What is the position right now?

Nothing has changed – existing legislation and case law continues to apply.

What changes will there be to employment law on Brexit?

Whether the UK can depart from current EU requirements in the future will depend on the shape of the UK’s future relationship with the EU. Alternative trade arrangements may involve accepting some, or all, EU employment legislation.

Even if the UK has scope to diverge from EU employment law, changes may not necessarily be immediate on the point of Brexit, or ultimately far-reaching, for the following reasons:

  • Much of EU employment law has been brought into effect via UK legislation, which will remain in force post-Brexit unless and until amended.
  • Changes to primary legislation require Parliamentary approval and the Government of the time will need to consider whether reform is politically desirable. The UK has come to expect a certain level of workplace protection, and wholesale changes to the likes of, for example, discrimination law, seem highly unlikely – see the table below.
  • Many employment rights, including unfair dismissal and the minimum wage, do not in fact stem from the EU – see the table below.
  • In other cases, the UK deliberately provides protection which exceeds the EU minimum: prime examples being maternity leave and the right to 5.6 weeks’ holiday (as opposed to the EU four-week minimum). Withdrawal from the EU is therefore unlikely to prompt a change to Government policy in these areas – see the table below.
  • Although, post-Brexit, UK courts and tribunals would not refer cases to the European Court of Justice or be obliged to follow new decisions from that court, it is less clear how they would deal with existing UK case law stemming from EU decisions. High profile examples include sickness absence and holidays; and the inclusion of certain payments in holiday pay. It is likely that tribunals would continue to apply the previous decisions of a higher UK court unless or until that higher court or Parliament took a different approach.
  • Employers’ internal policies and even contracts of employment often reflect certain EU rights relating to, for example, working time, sickness absence and equal opportunities. Reducing entitlements could be difficult both from a legal and employee relations perspective.
  • David Davis, Brexit Secretary, has indicated that existing employment law will not be radically changed. He blogged that:

“Empirical studies show that it is not employment regulation that stultifies economic growth… Britain has a relatively flexible workforce, and so long as the employment law environment stays reasonably stable it should not be a problem for business.

There is also a political or perhaps sentimental point. The great British industrial working classes voted overwhelmingly for Brexit. I am not at all attracted by the idea of rewarding them by cutting their rights.”

The Chartered Institute of Personnel and Development (CIPD) has also commented that the UK has one of the most lightly regulated labour markets in the OECD in terms of employment protection legislation and that, in its view, we have the right balance of flexibility. It has stated its intention to make the case for maintaining the status quo.

Table of key employment rights – what might change?

If a future deal gives the UK scope to diverge from EU employment law (which may not be the case, as explained above), this table sets out what might happen to some key employment rights, although changes would of course be highly dependent on the future political make-up of Parliament.

Key right Potential impact of Brexit
Unfair dismissal UK-based right – does not stem from the EU: Brexit will have no direct impact.
Minimum wage UK-based right – does not stem from the EU: Brexit will have no direct impact.
Unauthorised deductions from wages UK-based right – does not stem from the EU: Brexit will have no direct impact.
Statutory redundancy pay UK-based right – does not stem from the EU: Brexit will have no direct impact.
Industrial action The detailed provisions on strike action are purely UK-based and Brexit will have no direct impact.
Paternity leave UK-based right – does not stem from the EU: Brexit will have no direct impact.
Shared parental leave UK-based right – does not stem from the EU: Brexit will have no direct impact.
Flexible working UK-based right – does not stem from the EU: Brexit will have no direct impact.
Pregnancy and maternity Mixture of EU and UK-based rights.

UK rights go further than the EU minimum, for example providing 52 weeks’ maternity leave as opposed to the EU minimum of 14 weeks.

Wholesale changes seem unlikely, however there may be a reversal of the current entitlement of workers on maternity leave to carry-over unused holiday entitlement to another leave year.

Parental leave EU-based right providing up to 18 weeks’ unpaid parental leave for each child – in the UK the age limit for this was increased in 2015 so it can now be taken up to a child’s 18th birthday.

Given that the right is unpaid (which limits its actual uptake), and the age limit was recently increased in the UK, it is unlikely to feature high on a list of potential targets for change.

Working time EU-based right.

The UK has its well-known opt-out provisions in relation to the 48-hour working week, and a future Government might be keen to remove this limit altogether. There may also be calls to change the rules which mean that some on-call and travelling time counts as working time.

Holidays and holiday pay EU-based right.

Basic holiday provision is unlikely to be a target, given that the UK exceeds the EU minimum (providing 5.6 weeks’ holiday as opposed to the EU minimum four weeks).

However, there may be a desire to reverse the current entitlement of workers on long-term sick or maternity leave to carry-over unused holiday entitlement to another leave year.

A future Government might also seek to exclude payments such as commission and overtime from holiday pay, contrary to the current direction of EU travel.

Collective redundancy consultation EU-based right.

Consultation periods were reduced in 2013 from 90 to 45 days for redundancies of 100 or more employees.

This may have dampened the appetite for further change, although there might be calls to increase the threshold number of affected employees, so that collective consultation is only triggered for redundancies of 100-plus rather than 20-plus.

Trade unions would be likely to strongly oppose any change.

Other collective consultation rights EU-based rights, implemented in the UK via:

  • The Transnational Information and Consultation of Employees Regulations 1999
  • The Information and Consultation of Employees Regulations 2004

These may be subject to change post-Brexit.

TUPE EU-based right.

The Government previously stepped back from proposals to repeal the rules on service provision changes (which go beyond the EU minimum) on the basis that the rules provided certainty.

We might, however, see changes making it easier to harmonise terms and conditions following a transfer, or the watering-down of information and consultation rights.

Rights on insolvency EU-based right of employees to claim certain sums from the Secretary of State if their employer becomes insolvent.
Agency workers EU-based right.

The right of agency workers to the same basic working conditions (for example, pay and annual leave) as equivalent permanent staff after 12 weeks wasn’t popular at Government level when it was introduced, and is a likely candidate for change if a future Government has a deregulatory agenda.

On the other hand, given the low level of employment protection available to agency workers at present, a Government from the opposite end of the political spectrum might consider it a priority to increase protection (which is possible under current EU law).

Discrimination The UK had protection against sex, race and disability discrimination pre-EU, but these rights have been extended by the EU, and additional protections added, including discrimination on the basis of age, religion / belief and sexual orientation.

Discrimination laws have become accepted in workplaces and society as a whole, and wholesale changes seem unlikely. However, there may be a desire to introduce a cap on discrimination compensation (which is not currently allowed under EU law), similar to that for unfair dismissal.

Some commentators have indicated that age discrimination might be a target as there is less political consensus on the need for this, but our view is that given the political desire for older workers to continue in employment beyond traditional retirement age, this seems unlikely.

Fixed-term employees EU-based right protecting fixed-term employees against less favourable treatment in comparison to permanent employees.

Those arguing for a removal of ‘red tape’ and an increasingly ‘flexible’ labour market may target these rules.

Part-time workers EU-based right protecting part-time workers against less favourable treatment in comparison to full-time workers. Those arguing for a removal of ‘red tape’ and an increasingly ‘flexible’ labour market may target these rules, however, some female part-time workers may still be able to claim that any less favourable treatment amounted to indirect sex discrimination (since the majority of part-time workers tend to be female).
Data protection EU-based right - the UK Data Protection Act implements the EU Data Protection Directive.

The EU General Data Protection Regulation (GDPR) is due to come into force in May 2018, introducing tougher rules for organisations that handle personal data, and higher penalties.

It seems likely that businesses will need to continue preparing for the introduction of the GDPR. The GDPR is due to have direct effect in member states without the need for any national implementing legislation and, as the exit process may not be complete by May 2018, the GDPR may take effect as planned.

If the status of the UK has changed, it may have adopted GDPR (or a UK equivalent) to ensure that (for EU data protection purposes) it is considered as adequately protecting data.

Even in a scenario that sees the UK entirely severing ties with the EU, the GDPR may still be relevant in some circumstances, such as where a UK organisation processes the personal data of EU citizens.

The Information Commissioner has stressed the importance of international consistency on data protection and made clear that reform of UK law remains necessary.

Trade Secrets The UK was due to implement a new EU Trade Secrets Directive by June 2018.

The aim of the Directive is to:

  • harmonise the law of trade secrets throughout the EU - there is no legislation on this subject in many EU states, including the UK which relies on common law and precedent;
  • facilitate trade, promote innovation, investment and cross-border collaboration; and
  • assist in the prevention of theft of trade secrets and set out a clear and consistent set of civil remedies and sanctions.

What will happen now is unclear and may well depend on political negotiations, but it may be that regardless of the UK's position post-Brexit, it adopts laws similar to the new Directive, if it considers this to be in its best interests.

Even if it does not do so the law in the UK is already fairly consistent with the Directive’s provisions.