For now, employment rights and obligations will continue to be subject to EU law in the same way as before the referendum. So, for employment law nothing is likely to change until the UK exits the EU, or the terms of our changed relationship are known. The extent to which the UK may be able to change employment laws could well depend on these terms. Of more immediate concern to the financial services sector is the uncertainty of knowing what lies ahead: the Rumsfeld "unknown, unknowns".

Of particular concern is the issue of whether passporting rights (that is the system that allows financial services businesses regulated in the UK to operate freely across the EU) are included in any exit deal. The loss of these rights would mean inevitable redundancies as firms are likely to move some of their activities to other EU financial centres such as Dublin, Frankfurt or Paris and seek regulatory approval there to ensure continued unfettered access to EU markets.

Set against this, the City is the largest global financial centre and the heart of Eurozone's financial system. It is uniquely positioned as a hub between Europe, Asia and the U.S. and the City's key attractions will largely remain: political stability; cosmopolitan atmosphere; social and cultural activities; English language; lack of corruption; benign business environment; moderate workers' rights and the predictability and integrity of its legal system. This will continue to pull in skilled workers from all over the world and make London a place that people will inevitably want to live and work in and so continue to provide a talented pool of workers for business.

We do not know at this stage what future immigration controls will look like but since immigration has been one of the prime issues in the Brexit campaign, it is likely to feature highly in any negotiations for a trade deal. Because of the City's global status, thousands of EU and non-EU citizens are employed in it and many of those will be key staff. For existing EU national employees in the UK, the current position is they still have a right to work but it remains to be seen whether any transitional provisions are put in place and whether, once the UK’s EU membership is formally terminated, they will become subject to UK immigration control.

Employers should now audit their staff to see the extent of EU nationals working in the UK and whether they could, for example, apply for Permanent Residence in the UK. If UK nationals are operating in other EU member states, thought could also be given to whether they would require permission to work in the future if reciprocal restrictions on UK nationals are implemented. Advice should be sought as soon as possible on what action can be taken now to protect key staff identified.

Sovereignty was another important issue in the Brexit campaign. So, would leaving the EU allow the UK to rescind some of the regulations it considers damaging to its competitiveness? The new rules limiting bankers' bonuses to twice their salaries might be a prime target, for example. But any real freedom to cut such regulation might be limited. Outside the EU, the UK would be treated as a "third country". So, like Switzerland, it might be required to ensure its regulations are seen "as equivalent" by the EU in order to maintain access to the EU financial markets.

Likewise, in order to obtain a free trade agreement, the UK may be forced to accept EU social and employment regulation. Members of the European Economic Area (EEA), such as Norway, are bound by most of EU employment law even though they are not part of the EU decision making process. Switzerland has negotiated a number of agreements with the EU and is in a similar position.

But let's assume for now, the UK manages to negotiate an exit which doesn't bind it to EU social and employment rules. Which parts of UK employment law are at potential risk of change? EU law has provided UK workers with a safety net which has prevented the UK government and the UK courts from reducing workers' rights below a minimum core level. Leaving the EU will mean that the UK government is free to remove and alter those rights. Any change will depend on the political will at the time, but top of the list might be how holiday pay is calculated, how holiday pay accrues during periods of sick leave, agency worker rights, capping discrimination awards and the current restriction on harmonising terms and conditions of employment after a TUPE transfer. Employment laws
which are purely UK derived will be unaffected. These include redundancy pay, some unfair dismissal rights and national minimum wage.

Financial institutions with operations in Scotland face a period of greater uncertainty because of the risk of a second referendum for Scottish independence. Should Scotland break away from the UK and be successful in its application to get into the EU (neither of which is a foregone conclusion), there could be a gradual divergence of Scottish and UK employment rights. Under the current plans for Scottish devolvement, the newly passed Scotland Act devolves power over the operation and management of employment tribunals to the Scottish Parliament allowing it to exercise powers relating to rules of procedure, membership, administration and funding of tribunals – including the abolition of tribunal fees. Other than this, there has been no intention, so far, to give Scottish
Parliament independent powers to change employment laws.

Many financial sector employees continue to have legacy defined benefit pension schemes. The referendum result has led to volatility in the investment markets and the fall in gilt yields which has the impact of increasing the value of pension scheme liabilities and therefore deficits. This may be compounded by trustees concerns over the weakening of the "employer covenant" supporting the scheme as a result of the referendum, with the consequence that trustees may become more cautious in the assumptions they use – increasing the value of liabilities furthers.

Longer term the impact on pensions would depend on the form Brexit takes. The UK successfully campaigned against stronger funding requirements in the latest EU Directive on Institutions for Occupational Retirement Provision (which has yet to complete is legislative process). If the UK remains in EEA it may find that future
directives will impose stricter funding requirements.

Finally, upon leaving the EU, there could follow a period of uncertainty as to what the law on certain issues actually is. Holiday pay is a good example of this. Recently the European Court of Justice ruled in Lock v British Gas, that commission must be taken into account when calculating holiday pay. Following this, the UK Employment Appeal Tribunal ruled earlier this year that the UK regulations must be read as though they actually provide for this . This ruling now forms part of UK law which employers must abide by. But what is the status of its ruling after a UK exit? Could an employment tribunal simply ignore it, and simply interpret the UK regulations as they stand? The point may become clearer when we understand more about how the European Communities Act 1972 is to be repealed.
Of course, if Brexit negotiations culminate in a deal with the EU, it is possible that the UK courts would continue to see ECJ decisions (both past and future) as persuasive and perhaps even binding if the UK ends up with a Norwegian model trade and social deal.