Employment e-Brief: A possible EU exit for the UK and the impact on UK employment law

Popular wisdom would suggest that employment lawyers might have more to fear from Britain exiting the EU than many others. Indeed, many smaller employers may be rubbing their hands together with glee at the prospect. But what is the truth of the matter? Does anybody really know? Those who like to speed-read, the answer is no, no one does know.

The date already etched in our minds is the 23 June this year when we will all have the chance to vote “in” or “out” in a referendum on the pivotal question of whether Britain should remain in the EU. The Conservative Prime Minister, Edward Heath, took the UK into the “EEC” in January 1973 after President de Gaulle of France had blocked UK membership twice in the 1960s. This brought EEC membership to nine.  In a referendum in 1975 the UK electorate voted to stay in the EEC under renegotiated terms of entry. Since that time the UK has developed its own national employment law framework enormously but this has been supplemented by a considerable number of often highly controversial EU directives.

EU laws have been imposed on UK businesses through its social and employment legislation. Often viewed as unnecessary ‘red tape’, or as safeguarding health and safety for employees in the workplace, depending on which side of the fence you approach it from. UK domestic legislation traditionally tends to focus on the individual relationship between employee and employer: EU employment related legislation by contrast takes a more collective approach, for example covering the 3 main areas of labour law, health and safety and equality/non-discrimination. Key examples include the Working Time Directive, the Acquired Rights Directive and the Temporary Agency Workers Directive which led to the Working Time Regulations, TUPE and the Agency Workers Regulations respectively.

So in the event of a “Brexit” what do UK employers need to be asking?

We do know that it would take at least 2 years for the UK to be extracted but in terms of unravelling legislation this is bound to take much longer and indeed it is most unlikely that there would be any immediate changes.

Some commentators have suggested that it is possible that the UK would seek to follow the Norwegian model, becoming part of EFTA and the EEA in order to continue favourable trading relations with EU member countries.   This would mean the UK would remain subject to most aspects of EU social and employment policy and as such, ECJ case law would continue to have a significant influence in the UK courts. In short, this would result in very little change to UK Employment Law.

Much will depend on the precise nature of the relationship negotiated. It seems highly unlikely that a UK government of any flavour would have an appetite to fully repeal existing employment laws. The result most likely would be maintaining the status quo but, subject to the type of relationship adopted, it may be that certain EU influenced UK legislation will be replaced or amended overtime bit by bit. As with any such change, considerable prior consultation would be inevitable.

Logically the above must follow to avoid chaos for employers in terms of a lack of certainty not to mention the costs of re-training/re-education if laws were to change dramatically and quickly.

It would be interesting to have a straw poll with employers as to which laws they see as the most problematic or difficult or costly to comply with. However it is likely they would mention the three areas highlighted above TUPE, WTR, and Agency workers. For example, the problems which TUPE causes for outsourcers, the restrictions on harmonising employment terms after a business transfer and the issue of paid holiday will all probably be high on any list.

Established case law which embodies or incorporates EU law will be much slower to change by its very nature. Employment tribunals simply cannot ignore precedent from higher courts. Additionally, when seeking to interpret laws which were originally based on EU law, ECJ decisions will still have persuasive authority.

It would only be in the unlikely event of a full EU exit, with no EEA membership and no trade agreements, that the UK Government could be free to amend or repeal, for example, TUPE in its entirety.   But even then it seems that the risk of causing huge problems for employers would be too much of a risk. Employers who are thinking of voting “out” to give them free rein with their employees really should think again. The reality, it seems, is that this just isn’t going to happen, at least not any time soon. Even though the author is an employment lawyer with perhaps a vested interest in that being the case, the above is still a balanced view.

If you would like to discuss this e-Brief in further detail, please contact Philip Paget on 0113 227 0212 or at philip.paget@gordonsllp.com