What might Brexit mean for Employment Law?

Smith Partnership, one of largest firms of solicitors in the East Midlands, offers insight into what Brexit might mean for Employment Law and its impact on local businesses.

Following the UK’s decision on 23 June 2016 to leave the EU, commentators have gone into overdrive in an attempt to forecast the impact that the decision will have on business, finances and investment.

James Johnson, Partner at Smith Partnership’s Employment Department commented “We’ve already seen an immediate impact in some areas, particularly in the stock market and foreign exchange, but it is likely that the effect in other areas will be slower and longer term.”

“One area for possible change, impacting both our employers and workforce, is employment law.  To help you understand the potential impact, and, hopefully, allay some concerns, my team has summarised our view on what changes may lay ahead in UK employment law:

•           Holiday Pay – there is currently significant confusion about the calculation of holiday pay following several cases in the European court relating to the inclusion of overtime and commission payments in the calculation of holiday pay. The UK has already legislated to impose a two year cap on back pay to avoid opening the floodgates to historic holiday pay claims.  We may see a return in the future to a calculation based on basic pay only.  Accrual of holiday during sick leave may also be impacted;

•           Maximum Working Week – the 48 hour maximum working week, introduced by EU legislation, may be removed;

•           Agency Workers – the regulations derived from Europe allowing agency workers the same rights as permanent employees after 12 weeks has been largely unpopular with UK businesses.  We may therefore see a repeal of those regulations;

•           Discrimination – whilst a good deal of our discrimination legislation actually pre-dates EU discrimination law, one potential change in this area could be the introduction of a maximum cap on discrimination compensation.  We may also see the removal of associative discrimination claims;

•           TUPE – the TUPE Regulations protect employees’ rights when a business or service is transferred to another business or provider.  Whilst it is very unlikely that we will see a move away from these rights, it may be that it is made easier for employers to harmonise employees’ terms and conditions following a TUPE transfer.  We could also see a reduction in the compensation available to employees where an employer has failed to consult;

•           Redundancy Consultation – the current requirement for collective consultation for redundancies involving 20 or more employees may, in the longer term, be reduced or removed, perhaps retaining the requirements only for over 100 employees.

James continued: “It is a common misconception that our UK employment rights are largely derived from the EU, but the reality is that substantial parts of our employment legislation are purely domestic and in some cases (such as maternity and annual leave) exceeds the rights of our EU counterparts.  We therefore expect that any changes are likely to be a ‘tinkering’ of our existing provisions rather than a wholesale re-write.

“Finally, it is important to remember that at the moment it is ‘business as usual’ whilst the terms of our exit and any trade agreement are agreed.  Those terms could potentially require adherence to EU employment policy – as is the case with Norway’s trade agreement with the EU, for example.” 

“To coin a well-versed idiom, keep calm and carry on!”

If you need any advice regarding employment issues please call the Employment team at Smith Partnership on 0330 123 1229.