Ahead of the 23 June vote, leading 'Brexiteer' Priti Patel MP – then employment minister – said a leave vote would let the UK ditch the "burdens of EU social and employment legislation" and free employers from "pointless" rules imposed by Brussels bureaucrats. Meanwhile, the Stronger In campaign warned that critical workers' rights would be "vulnerable to being scrapped".
The referendum produced a clear vote in favour of the UK's exit from the EU, leaving years of complex negotiations ahead. More than two months on businesses and employees are asking: "Now what?"
Are we set for a dynamic new environment where employers can discard large swathes of employment legislation, cut costs and bureaucracy and hire staff on more flexible terms? Or is this the dawn of a new era of declining employment rights, with safeguards stripped away by uncompromising employers?
The government could abandon the European Communities Act 1972 to ease "Brexit", which would put at risk several measures derived under EU legislation. However, such radical reform to existing law is unlikely – the consequences of abruptly reversing legislation so densely entwined with a host of UK statutes would be the opposite of the orderly exit the government promised.
While EU input has been crucial to many key areas of UK employment law, such as working hours, discrimination protections and holiday pay, this has not been without the UK government’s agreement. In many cases, the UK has even enshrined EU principles into its own legislation, such as the implementation of the Working Time Regulations 1998 and the Equality Act 2010.
The UK has often gone beyond many of the safeguards and benefits granted by EU law. For example, enhanced statutory holiday entitlement, enhanced maternity and paternity rights and shared parental leave. Such rights are unlikely to be changed.
The government wants to preserve consistency as much as possible and any major overhaul will be politically and commercially unattractive, as well as a bureaucratic burden. Furthermore, it would be a radical and unpopular decision to differentiate the UK from its neighbours by curbing employment protections. Highly skilled and mobile European workers might vote with their feet, deciding they are better served by the more accommodating regimes of other nations.
It’s more likely existing practices will be tweaked over time, with the following areas susceptible:
TUPE (Transfer of Undertakings Protection of Employment)
TUPE protects employees' rights in the event of a business transfer, but employers often find their hands tied when seeking to harmonise the terms and conditions of transferred staff with those of their existing employees. We expect a tweaking of these regulations to facilitate a more flexible and practicable process for employers, while continuing to provide protection for employees’ core rights and entitlements.
Agency worker rights
The Agency Workers Regulations 2010 have been unpopular with businesses, especially the requirement that they should provide agency workers the same pay and holidays as permanent employees after 12 weeks. A recommendation in the coalition’s Beecroft Review for these to be set aside was not acted on. However, an attempt to curb agency worker rights would not be surprising.
The European Working Time Directive, enshrined in UK law by the Working Time Regulations 1998, limits average working hours, rest periods and annual leave. While the UK was granted an opt-out from the maximum 48-hour working week, employers have criticised the process of having to obtain the worker's consent. We expect businesses to lobby for the removal of this limit.
Other unpopular measures stemming from the directive could also be challenged, namely the right for workers to accrue holiday entitlement while on sick leave and the obligation that holiday pay includes non-guaranteed overtime and commission payments.
Brexit means EU citizens will no longer have the automatic right to reside and work in the UK, and vice versa, unless they obtain permanent residency. Immigration laws will be an integral part of the Brexit negotiations and the UK is unlikely to take any immediate steps to curtail EU nationals' freedom of movement rights. The government is expected to honour existing residence rights for EU citizens residing in the UK (or introduce transitional arrangements) in return for the same treatment for UK citizens residing in other member states.
Reform of the Asylum and Immigration Control Bill is likely to end the automatic right of EU citizens to enter the UK long term, which will be pushed by those who supported Brexit on immigration grounds.
Prime Minister Theresa May is likely to be a strong advocate for equal pay and push for better female representation in management positions. Mrs May has also pledged to overhaul corporate governance including appointing employees to boards, something common in countries like Sweden and Germany.
While it may be years before a post-Brexit employment law regime is fully formed, businesses should start preparing now to protect their workers and revenues. Larger firms are already considering if they want their operations based in the UK, and relocations and restructures are an inevitable consequence of the current uncertainty.
By Claire Knowles, partner at Acuity Legal