The UK left the EU on 31 January 2020 with a withdrawal agreement in place, a transition period and a framework for negotiations on the future relationship between the EU and the UK. The UK has since been in the transition period during which, for all practical intents and purposes, the UK has remained an EU member. This period will end on 31 December 2020 and, regardless of a deal or no-deal situation, most EU laws will be converted into UK law indefinitely, unless and until they are adapted. This ensures that the UK has a functioning statutory framework post-Brexit.
The vast majority of EU laws and case law will become "retained law" in the UK so it is difficult to predict just how much the UK employment law landscape will change. However, there are a number of areas that may be impacted and subject to change sooner than others. Much will depend on the government in charge in the UK from time to time as to whether employee rights are extended or restricted.
In this note we have outlined the key day-to-day areas that could change in the post-Brexit era.
Working Time Regulations - holiday pay and working time
There are several aspects of the Working Time Regulations 1998 (WTR) that the government may decide to amend post-Brexit. The origin of the WTR is an EU Directive and so the government has not been able to change the provisions while the UK was a member state. Some UK employers may be frustrated with case law developments in this area, particularly those that allow employees to accrue holiday whilst on sick leave and, in certain circumstances, carry over any unused holiday into the next year. If the government of the day decides to take an employer-friendly stance, this may change.
Holiday pay is another area where employers would welcome change. The current calculation for holiday pay is not simply based on basic pay; the European Court of Justice has held it must correspond to "normal pay". This has led to a series of domestic judgments on what holiday pay should or should not include. Employers must include elements such as commission and overtime. A UK government could decide to change this so that basic pay alone would become the benchmark again.
A further potential change under the WTR is in relation to the 48-hour weekly limit. As employers may be aware, a worker's average weekly hours calculated over their reference period (usually 17 weeks) must not exceed 48 hours, unless the worker has opted out. It may no longer be necessary to obtain this opt-out from workers if the government removes this requirement.
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) are not universally popular amongst employers. It is likely that the government will keep the provisions for the most part to protect employees, and provide certainty to businesses used to factoring TUPE into their transactions, but it may amend certain aspects to make it more employer-friendly. For example, it may allow transferee employers to harmonise terms and conditions following a transfer more easily. At present employees' terms are protected on transfer and TUPE does not permit changes, other than in certain limited circumstances.
The Agency Workers Regulations 2010 (AWR) have never been popular amongst employers. They also have not become so fixed in employment law that they are now unmovable. Therefore, at first glance, the AWR are a prime candidate to be completely revoked. However, following the recent employment law updates that took effect in April 2020, it would appear that the government does not intend to make any changes to these regulations. The changes made in April have afforded greater rights and protections to agency workers (for example, removing a significant exemption to the right to equality of pay).
We do not expect to see significant change in discrimination law. The UK had legislated to protect against certain types of discrimination (such as sex, equal pay and race) before the EU introduced similar legislation. In some areas EU law has improved and extended rights and it has also introduced protection for other characteristics, including age and sexual orientation. The principle of protecting employees from discrimination is now very much entrenched in employers' practices and it is almost unthinkable that a government would seek to roll these protections back. There have, however, been suggestions that the government might bring in a cap on compensation in discrimination claims (as there is for unfair dismissal claims). It is also possible that the government would legislate to permit positive discrimination in a wider range of circumstances than EU law allows.
Family-related leave and pay
The legislation covering family-related leave and pay derives from a combination of UK law (for example, maternity leave and pay) and EU law. In some respects, UK law is more generous than the minimum requirements set by the EU. It is therefore unlikely that the government will make changes in this area simply because of Brexit.
Redundancy consultation periods
Some commentators believe the minimum duration of collective redundancy consultations could be reduced. However, trade unions would likely oppose any plan, and employees and employers may not feel particularly strongly about making any change to the process which is now well-established in the UK and in itself is not overly onerous.
Areas of imminent change
European Works Councils: this is one area that will certainly see change in a no-deal Brexit scenario. From 1 January 2021, no new requests to set up European works councils in the UK will be permitted. The government has committed to preserving the rights and protections for employees in the councils. However, co-operation from other member states will be required. Where central management of an EWC is in the UK, the employer will need to transfer this to another member state or it will default to the member state with the most employees.
Immigration law: the new immigration system came into force on 1 December 2020 and, from 1 January 2021, EU and non-EU nationals will be treated equally. Employers recruiting EU nationals to arrive and start in the UK from 1 January 2021 will need to ensure that the correct visas are in place.
It is unlikely that there will be any significant and immediate change to UK employment legislation post-Brexit, although, if change does occur, it is most likely to be in the areas highlighted above. Future government policy will dictate whether any changes are made and those changes will depend on whether that government is more employer or employee-friendly. Changes will also be dependent on parliamentary time. Other, more pressing matters may take precedence given that the employment legislation framework does not require any immediate attention in the event of either a deal or no-deal scenario.