Partner expulsion case offers lessons to LLP firms and their partners
Theresa May has promised the British people in no uncertain terms that workers’ rights will not suffer as a result of Brexit. We have written recently about how legal and economic realities mean that her promise, even if sincerely meant, does not stand up to scrutiny.
As the Government prepares to trigger Article 50, we consider another way in which its stated approach to Brexit will necessarily affect workers’ rights in an adverse way, even if the Great Repeal Bill (“GRB”) purports to ‘download and save’ all such EU-derived rights.
The Recast Brussels Regulation is the set of rules used to determine which of the Member States’ courts has the jurisdiction to hear claims within the EU. They work because they are reciprocal and harmonized across the EU – every court knows what every other court will do.
If the UK leaves the EU, then it cannot unilaterally re-create that effect even if the Regulation is nominally brought into domestic law by virtue of the GRB. For example, in the absence of any express agreement between the UK and the EU, a German court would not refuse to hear a case in favour of an English court in the same way as it does now - the Regulation would simply not apply to the UK any longer from a German point of view.
This is important because, as with much of EU law, the Regulation sets out special protections for employees - it recognizes that they are almost always in a weaker bargaining position than their employer.
Under the Regulation, employees have a wide choice as to where they may sue their employer, but they are protected in two key ways:
If the Regulation falls away (without a replacement), then the protections enjoyed on a reciprocal basis with other EU states do as well.
This may seem, at first glance, like a point of purely technical interest, but the protections offered by the Regulation are significant if one considers the practical and financial consequences for employees which may result once they are removed.
In Petter v EMC Corporation, the employee’s equity awards were subject to an exclusive jurisdiction clause in favour of the courts of Massachusetts and the employer brought proceedings there to rescind them. Accordingly, the employee was forced to bring High Court proceedings and duly obtained an anti-suit injunction to restrain his employer. This case concerned the US – clearly not an EU Member State – but, consider an employee working in the UK for a French company with equity awards subject to French jurisdiction – a not uncommon situation in the highly integrated European economy. Post-Brexit, they would be faced with the invidious choice of going to the expense of seeking a High Court anti-suit injunction or else face proceedings in an unfamiliar jurisdiction. A worker in this position will therefore be in a materially worse position than they otherwise would have been.
It is questionable whether the Brussels Convention (the rules which applied before the Regulation and which have been expressly incorporated by statute into English law) could still be relied on.
However, that surely misses the point as to the position we’re currently heading for on ‘Brexit day’ in 2019. By virtue of the GRB, the Regulation will still hold its ground as the law to be applied by the English courts, but UK workers won’t be protected should their EU employer take steps against them in another Member State.
As such, Mrs May cannot promise that the Government’s current plans, in particular the intended operation of the GRB, will mean that workers’ rights are maintained at their current level following Brexit.
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