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EU Referendum-The Implications of the Brexit vote on Employment Law

30th June 2016

The result of the EU Referendum presents one of the largest challenges in UK legal history, and leaves businesses and individuals unsure as to how it will workers' rights in the UK. In this article we set out our initial opinions and predictions.

Short- term

The first, and most obvious point is that it is very early days, and it will take some time before the Government, whatever form or colour that takes, comes to a clear view as to what direction it wishes to take in respect of employment law changes resulting from the EU referendum.

Secondly, the UK remains a member of the EU, and subject to the laws of the EU, and judgments of the EU Court of Justice until the exit from the EU takes effect- which could be a couple of years away.

The immediate answer therefore must be that there is no immediate change in UK employment law, and no immediate "bonfire" of EU Directives and Regulations.

Medium Term

The full impact on UK employment law will only become clear once the exit negotiations have been concluded. It is distinctly likely that the EU will only allow access to the free trade zone if the UK agrees to maintain much of the employment law introduced by the EU so that other workers in the EU are not undercut by UK workers with lesser employment protection (and hence likely to be cheaper to employ, hire, and to fire).

In the medium term it is important to note the political realities faced by the political parties in the UK. There would be little political will to make radical changes to employment law, for fear of losing too many votes. It is difficult to see any political party seeking to remove the right to paid holiday pay, the right to a rest break at work, or reduce the protections from discrimination.

Origins of Employment Law

As the Leave campaign  pointed out, there is a substantial body of employment law that has its origin in the UK, not the EU. The main provision in this list is the protection from unfair dismissal. But in addition to this, is the right to a statutory redundancy payment on being made redundant, and rights to equal pay (under the Equal Pay Act). These rights pre-date the UK's membership of the EU (or EEC as it once was known). In addition some other important employment law has its origin in the UK, such as the disability discrimination legislation (the Disability Discrimination Act 1995 predated the EU law on this subject).

Status of Employment Law

Contrary to common belief, the UK has introduced most EU employment law into UK Acts of Parliament or Statutory Instruments (ie Regulations). This means that those rights are part of UK law by virtue of being contained in the respective Acts of Parliament or UK Statutory Instruments. Examples include TUPE (the Transfer of Undertakings Regulations), and the Working Time Regulations. It is the Working Time Regulations that bring into effect the requirements of the Working Time Directive, but in the vast majority of cases the Employment Tribunal does not have to refer back to the EU Directive in dealing with the claims brought over working time; they refer to the Working Time Regulations.

It is also a fact that the UK Government has often gone beyond the strict minimum requirements set out in EU Directives, for example giving a  greater paid holiday right than the EU Directive requires, and ensuring that "service changes" are expressly covered by the provisions of TUPE.

However, we do think that some areas of employment law may be candidates for change due to the outcome of the EU Referendum.

Specific Areas

Fixed Term and Part Time Workers rights

It could well be that these will be relaxed so that only "employees" are protected, rather than the broader category of "workers"- which is wider.

Agency Workers

UK industries have traditionally seen agency workers as a part of a flexible work and employment tradition, and there were wide objections to EU law on this area. We think it is therefore likely that there will be at least some dilution of the rights and protections given to agency workers. 

Collective Redundancy Consultation

The UK government has already reduced the minimum consultation period in respect of large scale redundancies. After leaving the EU it is possible that it will further reduce this, and possible remove or reduce the consultation period for smaller redundancy exercises. 

Discrimination law

It is our view that discrimination law is very unlikely to change, due to the political consequences and damage in reducing this protection. However, the law may be changed in respect of compensation awards for discrimination- perhaps limiting the compensation available (pretty much in a similar way to limiting compensation for unfair dismissal).

Unfair Dismissal

As this is UK law, it is unlikely to change due to the EU referendum result.

Working Time/ Holiday Pay

The entitlement to holiday pay in unlikely to change- we think that it would be deeply unpopular to even try to reduce this right. However, the basis of calculating holiday pay may change. Working time rules may be relaxed, but in reality the opt-out of the 48 hour working week effects a relatively small number of people.

It will be challenging for all.

So the best advice is to keep watching this space!

At Hallett Employment Law Services Ltd we can give practical legal advice on how you should deal with the issues raised in this article. 

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