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Certain aspects of employment laws were hotly debated during the run-up to Brexit. In time we may see significant change which could be of relevance to Ireland. These include:
- A form of amnesty for non-UK citizens resident in the UK is considered probable, but new entrants to the UK are likely to face hurdles including visa requirements, which would have major implications for Irish citizens travelling to work in the UK. Any bi-lateral arrangement between the UK and Ireland will need the consent of the EU.
- Much of the UK’s employment laws originate from EU directives. Following Brexit, it will be possible for the UK to repeal this legislation. However, much of the ‘family friendly’ legislation is popular and may be retained. Agency workers legislation is considered to be the most vulnerable area of UK employment law post-Brexit. Collective redundancy requirements, already relaxed, may be relaxed further.
- The transfer of workers with undertakings is an area of great uncertainty post-Brexit. There are strong advocates on each side of the argument around the merits of retaining TUPE style regulation compared to the opportunity to shed the costs of TUPE regulation. Given the uncertainty, outsourcing contracts with UK counterparts would need careful drafting to manage longer term risks and benefits.
- The future of UK/Ireland cross-border pension schemes has been thrown into doubt. The establishment of these arrangements was made possible through European legislation which may not be retained in a post-Brexit UK. The legal standing and future of existing cross-border pension schemes is uncertain and there may be a need to conduct an “unwinding” of existing UK/Ireland cross-border pension schemes. Cross-border pension schemes that were previously “hosted” from the UK may consider moving to Ireland or another EU country.
- Funding of defined benefit pension schemes has been hit by negative movements on financial markets following Brexit. Defined benefit schemes that are the subject of funding proposals may see those proposals falling “off track”. This would result in the requirement to agree and submit revised funding proposals to the Pensions Authority. Defined contribution pension schemes will also have to ensure that their default investment strategy is sufficiently diversified.
- Pension schemes which are heavily invested in UK assets or assets that will be affected by changes in the exchange rate will need to review their exposure to risk and take actuarial and legal advice in relation to asset reallocation.
- The cost of purchasing an annuity at retirement has risen in the wake of Brexit and people may be looking at a significant reduction in their pension purchasing power. Trustees and employers may want to seek advice in relation to possible alternatives to purchasing an annuity at retirement.