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A “no-deal” Brexit: implications for employment law

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

Short-term effect

If there was a “no-deal” Brexit, 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. 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.

As the UK prepares to leave the EU, all resident EU citizens need to take action, therefore, under the scheme to secure their immigration status after Brexit.

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 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. It is possible to draw out certain indicators about the future shape of a new Conservative immigration policy from remarks of Theresa May, the Prime Minister and Sajid Javid, the Home Secretary, and from the report of the Migration Advisory Committee which advises the Government on immigration policy.

These points can be summarised as follows.

  • An end to free movement and to preferential access for EU citizens to UK’s labour market.

  • Preferential treatment/priority given to high-skilled migrants and the possibility of ending the present cap on these skilled workers.

  • Government wants British people to fill the vacancies in areas such as hospitality, social and health care, which currently rely heavily on EU migrants.

  • There would be the minimum of exemptions from this emphasis on skilled workers — for example, a suggested seasonal scheme (six months long) for agricultural and horticultural workers.

The White Paper on immigration, due this autumn, has yet to appear. The Government has also intimated that a draft Immigration Bill might be published at the end of the year.

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). Employers may consider financing their applications and those for naturalisation.

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

  • Plan ahead for new immigration policy — once concrete details have emerged.

Last reviewed 3 December 2018

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