What does Brexit mean for employers?

Posted on: August 10th, 2016

Following the outcome of the EU Referendum there is much that is left uncertain, so we are here to provide you with guidance on the consequences of the decision to leave the EU.

The EU Referendum is not legally binding; it is still up to the Government whether it follow the will of the majority of voters. It is clear from what Theresa May has said before she became Prime Minister that “Brexit is Brexit”; so it’s just a question of timing. The EU referendum was simply an indication of the path we are to take; not the first step on that path.

This means that the UK is not leaving the EU immediately. The process of exit only starts once Article 50 of the Lisbon Treaty has been triggered by the UK giving formal notification of the decision to leave the EU. We know Theresa May said she will not be rushed into this and that the EU has indicated that it will not have informal or formal negotiations with us before Article 50 has been triggered, this stance appears to have weakened in the last few weeks.

After Article 50 has been triggered the UK will only leave the EU after a period of 2 years or the earlier date of any Withdrawal Agreement negotiated.

So what does this mean for employers? Well, we thought that we would set out some frequently asked questions.

1. Do workers and employees currently working in the UK as a result of the freedom of movement of workers in the EU have to leave?

No.

There has been a rise in racist rhetoric since the outcome of the EU referendum vote with people expressing the incorrect view that all persons in the UK who are here because they are a citizen of an EU country should leave immediately. At no time during the campaign was there any suggestion that there would be mass deportations when the UK leaves the EU. Theresa May has indicated that whilst she would like to “guarantee the position” of EU citizens currently in the UK, she considered that “as part of the negotiation we will need to look at this question of people who are here in the UK from the EU”.

This appears to be a negotiating tactic and the chances are that it is likely that most people who are in the UK will be permitted to stay in the UK.

This disturbing rise of racism could happen in your business, and if it does it needs to be addressed (see questions 5 & 6 below).

2. Do we have to follow EU employment law anymore?

Yes.

Until we leave the EU we are still governed by EU directives and regulations and case law. At the point of exit, it is likely we will continue as we are at the moment. The rationale for this prediction is that the Government has a very busy time ahead and we suspect this activity will be based on negotiating trade deals. The Government has not had to negotiate such trade deals in the past 40 years because it has not needed to by virtue of being in the EU so there is much to do; not least in ensuring that they have the skills to carry out effective negotiations.

Angela Eagle has called for the Government to guarantee the level of current EU employment rights in UK legislation now to remove any uncertainty.

It is interesting to note that Theresa May mentioned equal pay for women in her first speech as Prime Minister and in her leadership bid signalled the need for publication of the earnings of Chief Executives and those of the average paid employee in a business. It seems the Gender Pay Gap reporting is here to stay and there might be moves to extract greater detail either as part of that process or as stand alone pay disclosure.

Our prediction however is that the UK Government will keep the legal position in relation to the EU as it is at the point of exit and changes will be implemented over a period of time depending on economic forces) and demands, including the terms of negotiated trade deals.

3. Will I have to make visa applications for workers and employees I have in the business who a citizens of an EU member state?

This is currently unknown.

Whilst it is unlikely that the workers/employees would have to leave the UK, once the UK leaves the EU they will have to remain in the UK under some visa regime. It might be that there is an automatic right for those in work to remain and a distinction is drawn on those moving to the UK after it has left the EU. There might be transition arrangements put in place.

There is a view that it is highly likely that the UK will negotiate a deal for the free movement of people for the benefit of our economy, but it is unlikely to be complete free movement. So, most probably free movement for those who add benefit to the economy.

4. As we lead up to the exit from the EU, what happens if I choose not to employ an EU national so I don’t have to worry about visa applications in the future?

As the law currently stands, this will be unlawful and you could have discrimination claims presented against your business as a result.

5. What do I do if one employee (A) makes a racist comment to another (B) because A considers B should no longer be in the country?

There has been a lot of publicity about racist slogans being put in public places and racist tweets etc.

Anything done by an employee in the course of their employment is treated as having also been done by the employer, regardless of whether the employee’s acts were done with the employer’s knowledge or approval. This means an employer can be held liable for discrimination or harassment committed by an employee in the course of employment. However, there is a defence available to an employer if it can show that it took “all reasonable steps” to prevent the employee from doing the discriminatory act or from doing anything of that description.

So what you need to do is ensure that you took all reasonable steps. This means having an anti-harassment and anti-bullying policy and an Equal Opportunities policy. You need to ensure that all employees are trained in relation to such policies and make it clear that such behaviour will not be tolerated in the workplace.

In the event of an incident, investigate it and take disciplinary action against the perpetrator.

6. What do I do if a customer or other third party makes racist comments to an employee?

Whilst the third-party harassment provisions in the Equality Act 2010 have been repealed, it is still possible for businesses to be held liable for failing to act to prevent third-party harassment. The argument would be that an employer’s inaction in the face of third-party harassment was itself unwanted conduct “related to” a protected characteristic that violated their dignity or created an intimidating, hostile, degrading, humiliating or offensive environment for them.

7. What do I do if there is an argument between two employees over the Brexit result?

It was made clear in 2010 by the Government Equalities Office that it was never the intention of parliament to protect political beliefs against discrimination. The Tribunals, however, have held that if the political belief amounts to a philosophical belief, for example “democratic socialism”, then it is capable of being protected.

The European Court on Human Rights has also held that UK law must be changed in order to provide specific protection against dismissal on grounds of political opinion or affiliation if it is to comply with EU legislation.

So, the practical answer is that if you are a public body (and have EU law applying directly to you rather than just through UK legislation), you probably should include political beliefs in your Equal Opportunities policies and deal with the matter in the same way as racist comments in question 5 above.

If you are not a public body, then it will depend on whether the argument centres around a political belief that amounts to a philosophical one.

Summary

The likelihood is therefore that nothing will change in the short-term and possibly even the medium term.  It will only be after we have negotiated trade deals, understand what obligations we will have to keep as a result of those and have a better understanding of the impact of the referendum vote on the economy that any changes will be considered.

As Theresa May is now our Prime Minister, it is probably also worth mentioning that during the Brexit campaign she expressed the view that irrespective of whether we stayed in the EU or left it, we should ensure that we are no longer bound by the judgements of the European Court of Human Rights.

We will provide updates and guidance as we know more and as the situation develops.

Read more here about our predictions for the changes to employment law once the UK leaves the EU.

Read our Traffic Light Guide to Employment Policies to help you understand which policies you must have, those we would recommend and those which are optional, depending on your business.  Click here to find out more.