What would a Brexit mean for UK employment law?

28 June 2016

Back in January this year, I blogged about the potential impact upon employment law were the United Kingdom to vote to leave the EU. Following Thursday’s referendum, the potential effect of a Brexit upon employment law has naturally become of greater importance and interest. My comments from six months ago about how a leave vote would affect employment law continue to be relevant. It is clear that we will be surrounded by uncertainty due to the fact that we do not know what the renegotiation will entail, yet it remains the case in my view that Brexit is unlikely to lead to a full scale revocation of European employment law.  My comments from January appear below:

“It seems probable that, in the event of a Brexit, the Conservatives would seek to oust  supposed unpopular laws derived from the EU. One such area would likely be the Working Time Regulations, especially given the recent decisions extending the ability to carry over sick leave (which is arguably burdensome for employers) and how to deal with variable payments when calculating holiday pay (which has been characterised by a lack of clarity for employers). Another potential target in the financial services arena could be CRD IV and the provisions regulating variable remuneration. Such provisions are seen by some to restrict financial institutions' ability to incentivise and attract the best talent. Legislation surrounding agency workers may also be another area where the Conservatives would push for change and a cap on discrimination claims (following a CBI recommendation) to curb unrealistic expectations of Claimants is also another possible area where changes may occur.

However, despite these potential areas where change may be desired by the Government, it is highly unlikely that a Brexit would lead to an instant overhaul of EU derived law and there are numerous reasons for this.  Firstly, if the UK did leave the EU, naturally it would want to try and retain a good economic relationship with the EU. It seems unlikely, however, that the EU would allow for the UK to leave the EU without simultaneously being subject to certain laws prescribed by the EU. It is quite feasible that the EU would take the stance that the UK should not, for example, be able to benefit from a free movement of goods agreement with the EU whilst concurrently operating more relaxed employment laws rendering the UK market more attractive and thereby undercutting the EU member states. Indeed, Norway, who has chosen not to join the EU, is instead part of the EEA in order to benefit from economic ties with the EU and as a result is still subject to many of the directives of the EU.

Furthermore, a removal of all EU derived laws would be highly unlikely given how highly integrated they are into UK law and the resulting confusion that such significant change would cause to UK employers. Some EU based laws are incorporated into the UK by way of free standing acts of Parliament. However, another common way of integrating EU law is through secondary legislation passed pursuant to the European Communities Act. If the Government repealed this Act, this would result in all secondary legislation, which would account for a significant share of UK employment law,  no longer remaining in force. The confusion this would cause for employers and employees alike would be so significant that it would appear to be unworkable and this renders piecemeal change of UK employment law rather than a dramatic overhaul a more realistic possibility.

The situation appears to be similar in relation to UK court decisions. The UK courts are currently bound to follow the Court of Justice of the European Union’s rulings on applicable EU law. A Brexit could mean that the CJEU’s decisions would no longer be binding upon UK courts. However, the UK courts have already followed CJEU decisions and built up a substantial body of UK case law shaped by such CJEU decisions. In theory, this UK case law should therefore continue to be binding on lower courts within the UK and arguably CJEU decisions would also still form a persuasive precedent for UK courts (given that the laws would often be EU derived), unless overridden by any act of Parliament. Thus it is likely that decisions of the CJEU would continue to have a strong influence, although arguably, following a Brexit, a judge may feel more confident to depart from UK case law where a finding was clearly derived from a CJEU decision.

There are other reasons to doubt that there would be an overhaul of EU law. There are cultural grounds to suggest that a dramatic change seems unlikely. The modern workplace has been shaped by EU laws and a swift change could upset both employers, who are experienced and familiar with how employment relationships should be properly managed, as well as employees, who would generally be opposed to removal of substantial protections that have been brought into the workplace via the EU’s influence over the years. Indeed, some current UK laws go even further than the protections put forward by the EU, the recent introduction of Shared Parental Leave being one such example, suggesting that a large scale reduction in protections would be unlikely.

Overall, it appears that, although certain changes may be desired, a Brexit would be highly unlikely to result in a sudden radical change to UK employment law. In fact, the future of UK employment law would be dependent upon what the UK would be able to achieve through the lengthy negotiations that would inevitably follow any such exit.”

Further information

Should you have any questions about the issues raised in this blog, please contact a member of our employment team.

You may also be interested in reading other articles in our EU Referendum Blog

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