Employment Law and Brexit

How can you be ready for a potential Brexit?

As the debate hots up over the UK referendum on leaving or staying in the EU, and as we are on the brink of the voting deadline, what steps should UK employers be taking to prepare for a potential “Brexit”?

Brexit is a blend of the words ‘British’ and ‘exit’ which refers to the possibility of Great Britain leaving the European Union following the referendum on 23 June.

It can be hard to make sense of the noise around the UK’s potential exit from Europe. Market research companies have gone into overdrive as they poll the nation on everything from a “leave” vote’s impact on the jobs market, to how it could affect the price of milk. For HR, the key concerns, should we decide to vote in favour of a “Brexit”, are likely to be the impact on employment law, whether or not it will reduce access to key skills that employers need, and the movement of labour between the UK and EU countries.

There are few certainties, other than that if the UK does break away from Europe, the process will not happen overnight. Upon making a decision, the UK must first notify the European Council of its intention to leave, and there is a two-year period after that in which the mechanics of the withdrawal are negotiated. Once that has been decided, the exit itself is likely to take even longer.

The Chartered Institute of Personnel and Development’s advice to employers on Brexit echoes this, saying “there are simply too many uncertainties that will not be clear until after the result of the referendum, and potentially some time after then”.

For employers with a presence in EU countries, it is worth developing strategies to reassure current or prospective employees on what might happen if there is a positive vote to exit.

One of the basic principles of the EU is freedom of movement, and while this is unlikely to be removed immediately in the event of a vote to leave, arrangements for visas or amendments to contracts may need to be considered.

One other effect could be that turmoil in financial markets and uncertainty about employees’ rights makes organisations nervous about hiring from Europe, or hampers their access to talent in other countries.

Employment law and Brexit

From a practical perspective, potential changes to employment legislation are most likely to create headaches for HR.

Regulations influenced by the EU include the Working Time Regulations, which restrict the number of hours someone can work per week (unless they opt out) and the Agency Workers Regulations 2010, which stipulate that agency staff must enjoy the same working conditions as their permanent colleagues after a period of 12 weeks.

Both have had their detractors, and it is possible that a British Government working outside of the confines of EU legislation could tinker with these rules to cut red tape.

European court decisions during Brexit transition

One of the legal issues surrounding Brexit is what might happen to any judgments that might be handed down via European courts during the transition period between a vote to leave and the exit itself.
One such piece of legislation is the long-running case on holiday pay, British Gas v Lock, where it has most recently been confirmed that employers must pay commission as part of holiday pay, although not yet established how this calculation should be made.

Much of the UK’s primary employment legislation goes beyond EU recommendations. The UK offers more paid holiday days than any other country and family-friendly legislation such as shared parental leave is progressive by comparison. It would be an unpopular government that revised any of these provisions, and the European Convention on Human Rights is separate from the European Union, so should not be affected by exit. On the flipside, however, we have tighter regulations on unfair dismissal and the Government has increasingly clawed back trade unions’ rights, and this trend could continue.

Practical steps to prepare for Brexit

Should there be a vote in favour of the UK leaving the EU, it is crucial not to make any knee-jerk amendments to employee contracts that might be difficult to amend, as these will be binding.

If we make the break away from Europe, this would also mean that where once the EU courts provided a safety net for employees or unions to challenge UK decisions this would be removed.

With so much uncertainty, the best policy, for now, is to be aware of the make-up and location of your workforce, and reassure those who either work for you in other EU states or come from those countries that you will keep them informed of their rights.

Finally, take comfort that a radical overhaul of our legislative system is unlikely to happen any time soon.

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