What changes will be made to employment law if the UK leaves the EU?

Posted on: July 19th, 2016

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

It should be remembered that the UK has implemented greater employment protection and benefits than required by EU law in many areas.  It is therefore predicted that in such areas there is likely to be little change.  There are areas which are a source of varying levels of irritation which may change eventually depending on the trade deals we negotiate, the state of the economy and the competing demands on parliamentary time.

Discrimination legislation 

It is unlikely that the UK would reduce the number of protected characteristics. 

It might, however, implement a cap on the level of damages awarded in discrimination cases.  It has been unable to do so previously due to EU law. 

The Employment Appeal Tribunal has previously expressed concern that some direct discrimination might be capable of objective justification (such defence currently only available in indirect discrimination claims) and it might be that this defence will be applicable to both direct and indirect in future.

Transfer of Undertakings (Protection of Employment) Regulations 2006 

The UK adopted the 1981 Regulations after a 10 year delay and following the threat of legal action by the EU.  The approach in bringing in the 2006 Regulations was somewhat different. It gave employee protection in service provision change situations which is not required by the EU.  We suspect that the changes will centre around:

  1. relaxation of the consultation requirements with the removal of the requirement for trade union/employee representative consultation where there is no recognised trade union or appropriate employee representatives.
  2. an introduction of the ability to harmonise terms of employment after a transfer has taken place.  This might be similar to the 2014 changes which allows for there to be changes to terms derived from collective agreements one year after transfer provided the overall change is no less favourable.  If we are in a recession situation, it might be that it will remove any restrictions to help to promote growth in the economy.

Working Time Regulations 

The UK implemented greater holiday provision than was required by the EU (5.6 weeks and 4 weeks respectively).  It is unlikely that holiday provision will change.  What is most likely to happen is the reversal of the unintended additional costs which have been placed on employers by EU case law.  We predict the following changes:

  1. The requirement to pay overtime and commission as part of holiday pay will be removed
  2. Clarification of recent EU decisions that have left the question of how holiday pay is calculated uncertain
  3. The requirement to allow employees to accrue holiday whilst on sick leave and the various complications that leads to
  4. Removal of the 48 hour average working week (which is usually ignored anyway)

Collective Redundancies 

We suspect that the number of employees at risk which trigger a collective redundancy situation will change.  Currently it is the proposal of 20 or more employees which triggers a collective redundancy situation and we predict it will be left so that it is only triggered when 100 or more are at risk.  There may also an exception introduced for insolvent companies.

Data Protection 

The UK would become a ‘third country’ under EU data protection rules meaning that UK businesses operating in the EU would need to provide adequate protection for the rights of employees whose personal data is transferred from the EU to the UK.

Family-friendly legislation 

The Government has introduced family friendly legislation that is much wider than the EU requirements and it is unlikely that these will be changed.

Unfair Dismissal Rights 

We do not predict any changes to unfair dismissal rights as a result of us leaving the EU; whether changes will need to be made due to the economic conditions at that time is a different matter.  We have seen the desire to reduce employee protection already to help businesses (such as the increase in the qualifying period before being able to bring a claim from 1 year to two years and the changes to the statutory cap on compensation).  The most likely change in this area would be to exclude small or micro businesses from the unfair dismissal regime altogether.

Agency Workers 

The employment rights the Agency Workers acquire after 12 weeks employment has been universally unpopular with businesses and ignored by many.  It may be that the Government seeks to remove these provisions as they do not appear to be working in practice.

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

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