How will Brexit impact UK employment legislation?

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19 Sep 2016

David Yeandle OBE, President of the United Nations Staff-Management Committee, Member of the IPA Executive Committee, and Director of Government Relations at European Employers Group

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Employers and employees are understandably concerned about the impact that Brexit will have on UK employment legislation. This is because a significant proportion of both the individual and collective rights that UK employees currently benefit from have come either directly or indirectly from EU Directives.

For individual rights, this includes legislation on working time, annual holiday entitlement, atypical working and a number of family-friendly issues, such as maternity leave/pay and parental leave, as well as some anti-discrimination legislation. As far as collective rights are concerned, this includes legislation on information and consultation rights, European Works Councils, collective redundancies and transfers of undertakings.

So what will happen now that the Government has started to prepare for its negotiations with the other Member States about the terms of the UK’s exit from the EU? Initially, and for probably at least the next couple of years, almost certainly nothing will happen. This is because, until the UK leaves the EU and ceases to be a Member State, all UK legislation implementing EU Directives remains in place. Only at the end of this period can the Government make changes without being in breach of EU legislation.

What happens next will depend crucially on the Brexit terms that the Government agrees with the other Member States. All the current signs are that this will be not be a very ’soft’ version of Brexit where the UK would, like Norway, continue to have access to the EU Single Market but have to implement all EU legislation without having any direct influence on its content. Any other form of Brexit would probably allow the Government to start making changes to EU employment legislation after, probably, the end of 2018 or early 2019. What it decides to do will, however, depend on the political and economic scene at that time.

The Government currently has only a small overall majority in the House of Commons and no majority in the House of Lords. In my view, the Government is unlikely to want to face potential defeat in the Commons and almost certainly a lengthy constitutional battle in the Lords by trying to make significant changes, such as repealing the Working Time Regulations or the Agency Workers Regulations, which would remove individual rights. Indeed, I do not detect any real pressure from the business community for this type of wholesale change to employment legislation at a time when employers are likely to be facing other more significant challenges arising from Brexit.

I think it is therefore more likely that, if the Government decides to make changes to employment legislation following Brexit before the next General Election, it will only make some relatively modest changes. These will be intended to reduce employers’ administrative burdens and costs but without significantly removing individual employment rights.

So what could these changes be? Over the years, employers have complained about the administrative burdens and costs imposed by EU legislation and this will be an opportunity for the Government to start to address these. Some examples of these changes might therefore be:

• Imposing a maximum figure on the level of compensation for successful discrimination claims that can be awarded by an Employment Tribunal.
• Amending the Working Time Regulations to:
• Clarify what, if any, entitlement employees have if they fall sick whilst on holiday.
• Reduce the conditions attached to the use that can be made by employers of the individual opt out from the average 48 hour working week.
• Enable employers to be able to average weekly hours automatically over 52 weeks rather than this only being allowed by collective agreements.
• Increasing the number of weeks after which equal treatment with a comparable employee applies under the Agency Workers Regulations from 12 to 26 weeks.

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Any views expressed are those of the author and not necessarily those of the Institute as a whole.