With the official EU referendum campaign period underway, Brexit - an abbreviation for Britain's exit from the EU - is top of the political and business agenda.

The referendum on whether the UK should remain in the European Union is to be held on Thursday 23 June 2016. The question posed is, "Should the United Kingdom remain a member of the European Union or leave the European Union?" If the vote is to leave, the UK must give two years notice, meaning a formal exit would not occur until 2018 at the earliest.

Employment law

Some areas of UK employment law - such as the National Minimum Wage and the law relating to (unfair) dismissal - are outside the scope of EU law and regulated by UK legislation. However, other areas - including unlawful discrimination, certain family-friendly rights, working time, collective redundancy consultation and business transfers - have been heavily influenced by the EU, often having a basis in European Directives or case law. It is also important to note, although that the EU provides a legislative benchmark , in many instances the UK provides protection in excess of the EU minimum requirement.

The impact of a Brexit on UK employment law will depend, to a large extent, on how a Brexit would be implemented and what, if any, other agreements are put in place as a substitute. If the UK followed the Norwegian model and joined the EEA, the UK would still be subject to most aspects of European employment law. The Swiss model, involving access to the single market and many bilateral agreements, could also restrict the sovereignty of employment law due to the need to satisfy trading partners.

If the UK sought a bespoke relationship, theoretically, significant changes could be made. The government would have freedom to depart from EU employment law by repealing and amending legislation and the UK courts would not be bound by the decisions of the ECJ. If Parliament chose to repeal the European Communities Act 1972, all of the Regulations passed under it would cease to have effect. Due to the significant legal and commercial upheaval that this would cause, it is more likely that changes would be addressed in a piecemeal fashion. Equally, it is likely that the UK courts would continue to treat any ECJ decisions as persuasive if not legally binding, at least in the short-term.

Immigration law

The free movement of people is one of the four economic freedoms of the EU.

In theory, upon a Brexit, EU citizens would no longer have the automatic right to reside and work in the UK, and vice versa unless they had already obtained permanent residency. In reality, however, freedom of movement is likely to be an integral part of the negotiations around the post-Brexit relationship between the UK and EU. As is the case with employment law, the extent of change to immigration law will depend on what this relationship entails. For example, if the UK were to join the EEA, the current rules would largely remain the same, whereas alternative models hold more uncertainty. It is anticipated, however, that the government would honour existing residence rights for EU citizens residing in the UK (or at least put in place transitional arrangements) in return for the same treatment for UK citizens residing in other member states.

How would a Brexit legally impact employers?

It is very difficult at this stage to predict how Brexit will impact upon employers as changes to employment and immigration legislation will require consideration of a number of issues (e.g. social, political) rather than just a legal analysis. Many EU employment laws have become entrenched in the UK's legal and ideological framework, meaning the UK government is likely to be disinclined to make drastic changes at least in the short-term. Laws that are considered to impose the greatest burden on businesses - such as agency worker rights, collective consultation and working time rights - are most likely to be subject to change. However, the general consensus is that the changes will be neither radical nor immediate, giving employers ample warning to prepare.

The position on immigration is less clear. Labour shortages, a loss of talent and mobility restrictions are all ways in which businesses could be affected depending on how the government elects to regulate or remove European nationals’ right to live and work in the UK.

A short-term concern is that businesses will be less likely to invest in the UK until there is clarity on what a Brexit really entails.

Practical steps to take ahead of the EU referendum on 23 June

  • Communicate with employees where affected or concerned
  • Audit your workforce in terms of where they work and their immigration status
  • Review employment contracts and policies
  • Determine the effect, if any, on benefit schemes
  • Check your European Works Council arrangement; for example, information/consultation obligations that could arise from restructuring proposals following a Brexit
  • Reconsider pending expatriate arrangements and address any immigration applications that could be made now

Contingency planning for a Brexit

  • Consider adapting contracts to address any unenforceability risks that could arise from a Brexit
  • Reconsider pending expatriate arrangements and address any immigration applications that could be made now
  • Consider adapting contracts to address any unenforceability risks that could arise from a Brexit

This article is part of our Brexit series