the service-provider, but who were principally engaged in providing the service to that client).

Employers usually expect to take on employees, barring a redundancy situation for example, when there is a business transfer – a standard transfer. So it is situations involving a service provision change that usually cause most consternation for employers. The UK in fact provides extra protection under TUPE, in relation to service provision changes, so one might think that the UK government would be inclined to retain it. However, once EU law ceases to be applicable in the UK, there will undoubtedly be mounting pressure to scrap this type of protection, particularly given the complaints of many non-EU employers operating in the UK.

Other statutory employment rights

Equal pay legislation in the UK dates from 1970, pre-dating entry into the EU. Whilst EU law contains the same principle, we think it inconceivable that there will be any substantial change to equal pay law.

Discrimination law is now consolidated under the Equality Act 2010 which implemented an EU Directive, and the UK has already taken steps to alter the law in relation to, for example, disability discrimination law. We see no substantial changes purely as a result of Brexit.

The origins of a large proportion of UK employment law originate from EU legislation. The implementation of EU legislation into domestic law means that employment law obligations and protections will not automatically fall away upon the UK's eventual withdrawal from the EU; the UK would have to repeal them.

UK legislation is usually more generous than the EU's minimum standards. Following the UK's withdrawal from the EU, such standards such as minimum holiday allowances may be removed from UK legislation as could other guaranteed protections, such as parental leave.

As for the Working Time Directive, however, the UK negotiated a partial opt-out, meaning the effects on UK employers and employees in other member states are different. For this reason, we see little chance of change here.

As far as these 'main' EU-derived statutory employment rights are concerned, it seems unlikely to us that Brexit will lead to any substantial change.

If you would like any additional information as to the matters set out in this newsletter then please contact us on +44 (0)20 7529 5420.

Richard Berry
Partner, Head of Employment
richard.berry@burlingtonsllp.com

Helena Antoniou
Associate Solicitor
helena.antoniou@burlingtonsllp.com

Disclaimer: this newsletter is provided for general information only and is not intended to be nor should it be relied upon as legal advice in relation to any particular matter.


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