Employment law post-Brexit




Article 50 of the Treaty of the European Union (the Lisbon Treaty) was triggered on 29 March 2017, beginning the formal process of the UK’s exit from the EU. It provides for the negotiation of a withdrawal agreement between the EU and a withdrawing state over a two-year period, at the end of which, if no agreement is concluded, the state’s membership will end automatically unless the European Council and the member state agree to extend this period.



At this stage, nobody knows what employment law will look like once the UK leaves the EU. However, the current government's official position is as follows:



• current prime minister Theresa May has promised that all workers’ rights that derive from EU law will be “fully protected and maintained” under national law while she remains in office;


• the UK government has reached an agreement in principle with the EU on a twenty-month "transition period" ending in December 2020, during which the UK is to remain bound by most EU laws, including those covering workers’ rights; 


• as Law at Work goes to press, a new statute, the EU Withdrawal Bill, is being scrutinised by the House of Lords. The Bill proposes:


◊ to convert all EU law, including employment laws, at the date of leaving, into domestic law;



◊ to repeal the European Communities Act 1972, which took Britain into the EU and gave EU law precedence over UK laws; and


◊ to end the jurisdiction of the ECJ; 



• having converted EU laws into domestic law, the government hopes to be free to change these laws over time after Brexit. In the context of employment rights, this is a significant concern for trade unions (see below). The extent to which change is possible will depend on the terms of the exit and any trade deal;


• a new “sifting” committee of MPs (the European Statutory Instruments Committee) will scrutinise Ministers’ proposed changes to EU-derived statutory instruments and highlight issues that should be considered by parliament, following concerns that the government was executing a power grab by seizing wide powers to scrap or water down rights derived from EU law without a parliamentary vote (so-called “Henry VIII” powers);


• despite widespread objections, the Bill in its current form is to withdraw the UK from the EU Charter of Fundamental Rights, which is the EU's human rights agreement;



• section 6 of the Bill sets out how courts are to deal with ECJ case law after the exit date. Senior judges have called for much more clarity than the Bill currently provides. The Bill distinguishes between “pre-exit” and “post-exit” case law;


• lower courts and tribunals will be required to follow all “pre-exit date” rulings of the ECJ and domestic rulings based on EU law (an example would be domestic rulings on the calculation of holiday pay discussed in Chapter 4, page 121). However, the Supreme Court will be able to decide not to follow these rulings;


• courts will not be bound by ECJ rulings made after the exit date, but they will be able to choose to take them into account if they consider this appropriate;


• after the exit date, no more cases can be referred to the ECJ; 


• some cases that have already been referred to the ECJ will remain undecided at the exit date. A House of Lords committee is considering whether the Bill needs to spell out how UK courts should treat these cases and also at what happens if, once the UK has left the EU, the ECJ overturns or clarifies its own pre-exit case law.


In practice, huge political uncertainty remains at this stage, as the eventual outcome depends entirely on political pressures and on the terms of exit and of any future trade deal with the EU. Here are some specific areas of concern, from the perspective of statutory employment rights:



◊ Agency workers: The Agency Worker Regulations 2010 are based entirely on EU law and are vulnerable to repeal (see Chapter 2). The same is true of laws protecting part-time and fixed-term workers;



◊ Collective redundancy consultation: the statutory duty to consult collectively, the length of consultation, topics for consultation, the requirement for consultation to be “tantamount to a negotiation”, and for protective awards to be based on uncapped wages, are all based on EU law (see Chapter 11);



◊ TUPE transfers: TUPE is based entirely on EU law. The basic framework, in particular the “automatic” transfer of employment liabilities, is likely to remain unchanged. This is because businesses place a high value on the certainty of knowing who has responsibility for employment liabilities on a sale or service provision change, and there is little appetite in the “business community” for change. However, other key aspects of TUPE, such as limits on employers' ability to change contract terms and conditions post-transfer, collective consultation obligations before a transfer and uncapped protective awards, are all vulnerable to erosion or repeal as “barriers to business” (see Chapter 12);



◊ Discrimination: The UK's equality laws are greatly influenced by EU law. In particular, awards of compensation for discrimination are currently uncapped thanks to EU law (see Chapter 7);


◊ Working time and holidays: Holiday pay and other working time rights, including, in particular, the requirement for holiday pay to be based on “normal remuneration” and the treatment of statutory holiday during periods of sickness are under threat. In December 2017, there was widespread media speculation that the government planned to seek to exclude the Working Time Directive, in particular paid holidays and the 48-hour week, in any post-Brexit trade deal with the EU;



◊ The rights of EU nationals already based in the UK and the question which body has jurisdiction over those rights: The EU wants a continuing role for the ECJ. This is a key area of negotiation;



◊ Immigration rights: A major area of uncertainty for employers and workers is immigration and what regime is to replace EU freedom of movement. This is a key issue for the current government in its planned negotiations for a new relationship with the EU; and



◊ Human rights at work (see below).




Some individuals will have separate private contractual rights that match or exceed the original EU right. These will remain in place unless and until they are changed by agreement, whatever legislative changes are made. Where a union is recognised, that agreement should be reached through collective bargaining (see Chapter 5).



The “Brexit” vote also has important constitutional and other implications for the devolved nations, especially Northern Ireland. 


In December 2017, the EU announced plans for a new Directive on transparent and predictable working conditions in the EU to strengthen workers' rights. The proposals are part of the European Commission’s European Pillar of Social Rights, announced by the European Parliament, Council and Commission in November 2017. 


The TUC is pressing for a legislative guarantee, enshrined in the final agreement on leaving the EU, that workers' rights will be fully maintained after Brexit and that any improvements made by the EU will be at least matched by UK law, because as the TUC says, "no one voted for worse rights at work".