News Update

The Future of the Workplace: The Impact of Brexit

The EU referendum vote on 23 June 2016 revealed a stark divide in how the UK perceived its membership in the EU; for some, the EU was a useful source of trade and highly skilled employees, but for others, it generated unnecessary bureaucracy and red tape. Three and a half years later, Brexit D-day has finally happened (31 January 2020). Although this only marks the start of an 11-month long transition period, it nevertheless provides some certainty in what has otherwise been a tumultuous political period in the UK.

Regardless of divisive political views, most individuals and UK businesses alike are probably quite relieved to see some light at the end of the (Brexit) tunnel. However, there remains a great deal of uncertainty about what the future will look like in post-Brexit Britain. From an employment law perspective, businesses are concerned about how (if at all) Brexit will affect the employer-employee relationship.

How does the EU currently affect the workplace?

The EU currently permeates the workplace in a number of important ways. For one, at the requirement stage, many businesses rely on a key tenet of the EU – the freedom of movement – to employ EU citizens in an attempt to plug recruitment gaps and/or address skills shortages. Since EU citizens currently do not require a permit to work in the UK, companies can avoid otherwise onerous immigration requirements that apply to non-EEA citizens (such as sponsoring work VISAs).

Once employed / engaged, employees, workers and (to some extent) agency workers become entitled to a varying degree of employment rights, a number of which originate from the EU. These include:

  • Working Time Regulations 1998, the purpose of which is to set down maximum weekly working time limits, night work limits, time off and rest breaks as well as minimum entitlement to paid annual leave for all workers, among other things.
  • The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) which grants employees the right to transfer to another undertaking on the same employment terms on a business sale or in a change in service providers. Although TUPE can be useful for both employers and employees, a real source of difficulty for employers is the restriction on harmonising employment terms post-transfer.
  • Agency Worker Regulations 2010 (AWR) which grants agency workers a right to the same employment terms as permanent employees. The AWR tends to be particularly unpopular among employers because agency workers gain a right to equal treatment after only 12 weeks of employment.

Further, the EU has been a key driver of collective consultation rights and certain health and safety requirements at the workplace including, for example, the need for employers to pay for eye tests and glasses for workers that regularly use computer screens.

What will happen now?

The UK has entered enter a transition period, which is due to end on 31 December 2020. The purpose of the transition period is for the UK to negotiate a trade deal with the EU. Although the UK will remain a member of the customs union and the single market, the transition period is expected to mark the end of EU’s direct political influence over the UK.

Even though a number of UK employment laws derive from the EU, it is likely that there will be limited changes to employment laws during the transition period. This is because the government has passed a law to incorporate EU legislation into the UK legal framework during that time. Further, given the importance of negotiating a trade deal with the EU, it certainly seems unlikely that the UK government’s first priority during the transition period would be to overhaul existing employment rights. This could also cause unnecessary confusion for employers who are already trying to navigate the challenging employment law minefield.

However, once the dust settles, if the UK restricts the EU’s desire for full regulatory alignment, the UK government will have greater scope to take a fresh look at employment rights. Although it is impossible to know exactly what, if any, changes will take place, we know that certain EU-derived rights are generally considered quite burdensome and are therefore unpopular among employers. As such, we suspect that the likes of TUPE and the AWR may be one of the first employment rights in the firing line. Although this may be welcome news for employers, employees may understandably feel concerned at this prospect. With the UK government taking over the legislative reins from the EU, could Brexit prompt a huge overhaul or reduction of employment rights?

The short answer is probably not. For one, a number of employment rights, such as a right not to be unfairly dismissed or a right to receive a national minimum wage, do not stem from EU law at all. This means that Brexit is unlikely to affect those. Further, historically, the UK has been a ‘market leader’ of employment rights in many ways. For example, before the EU introduced anti-discrimination legislation, the UK already had in place a right to equal pay and prohibited discrimination on the basis of race and disability. EU-wide changes therefore subsumed existing UK discrimination legislation. The UK also introduced a right to return from maternity leave before the EU did. As such, history suggests that significant reductions in employment rights are probably unlikely in the medium term (although some changes to simplify employment law may be attempted).

In any event, the UK government will need to think carefully about how far it can diverge from EU-wide employment rights. If it goes too far, that could cause unintended adverse consequences for UK business.

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Key Contacts

Jonathan Bruck
Head of Employment
+44 20 7539 7305
Karin Kiho
Solicitor, Employment
+44 20 7539 7304
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