Blog: What Brexit would mean for employment law

Simon Martin, Specialist Employment Lawyer at Menzies Law

Unless you have been stuck in a cave for the past few months, it can’t have escaped your notice that we are a few short weeks away from the EU referendum.

The polls indicate that the result is too close to call, but given the woeful performance of the pollsters  in the run up to the General Election we need to take all opinion polls with a very healthy pinch of salt (is a pinch of salt healthy? Ed).

We should think about what would happen to UK employment law if the Leave side prevails.  The short point is that no one knows what will happen but we can have a few educated guesses.

A vote to leave the EU (‘Brexit’) could in theory mean that some EU employment laws being rolled back fairly shortly after the vote. Last week Michael Gove said that a Leave vote would mean that “we wouldn’t have all the EU regulations which cost our economy £600million every week”. According to a recent study, the Working Time Directive is the third most expensive regulation and the Agency Workers rules are the fifth most expensive.  This gives us a fairly good idea of where a successful Leave campaign would focus its attention.

The likely scenario is that, following a Leave vote, we would face a possibly lengthy period of uncertainty, followed by piecemeal change.  The divorce process we know will take at least two years (possibly many more) so it’s likely that not much change would happen straight away.

There is one factor that makes us think that there could be some major changes, and other factors that indicate that there may not be too much change following a Leave vote.

The factor that could lead to major change is the composition of the UK government following a Leave vote. There is a general consensus that, if the Leave campaign wins, David Cameron would resign fairly shortly afterwards, which would result in a leadership contest.  It is likely that other prominent Remain campaigners would step down.  One assumes that the new leader would be someone who was a leading light in the Leave campaign.  Front runners to lead the Conservative party would therefore be Michael Gove and Boris Johnson.  Many commentators think a shift to the right in the government will mean that there will be a more ruthless pruning of employment rights that derived from Europe.

The reality is, however, that regardless of the political will, any changes to UK employment law will depend on the terms the UK agrees to, possibly reluctantly, to secure trade deals with the remainder of the EU. In those negotiations the UK may come under EU trade pressure to maintain employment rights if we were seen to be unfairly undercutting them for a competitive advantage.

Another limiting factor on any changes is that UK laws which originate from the EU have become well established in UK domestic law,  so it would be a determined government who would go for wholesale repeal.  Examples of such rights would be in relation to part-time and fixed term workers’ rights, some equality laws and TUPE.  If the Leave campaign do win then they may not repeal a lot of such legislation, instead perhaps opting for reform. The CBI, for instance, has been lobbying for a cap on awards for discrimination claims and we could see something like that.

We must also not lose sight of the fact that not all UK employment law derives from the EU. The unfair dismissal rules are a UK creation and would not be affected by Brexit.  Even the rights that derive from Europe have often been “gold plated” by UK governments.  Take annual leave for example: the European Working Time Directive requires that all workers be given 4 weeks’ annual leave  (20 days for a full time worker), but the UK parliament has added a further 1.6 weeks’ (8 days) leave on top.  It feels rather unlikely (although perhaps not impossible)  that a UK government would have the political will to repeal UK law too, in order to chip away at these established rights.

Changes to UK employment case law

At present, the final court of appeal is the Court of Justice of the European Union (CJEU, formally  known as the ECJ). This means that UK courts tend to follow the decisions of the CJEU.

In the event of a Brexit vote, UK courts would no longer have to follow the rulings of the CJEU.  However, in the short term, that probably would not make too much difference.  Take decisions on TUPE cases for instance; many UK Tribunals and higher courts (i.e. Employment Appeal Tribunals,  Court of Appeal and Supreme Court) have made decisions about TUPE matters that follow the CJEU decisions. That means that there is a large body of TUPE cases decided by our own UK courts which would still be binding on UK employers even after a Brexit.

Over  a period of time, however, there could well be a move away from the CJEU decisions. This could lead to problems for  employers with establishments across Europe. They could be faced with markedly different rules affecting its workforce in different countries.

End of free movement of workers?

We all know about the right of EU citizens to freely live and work across the EU, which supports employee mobility, labour supply and flexible recruitment practices. It’s possible, following a Leave vote, that citizens of other EU Member States would no longer enjoy an automatic right to travel to and work in the UK (and UK citizens would no longer enjoy rights of freedom of movement in the EU). In reality, it would form part of the negotiations for a new relationship with the EU, following a Leave vote, with the EU expected to demand some form of free movement of people in return for the UK enjoying free movement of goods.  We can’t predict the result of those important negotiations but we can be certain that they will be fraught and lengthy!

Will my EU workers be deported?

It’s certainly reasonable to assume that there would be transitional arrangements for EU citizens already working in the UK. No-one is really suggesting that anyone will be deported on 24 June in the event of a Leave vote. It would seem likely that EU nationals already working in the UK would be permitted to stay, at least for a period, in return for similar arrangements for UK citizens working in other EU countries.

Conclusion

There are apocalyptic threats from both sides of the debate about the consequences of a vote to Leave and Remain. If there is a Leave vote then we will be entering into a lengthy period of uncertainty, the status quo in employment law will prevail for a couple of years and it’s only really at the end of that period that we will know the real consequences of such a vote.  We suggest that it will come down to a question of UK political will, counterbalanced by the deal that the UK strikes with the rest of the EU.

Whatever your views, do make sure that you exercise your right to vote and encourage all your colleagues to do so too.  It’s a huge decision, and we all must have our voices heard.

Simon Martin
Partner

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Simon Martin, Specialist Employment Lawyer at Menzies Law