What are the implications of Brexit for Employers and Employees?

May 12, 2017

On 29 March 2017, Theresa May, served Article 50 notice to exit the EU. It is the first time that an Article 50 notice has been served in the history of the EU. The full consequences of the serving of the notice remains to be seen. It will mean that there will now be two years of negotiations.

As we have already seen in our two previous blogs, much of UK law is derived from EU law. In our last Brexit blog, we considered the legal implications for businesses that have registered trademarks. In this blog, we consider the implications for employers and employees post-Brexit.

In recent years, a large proportion of employment law has been derived from EU Regulations. However, several employment law protections for employees were already in place prior to EU law being adopted into UK law.

It will remain to be seen whether the UK will repeal the laws that have been put in place to protect employees under EU Law. It remains to be seen whether the UK will put in place less favourable laws for employees and protect the interest of businesses rather than employees in the future. Much of employment law is designed to protect employees rather than businesses. Many businesses do feel that there have been too many changes in employment law in recent years. Employment law has been one of the most rapidly changing areas of laws for businesses to keep on top of and this is particularly burdensome for SME’s where there are no HR teams in place to keep on top of the changes in employment law.

It is likely to be several years before we fully understand the implications of serving Article 50 and what this will mean for employers. It is unlikely that Government will make full scale changes to employment law post-Brexit. It seems most likely that Government will make smaller amendments to legislation that is perhaps unhelpful to businesses in practice. A good example of this the transfer of undertakings regulations (TUPE) – see below.

TUPE is designed to protect employees where a business is sold or a long-term contract terminates and a new one is put in place. TUPE ensure that employees retain their jobs where there is a TUPE transfer any dismissals made as a result of the transfer are deemed to be automatically unfair unless there is a genuine redundancy reason and a formal redundancy procedure is followed. In addition, employers are not entitled to make any changes to employees’ contracts of employment where the changes will be less favourable to employees post-TUPE transfer so it can have several members of its workforce subject to different terms of employment. It seems unlikely that Government will repeal the TUPE legislation. It is more likely that Government will change parts of TUPE so that it can put in place new contracts of employment post-TUPE transfer.

Other issues to consider are what will happen in the employment law cases. Currently the European Court of Justice (ECJ) has jurisdiction over the UK. When the UK is no longer part of the EU the EJC will not have jurisdiction over the UK. Government will need to decide on whether case law decided in the ECJ will remain as precedent in the UK. Government will need to decide whether future ECJ hearings will be persuasive in court hearings.

It would seem unlikely that Government would completely repeal current employment law, however, it may change the laws to fit in with current thinking at that time. There may well be lobbying from certain sectors to change employment law in due course where businesses find certain EU derived employment laws challenging for SME’s for example. It may be that Government decides to take a staged approach to making changes to employment law. Government may not have the political appetite to start making immediate changes to employment law post-Brexit.

There are still many trade unions in place in the UK supporting employees working in a wide range of sectors. If Government did decide to repeal employment laws which are favourable to employees, then it is likely that Government and businesses could face opposition from trade unions standing to protect their members’ rights as employees.

There are many UK nationals working in other EU countries and many EU nationals working in the UK. When the UK is no longer part of the EU, such UK and EU nationals will potentially no longer have the right to work. It is likely that as part of the trade agreements interim measures will be put in place between the UK and EU allowing individuals to remain working for an agreed amount of time. It is likely that new immigration rules will be put in place to allow workers to apply to work in the UK and EU member states. The terms of these arrangements remain to be seen. One thing that UK businesses and EU member states businesses will not want to lose are skilled and unskilled workers that are essential for the proper and efficient running of their businesses.

A final thought is that the Government will now be spending two years negotiating trade agreements with the EU. As part of this, the UK may be forced to agree that it will treat its employees in accordance with EU laws and accept EU employment laws in order to be able to trade with EU countries. The downside of this is that UK businesses will be subject to EU employment laws where UK Government has had no input in the creation of such laws.

If your business is facing issues with employees or you want to ensure that all of your employee or consultant’s contracts are compliant with current legislation then contact us today on 020 7148 1066 for a FREE LEGAL CONSULTATION with one of our expert LawBriefs. Alternatively, visit our legal advice portal for free templates, advice and guidance.

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