Brexit - Employment law and Immigration law implications

05 October 2016

The referendum question posed to us on 23 June 2016 was "Should the United Kingdom remain a member of the European Union or leave the European Union?" and the UK public answered “Leave” with a 52% majority. The referendum was only advisory and the UK is yet to trigger Article 50 to initiate the formal process of exiting the European Union. The full exit will only happen after 2 years of negotiations and it remains to be seen how connected the UK will remain with the EU.

Preparing for a range of possible outcomes, we examine the potential impacts the Brexit will have on Employment law and Immigration law.

Employment law

The referendum Leave campaign argued that we need to take back control of our laws and some went as far as to say that two thirds of UK laws stem from the EU. While there was a lot of dispute on what the correct percentage is and even the House of Commons Library concluded that it is "possible to justify any measure between 15% and 50% or thereabouts, depending on the approach“, one thing we didn’t really hear about during the referendum campaigns is to what extent the UK employment law is not influenced by the EU.

  • We have a lot of domestic legislation that has nothing to do with the EU (for example Unfair dismissal protections, National minimum wage, Shared parental leave, Gender pay gap reporting, Flexible working, etc.).
  • In a lot of cases the UK chose to provide benefits above and beyond the EU requirements; so called gold-plating (for example annual leave entitlement and maternity leave and pay).
  • Some legislation, which would appear at the first glance to be EU influenced (e.g. Equality Act 2010), in fact just brings together a number of laws we have already had in place long before the Equality Act came along. As such only certain sections are new and most of it is much more inherently embedded in the UK legislative framework. 
  • Only a fairly minor proportion of the laws are purely EU driven for example TUPE (Transfer of Undertakings Protection of Employment) and Agency Workers Regulations, and even in these cases the UK had substantial input at the drafting stages.

Brexit is very unlikely to affect any of the first three types of employment legislation as classified above. It also doesn’t mean that the EU derived laws under the fourth bullet point will simply go away. They will have to be repelled in their entirety or in part and it is unlikely that this will be the first priority for the Government. To be clear though, Brexit does have the potential for having a significant influence on the Employment legislation in this country, however this is more likely to manifest over a number of years or even decades rather than instantly change the legislative landscape.

The ability of the UK to make any changes will depend on how Brexit will be implemented. If the UK follows the Swiss or Norwegian model then we will remain bound by the EU legislation and any changes to employment legislation will be extremely unlikely. If, on the other hand, the UK negotiates a deal where it will no longer bound by the EU legislation, some of the regulations that are most likely to be targeted with changes are:

  • TUPE, especially the strict rule about harmonisation of terms and conditions after a transfer,
  • Working Time Regulations certainly won’t be repelled but there is likely to be huge appetite for amending certain provisions such as accrual of annual leave during long term sickness and maternity leave, holiday pay calculations, and employees’ ability to opt-out of the regulations,
  • Agency Workers Regulations are a strong contender for a piece of legislation that might be repelled in its entirety due to its unpopularity,
  • Cap on discrimination claim awards currently cannot be introduced due to EU legislation and it is likely a similar cap as for unfair dismissal claims will be put in place for discrimination cases as well.

Immigration law

Just as freedom of movement and immigration were central themes of the Brexit referendum campaigns, the same topics are likely to feature very highly in exit negotiations as well. Similarly as with Employment law above, the outcomes will, to a large extent, depend on the negotiations. Ironically, it looks like the UK doesn’t have enough skilled negotiators and will need to seek appropriate talent from abroad to negotiate its new trade and other deals.

There is still the possibility that the UK will have to agree to honour free movement of people in which case no changes are expected, however, there is a huge pressure on the Government to negotiate a deal which will allow the UK to exercise a greater control on immigration from the EU.

This might mean an extension of the Points Based System (PBS) we already have in place for immigration from all other countries, to the EEA and Switzerland as well. Tier 3 for immigration of unskilled workers has been built into the original PBS. So far the Tier 3 has never been used but there is a suggestion that opening this route will alleviate the concerns of British businesses which currently heavily rely on unskilled EU workers.

The Governments is currently refusing to give assurances about the status of EU citizens in the UK. Those who have been here for more than 5 years will, subject to certain conditions, qualify for permanent residence and subsequently, subject to further conditions, for British citizenship. Those who have been here for a shorter period will likely be subject to transitional arrangements although it has not been confirmed what these are likely to look like. It is worth keeping in mind that there are a significant number of UK citizens enjoying the right of free movement and any action UK takes on EU citizens in the UK will likely be mirrored in how other EU countries treat UK citizens who live and work outside of the UK.

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