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Brexit: What are the consequences for UK employment law?

Unless you have been living in a cave this week, you will have been following the blanket media coverage of the most important event in recent memory in the UK.  So while we anxiously await the outcome of whether Diego Costa has a future at Chelsea we can focus on the other issue which has generated a few column inches; Brexit and the announcement by Theresa May that the UK will not pursue single market access during the negotiations. 

While Mrs. May has now spoken, there is no doubt that we have still have a period of uncertainty until the full terms are agreed. Most employment lawyers seem to agree that although Brexit is unlikely to significantly affect our employment rights, some changes are almost a certainty. The extent of those changes is difficult to predict but we have considered a number of employment law issues which are likely to change.

Working Time

The Working Time Directive stems from EU law and governs working hours, daily and weekly rest periods and annual leave. The directive was implemented into UK law by The Working Time Regulations 1998 (“WTR 1998”). It is unlikely that the WTR 1998 will be abolished however changes are probable particularly in relation to:

  • Removing the maximum 48-hour working week;
  • A review of ‘on call’ time;
  • Removing travel time from being classed as working time;
  • Limitation to the calculation of holiday pay (e.g. excluding commission from calculations);
  • Adjusting the right to paid leave particularly for part-time workers;
  • It is thought that the right to accrue and carry over holiday during sickness absence is also at risk of being watered down or repealed;
  • Although less likely, but not impossible, mandatory rest periods may also be relaxed to allow for a more flexible workforce;
  • Reducing annual leave entitlements.

The current minimum holiday entitlement is 5.6 weeks’ holiday per year, which is more than the EU Directive minimum of 4 weeks, but only this includes bank holidays in the UK. It’s possible that in future the minimum statutory entitlement may be reduced to 4 weeks including bank holidays, to bring us in line with other European countries to make Britain more competitive, and this can be done without Parliament’s approval, using secondary legislation. Many employees already have their holiday entitlement stated in their contract, so scaling back their contractual entitlements would be difficult.

These would not be popular changes for employees but employers are likely to welcome them since, in theory, it would result in more output and less financial burden. This is debatable however since a tired workforce is likely to be susceptible to mistakes, accidents and more time off for sickness related absences.

Discrimination and Family Friendly rights

It is unlikely that basic direct discrimination protections will be significantly affected, but they may be worded in more subtle ways. There may be calls for discrimination awards to be capped at Tribunal, like the unfair dismissal award. It’s also possible that rights to claim 6 years of backdated losses in Equal Pay claims may be reduced.

The UK allows for a generous 52 weeks’ maternity leave, and this may not be affected, but rights on return from maternity leave or redundancy during maternity leave could be watered down. For example, women on maternity leave could lose their right to “first dibs” on available vacancies in a redundancy exercise.

Shared Parental Leave may come under the spotlight, since it hasn’t been taken up very widely, though this may change as time goes on if it becomes more popular.

Part-time Workers

In recent decades, the number of people employed on a part-time or temporary basis has grown, the majority of whom are women. The number of employers like Sports Direct as well as small businesses with variable staff needs who have enjoyed the flexibility of an on-demand flexible workforce, sometimes with very low or zero hours contracts, has increased exponentially. The number of hours worked often relies heavily on mandatory overtime. Where 15-20 years ago, it was extremely difficult to obtain part time work outside of the public sector, many people now often find that that is all they can get, even when they want to work full time.

EU law helped improve the rights of these workers. For example, a case brought by the former Equal Opportunities Commission in 1994 under EU sex discrimination laws succeeded in securing part-timers the same protections from unfair dismissal and the right to redundancy pay as full-timers.

According to the Trade Union Congress (TUC) “about 400,000 part-timers in the UK gained access to occupational pensions thanks to EU legal rulings on equal pay. Part-timers were among the main beneficiaries of the Working Time Directive too. Prior to its implementation in the UK, nearly a third of part-timers had no right to paid holiday.” It is thought that the rights enjoyed by part-time and agency workers are at substantial risk, particularly as the pro-Brexit campaign has repeatedly called for rights that are seen to be restricting employers’ flexibility to be scrapped.

Agency Workers

At the moment, the law says that after 12 weeks in the job, agency workers qualify for the same rights as someone employed directly. If any law is to be repealed in its entirety, it is likely that this piece of secondary legislation is at the top of the list. Businesses detest it and consider it onerous. Employers in the public sector in particular also strongly disagree with the principle that agency workers should get the same generous terms and conditions as permanent staff once they have been in post for 12 weeks, as this negates the flexibility that they want from using agency staff.

TUPE

The Transfer of Undertakings (Protection of Employees) Regulations 2006 are derived from an EU Directive. Their purpose is to protect employees in a situation where a business is sold or a contract insourced or outsourced to a new provider. It is important to note that TUPE goes beyond the minimum requirements of the EU Directive. For example, the concept of a ‘service provision change’ was introduced by the government and is not derived from the EU. In light of this, it is unlikely that the government would do away with TUPE altogether. And since TUPE was only recently reviewed in 2014, and the Government did not repeal the extra service provision change provisions then when they could have, it seems likely this will stay.

However, certain elements of TUPE that are unpopular with businesses are likely to be scrapped. Specifically, the onerous information and consultation requirements are likely to be relaxed, and the restrictions on harmonising terms and conditions of employment after the transfer will probably be removed altogether, to the detriment of employees.

Redundancy consultation

Much like TUPE, businesses are not keen on the onerous redundancy consultation requirements particularly when it comes to collective consultation.  The statutory duty on employers to inform and consult the workforce about proposed redundancies, contained in the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), was introduced in order to implement the provisions of the EU Collective Redundancies Directive. It is likely that, once out of the EU, the triggers for collective consultation (currently 20+ and 100+ dependent on the circumstances) will be watered down. The government already showed its appetite for tweaking TULRCA in April 2013 when the previous 90 days minimum period before which the first redundancy can take effect (if there are 100 or more redundancies) was reduced to 45 days. In addition, expiry of fixed-term contracts was taken outside the scope of collective redundancy consultation. Therefore, once removed from the “shackles of Europe”, it is likely that the collective consultation obligations will be watered down even further.

Conclusion

The possibility of a complete overhaul or substantial changes to employment rights is highly unlikely, particularly as so many rights are entrenched in domestic laws and extreme changes would be very unpopular. Changes will however undoubtedly occur, though it is difficult to predict with certainty what is likely to happen as a consequence of leaving the EU. It will largely depend on whether the Conservative government remains in power throughout the period of negotiations.  A Conservative government is likely to water down or restrict some employment rights as they have already shown an appetite for change in favour of businesses and employers.

The likely changes will also depend on which model the UK chooses to adopt post exit. If we become part of the European Economic Area (EEA), so as to continue trading with the EU, it could mean accepting most of the EU’s employment laws anyway, as part of an economic agreement. But this is by no means guaranteed and it is for the UK to negotiate both the exit terms and the terms of any economic trade agreement. The fact that notice of exit under Article 50 is yet to be served, heightens the uncertainty, however, for the next 2 years employment law rights are likely to remain little affected.

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18.01.2017
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