Stuart Chamberlain, author and senior employment consultant at Croner-i, considers the implications for employment law and immigration if the Government is unable to obtain Parliament’s approval for withdrawal from the EU and there is “no deal” when the UK leaves the EU on 29 March 2019. He distinguishes between the short-term and long-term effects and implications and offers some advice to employers.

Short-term effect of “no-deal” Brexit

If there was a “no-deal” Brexit the UK would cut all ties with the EU overnight (29 March 2019). It would mean no transition period and businesses — organisations and public bodies would have to respond immediately to change as a result of leaving the EU. Businesses would see new taxes on imports, exports and services, while the border between Northern Ireland and the Irish republic would become a “hard” external frontier for the EU, with customs and immigration controls. There is no clarity about what would happen and, in theory, everything would be up for grabs.

In the short term in employment law, however, things are likely to go on as before. This is because the Government has already stated that there will be no radical change to employment law after Brexit and has already taken measures in response to the prospect of a “no-deal” Brexit. These are set out below.

The European Union (Withdrawal) Act

The Government has already passed legislation, the European Union (Withdrawal) Act 2018 (formerly known as the Great Reform Act), which converts EU law into UK law so that there is no legislative hole the day after Brexit, when the UK has left the EU. There will be no change to legislation or the law.

Technical notice on workplace rights

In anticipation of a “no-deal” Brexit, the Government has issued a series of technical notices, including one on workers’ rights. Workers in the UK will continue to enjoy the rights they are currently entitled to under EU law, says the technical note Workplace Rights if There’s No Brexit Deal.

The Government states that in order to ensure a smooth transition the following employment rights will remain unchanged.

  • Rights to holiday pay, rest breaks, annual leave, maternity and paternity leave

  • Protection from discrimination and harassment based on sex, age disability, sexual orientation, religion or belief, and race or ethnic origin in the workplace

  • Protection of workers' rights where there is a TUPE transfer

  • Protection of part-time, agency and young workers

  • Protection and consultation rights for workers, including for collective redundancies.

There are only two exceptions where the law will change.

European Works Councils

A “no-deal” scenario may have some implications in relation to European Works Councils (EWCs). EWCs are bodies representing European employees in the UK. No new requests to set up such a council will be able to be made after Brexit. Requests made before Brexit will be allowed to complete and any existing EWCs will continue to operate.

Insolvency

The rights of UK and EU employees working outside the UK in an EU country for a UK employer, where that employer becomes insolvent, may be affected. At the moment such employees are protected by national guarantee funds in the country they are working in but whether or not this remains the case will depend on the EU country where the employee is working.

Settled status

The Government reached an agreement with the EU guaranteeing the rights of EU citizens living in the UK and of UK nationals living in the EU after Brexit.

Under the EU settlement scheme, EU citizens living in the UK, along with their family members, will be able to stay and continue their lives, with the same access to work, study, benefits and public services that they enjoy now. Existing close family members living overseas will be able to join them here in future.

To obtain settled status, EU citizens will generally need simply to have lived continuously in the UK for five years. This means for example that stay-at-home parents, retired people and students can all be eligible. Those with less than five years’ continuous residence will be granted pre-settled status and be able to apply for settled status once they reach the five-year point.

The new application system aims to be streamlined, cheap and user-friendly and to minimise the burden on applicants to provide evidence of their residence. This streamlined process will take applicants through three simple stages.

  1. Proving their identity.

  2. Checking they are not a serious criminal.

  3. Evidencing their residence in the UK.

There are no fees for this service.

If the UK leaves the EU based on the proposed deal, then the outlined process for the registration of EU nationals in the UK will be as follows:

  • To protect their resident status, EU nationals must register for settled or pre-settled status by no later than 30 June 2021.

  • All EU nationals who have been resident in the UK by 31 December 2020 will be eligible to register for pre-settled or settled status.

  • EU nationals who have been living in the UK for five years will be eligible for settled status.

  • Those who cannot demonstrate five years of residence will be eligible for a pre-settled status.

  • EU nationals who arrive in the UK after 31 December 2020 will be subject to new UK immigration rules.

No deal

If, however, the UK leaves the EU without a deal, then free movement of people will stop on 29 March 2019 — the date the UK leaves the EU. In this scenario the registration process will look as follows:

  • To protect their resident status, EU nationals must register for settled or pre-settled status by no later than 31 December 2020.

  • Only those EU nationals who have been resident in the UK by 29 March 2019 will be eligible to apply for settled or pre-settled status.

  • EU nationals who arrive after 29 March but before 31 December 2020 will be able to enter the UK by showing their ID card or passport. They are able to stay for three months. If they wish to stay longer, they will need to apply to the Home Office for leave to remain, within the initial three months of residence. Such leave to remain, if granted, will be for 36 months and will include permission to work and study.

  • UK employers and landlords can continue to accept EU passports and national ID cards as proof of entitlement to work and rent until 31 December 2020.

  • EU nationals who arrive in the UK after 31 December 2020 will be subject to new UK immigration rules

Conclusions — the short term

In summary, the overall picture in the short term shows no significant changes to the existing workplace rights in the event of a “no-deal”. Brexit. The Government has already stated that existing employment law will not be radically changed. No Government is going to reduce anti-discrimination legislation, unravel holiday entitlement and “family-friendly” rights or amend TUPE immediately after the UK’s exit from the EU next March. Nor is the Government likely to revoke the EU settlement scheme and expel EU workers and their families covered by “settled status” from the UK. Businesses would be outraged by this and there would be consequent massive staffing problems in some occupations. There would be some different time limits attached to the process — see above

There is no Parliamentary time to embark on new and potentially provocative employment legislation. It will have other priorities.

The long term

The long-term position for legislative change after Brexit is less clear. Any major legislative changes will depend on the political complexion of the Government in power at that time. It may be affected by a change in the Conservative leadership, a general election or even a “people’s vote” (a second referendum).

Changes to employment legislation?

Any threats to employment rights and the introduction of new employment laws are more likely in the long term, although any forecasts about the future of employment law must be taken with a pinch of salt. Theoretically, in the event of a “no deal”, a sovereign Parliament would be able to “scrap” employment rights without the intervention of EU courts.

However, it should be appreciated that much of UK employment law does not stem from Europe but has been brought into force by UK legislation — for example, the unfair dismissal regime, redundancy pay, flexible working and the detailed provisions on industrial action. Changes to primary legislation will need Parliamentary approval and Parliamentary time will be needed to consider, let alone implement, such change. Employment law may not be a priority.

Nevertheless, there are a number of likely targets that have been identified by employer associations and business groups as “ripe” for amendment. These include the following.

  • Agency worker protection — the right of agency workers to the same working conditions (including pay and annual leave) as permanent staff after 12 weeks is not popular with some employers.

  • Limiting awards for discrimination — by introducing a cap (not currently allowed under EU legislation) similar to that for unfair dismissal.

  • TUPE — in particular, the need to provide more opportunities for transferee employers to harmonise employee terms and conditions after a relevant transfer.

  • Holiday pay claims during sickness — the current entitlement of workers on long-term sick leave to carry over unused holiday leave into another holiday leave year; and the exclusion of commission and overtime from the calculation of holiday pay.

  • Collective redundancy consultation — removal of employer obligations on EU-based rights from information and consultation regulations (the trade unions would strongly oppose any changes in this area).

However, this is all rather speculative. Any such changes would involve considerable Parliamentary time — and this may still be tied up on other Brexit discussions.

A new Immigration Act

Immigration was a big issue in 2016 referendum and the Conservative Party has made the reduction of immigration a major policy objective.

The long overdue White Paper on immigration was published in December 2018. It adopts many of the recommendations set out in the Migration Advisory Committee (MAC) report on EEA migration in the UK, which was published in September 2018.

As expected, the Government intends to end the free movement of EU citizens to live and work in the UK following Brexit. Instead, it will put in place what it describes as a “flexible” skills-based system which favours skilled workers. The Government emphasises that it is keen to limit the access of low-skilled workers to the UK and to create a level playing field between EU and non-EU workers in respect of access to visas to work in the UK.

From 1 January 2021 the following main provisions will apply.

A single system will replace existing immigration rules

This will enable highly skilled/skilled migrants from around the world to work in the UK.

The Government will remove the annual cap on the numbers of visas it issues (which cause significant delays) and will widen the skills threshold to include people who hold qualifications equivalent to A levels. The Government says this will make sure “the brightest and best” can come to the UK and “employers have access to the skills that add most value to the UK economy.”

Visas will be processed within two to three weeks.

The Labour Market Test will be abolished

Currently, if an employer wishes to employ non-EU (migrant) skilled staff, it needs to obtain a Tier 2 sponsorship licence and, unless the job is on the shortage list of occupations, comply with the Resident Labour Market Test.

The Government has said that employers with a Tier 2 sponsorship licence will not have to comply with the Resident Labour Market Test from 2021.

Plus, it looks as though employers without sponsorship licences who want to recruit skilled workers from outside the UK will be able to do so without a licence. The system will be designed to be as “straightforward” and “light touch” as possible.

Minimum salary requirements are not yet settled

To date, the Cabinet has not been able to agree on the minimum salary requirements for highly-skilled workers. The Migration Advisory Committee recommended £30,000 but many businesses think this is too high.

Low-skilled workers

Low-skilled workers from outside the UK will only be able to work here on a temporary basis to cover labour shortages in specific sectors. The White Paper refers to construction and social care.

These low-skilled workers will be able to work here for a maximum of 12 months (with a further “cooling off” period of 12 months) and will be able to move between employers during that time.

The Government says it will work with key sectors to help facilitate the change needed to reduce demand for low-skilled migrant labour going forward. The MAC is presently consulting on which occupations should be included in the shortage occupation list.

Advice to employers

A “no-deal” Brexit is filled with uncertainty. It is important that employers stay up to date with developments. Also consider the following.

  • Communicate these developments to staff, particularly “here and now” issues.

  • Consider the implications of a “no-deal” Brexit on the business — short term and long term.

  • Carry out an audit of workforce and your future needs and skills: consolidate this into a recruitment plan.

  • Ensure that staff from EU are familiar with the “settled status” procedure (fully open 30 March 2019 — 30 June 2021 deadline).

  • Review policies and documents that will need to be amended post-Brexit.

  • Plan ahead for new immigration policy.

Last reviewed 22 February 2019