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What happens to employment law when Britain leaves the EU?

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Following Britain’s decision to leave the EU, Harrison Drury’s Employment team looks at the possible consequences for UK employment legislation.

employment contractA formal EU exit process is likely to take up to two years, if not longer, once Britain triggers Article 50 of the Lisbon Treaty.

Once the exit process has been finalised, the government will then take steps to either repeal the EU derived employment law or modify it or possibly keep the legislation as it is. It remains uncertain exactly what will happen, but here are some of the possible consequences.

Discrimination law

It is unlikely that the government would take any drastic steps to change this area of law. It is therefore likely that the current regime will continue and employees will have the benefit of not being discriminated against on the grounds of a protected characteristic by an employer.

However, the government may consider introducing a cap (an upper limit) in relation to compensation for discrimination claims.

Agency Workers

The Agency Workers Regulations 2010 provide employment type rights to agency workers. However, given the complexity that they pose and the unpopularity among employers, there’s a chance the regulations may be entirely repealed.

Working Time Regulations and Holidays

The Working Time Directive caps working hours at 48 hours per week. Currently, UK employees are provided with the opportunity to opt out of a maximum working week of 48 hours. Employers are likely to want to see a change in this area with the decision-making power being removed from employees.

BeachClarification will also be required in relation to the calculation of holiday pay, for example, whether commission and overtime should continue to be included within holiday pay or whether holiday pay should be based entirely on basic pay, or whether another approach is used entirely.

In relation to annual leave entitlement, there are unlikely to be any immediate significant changes, but the government may consider amending the right to accrue holiday pay during periods of sick leave.

Parental leave and pay

Rights to parental leave and pay contain a mixture of rights originating from the EU, as well as the UK parliament. There are unlikely to be any significant changes in relation to this.

Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE)

Under TUPE, employees receive protection in the event that a business is transferred to a new business owner or where a service is being outsourced. It is unlikely that the government will make any immediate changes given the protection afforded to employees following a business transfer.

Immigration concerns

luggageThe principle of freedom of movement is a fundamental principle which allows large numbers of EU nationals to work within the UK and vice versa. A number of industries within the UK rely heavily upon foreign national workers.

One of the main concerns following Brexit is the impact this will have upon businesses losing skilled and talented employees resulting in labour shortages and the time and costs in recruiting replacements. In order to combat this, the government may seek to place restrictions upon EU nationals working within the UK. For example, a points system currently used for non-EU nationals could be used for EU nationals or immigration could be restricted to areas where there are skill shortages.

Although any potential changes in this area remain to be seen, it would arguably be in the interests of the UK economy for the government to reach a prompt deal in which the UK would continue to enjoy the right to employ EU nationals and for UK nationals to continue to have the right to work within the EU given the risk of businesses losing skilled workers.

The impact of the Brexit upon employers

It is difficult to calculate the likely impact which the above changes will have upon employers until the actual changes come into force. Any changes which the government does decide to make will be dependent upon the type of relationship which is maintained with the EU.

Railway2For example, if the UK follows the European Economic Agreement (EEA) this would mean that the UK would still enjoy the benefit of having access to the EU’s single market, free movement of goods, services, and people. However, in return the UK would likely be required to follow most aspects of the European driven employment law.

Furthermore, as much of the EU employment law has become entrenched within the UK’s legislative system, it is unlikely that the government will make any drastic changes. As explained above, the likely changes which are to take place are in areas which cause the smallest amount of disturbance to employers.

Any changes made by the government once a formal exit has taken place are likely to be gradual. However, employers can take proactive steps to prepare their business. For example, employers are advised to consult with employees and deal with any concerns that employees may have. Employers are also advised to undertake a detailed scrutiny of employment contracts in order to ensure ongoing compliance with all EU derived employment rights.

For more information on any of the issues raised in this article, or any other employment law matter, contact Harrison Drury’s Employment team on 01772 258321.

We have a team of experienced lawyers based all over Lancashire, including Lancaster, Kendal, Garstang and Clitheroe, as well as our head office in Preston.


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