HR and employment law implications of Brexit

Although much remains uncertain during the immediate aftermath of the outcome of the referendum, it is unlikely that there will be any very rapid changes to the legal framework. However, it is clear that investing in new businesses, and movement generally in the employment market, will inevitably slow down quite dramatically, at least in the short term, reversing the trend of cautious growth and recovery since the crash in 2008.

General HR advice to our employer clients

We are advising our HR director and employer clients to try and take a balanced view, to reassure employees likely to be unsettled by the Brexit fallout (real or imagined) and to try not to engage in misconceived speculation about the way events might unfold. Keep the communication channels with staff open, particularly if the business employs staff in the UK from the EU or, indeed, in the EU. Keep the immigration status of employees under review and consider carrying out an audit to assess the impact on your business if EU workers no longer have the automatic right to come to work in the UK. (Click here for further information from our immigration team.)

Management teams will need to avoid over-emotional reactions to Brexit and try to engender an atmosphere of calm. We understand that some employers are engaging bereavement counsellors!

Ensure that your employees are aware of what is acceptable on social media; ill-considered comments about Brexit and how people voted could, if linked to the business, result in discrimination claims and generally harm the business and its reputation. Businesses should review their social media policy (or consider introducing one) and their anti-harassment policies – an apparent increase in explicitly racist comments in public seems, sadly, to be taking place as a direct result of Brexit.

Monitor and assess the effects of Brexit on key employees: do you need to consider offering more favourable terms to retain them in the face of the current uncertainty?

If a restructuring, resulting in potential redundancies, is unavoidable, plan this carefully and ensure that you are seen to apply the requisite fair and objective criteria to the selection process. There is a danger that the emotional response to Brexit may result in the erosion of long established rules of good employment practice.

Legal framework

The UK has implemented all relevant EU Directives into UK Regulations, which will remain binding even in the event of Brexit.

The UK is likely to remain bound by the majority of European employment laws, as those countries with whom we will need to trade may be reluctant to enter into favourable trade deals with the UK if we allow businesses to employ workers on less burdensome (and cheaper) terms than those to which other countries have to adhere.

There has been much speculation as to which elements of UK employment law that are based on European rights may be ‘watered down’ to reduce the regulation on businesses. Some suggestions are:

  • Many commentators believe that TUPE (Transfer of Undertakings (Protection of Employment) Regulations) is now an accepted part of employment protection, although some adjustment may be proposed. For example, post-transfer harmonisation of terms is an aspect of TUPE which causes particular headaches for employers and might be subject to review. Some of the consultation requirements in respect of both TUPE and redundancy rules are very unpopular too with most employers, and these could now be diluted.
  • We predict that it is highly likely that the “social framework” laws will largely remain in place. The UK already exceeds the European rules regarding family friendly rights such as maternity leave, and at this stage no dilution of these seems likely.
  • The basic framework of the Working Time Regulations (“WTR”) is likely to remain in place, for example, the right to paid holidays, given that UK legislation already exceeds the European minimum in this regard. However, some controversial and unwieldy aspects of the WTR (such as the right to accrue holiday during long-term sick leave, and the entitlement to commission and overtime payments as part of holiday pay) could well be revisited.
  • Agency workers are currently entitled to the same terms and benefits as permanent employees once they have been working for 12 weeks, pursuant to the EU Temporary Workers Directive. Employers have been unhappy about this and these rules may be reviewed.
  • Individuals have the right not to be discriminated against on grounds of “protected characteristics” pursuant to the Equality Act 2010 and most commentators are confident that this will remain enshrined in UK law. There was a proposal a few years ago to cap the compensation awarded to successful discrimination claimants, which did not move forward in part because the UK’s membership of the EU did not permit it. It has been suggested that this could raise its head again in view of Brexit.