Brexit and It's Impact on Employment Law

Brexit and It's Impact on Employment Law

In light of recent speculation in the media that the government may look to leave the single market, I've taken some time to explore the potential impact that this could have on employment law.

Firstly, it is worth pointing out that a number of key areas within employment law are unlikely to see much change as a result of the UK leaving the European Union. More specifically, the legislation relating to unfair dismissal (as set out under the Employment Rights Act 1996) does not emanate from the European courts. This relatively long-standing piece of domestic legislation is unlikely to see any change as a result of Brexit.

By equal measure, a lot of the discrimination legislation contained within the Equality Act 2010 was in existence prior to the UK’s entry into the EU in 1973. A number of other regulations and legislation that could be classed as family friendly (such as the maternity regulations and the right to request flexible working) are either domestic in nature or go much further than is required under European directives. Against this backdrop it would not be logical for the government to repeal or make any substantial amendments to this legislation.
In my view, it would be far-fetched to say that an exit from the European Single Market will lead to wide scale re-vamp in terms of existing employment legislation . However, this article explores some of the changes that we may expect to see.

The last five years has seen a number of decisions on the area of holiday pay which has involved the European courts. Current domestic legislation does not appear to offer a clearly defined blueprint as to what does constitute holiday pay. This has not only led to a confusing situation for employers. It has thrown up as lot of case law that could lead to increased liability for employers. For instance, the recent Lock v British Gas in which commission was held to be included under a worker’s holiday entitlement could have heavy implications for employers, particularly those who operate within a sales driven environment.

It is possible that the UK government may look to redress this confused situation in relation to working regulations. An exit from the single market would give it the ability to do so. Over time, we may see some clearer legislation in terms of how holiday pay is defined under the regulations. Many employers will also plead that an accompanying Code of Practice (or some other form of guidance) on the area of holiday pay would provide some much needed clarity. Readers will probably be aware of the fact that the 5.6 weeks’ holiday entitlement goes further than the 4 weeks set out under the directive. Therefore, it is unlikely that we will see much change in terms of the basic statutory entitlement that is afforded to workers under domestic legislation.

TUPE is another area through which we may expect to see some changes. Existing legislation and case law makes it difficult for employers to harmonise terms post TUPE transfer. This often causes problems for an employer who inherits employees in a TUPE scenario on inflated terms and conditions of employment. The employer is placed in a predicament whereby it cannot vary fundamental terms and conditions without risking those transferring employees bringing breach of contract claims. By not varying terms however, the employer is faced with an inequality of terms and conditions amongst the workforce which can naturally cause problems amongst employees. An exit from the single market may see the government put measures in place to give employers greater freedom to vary and harmonise employees’ terms and conditions after the point of a TUPE transfer. This is the main area of change that we could see in an exit from the single market. Otherwise, the TUPE regulations may not be subject to that much fundamental change as a lot of businesses are generally accepting of the notion that the regulations are necessary when it comes to commercial acquisitions.

Many commentators have speculated that the Agency Workers Regulations 2010 may be in line for an outright abolition following an exit from the single market. Since their inception, these regulations have proved to be very unpopular with many employers. The obligations that the regulations place of employers (particularly in the area of pay equality) after the 12 week qualifying period have proved costly and have restricted the flexibility available to employers when it comes to agency recruitment.

Lastly, Brexit could result in a change in terms of the obligations placed on employers in a collective redundancy situation. An outright abolition of the consultation period is likely to result in a large degree of industrial unrest. Given that these obligations do emanate from a European directive, it is possible that the government may seek to increase the employee threshold at which these obligations are triggered (e.g. from 20 to 30 or more employees).

I hope you find this useful in terms of what may be on or may not be on the horizon.

David Hession is a legal solicitor at Simpson Millar LLP

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