How Brexit will affect Employment Law

Thursday, 28 July 2016 10:01

Employment Law over the last 45 years has been heavily influenced by EU Legislation.  

On 23rd June 2016, the majority voted in a referendum to leave the EU. What are the implications for Employment Law once we have embarked on leaving the EU?

Maternity and Family Friendly Policies

These have been influenced by EU Law, but much of the legislation that has been passed by UK parliament implemented by EU directives, has gone far further than the EU directives required. It is difficult to see any UK government unwinding these family friendly policies and benefits that have now become interwoven within our employment landscape. They are very popular with the public. All the main political parties have during the last few general election campaigns competed with each other to promote such policies. Focus groups tell them they are a vote winner. We do not believe that exiting from the EU will have any significant impact on the family friendly policies such as the right to maternity leave and other benefits.

Some commentators have suggested that there may be proposals to limit the amount of compensation a victim of discrimination can claim. Under EU law compensation for discrimination is uncapped. In UK law there is a cap on the compensation that an employee can receive for unfair dismissal and constructive dismissal: £78,962, or one year’s salary, whichever is the lower.

In “big city financial claims” the claims can run into millions of pounds, simply by virtue of the employee’s high earnings, and the eligibility to be compensated for loss of bonus payments.

A cap on the maximum level of compensation for discrimination claims may well therefore occur.

Some commentators suggest that a minimum qualifying period could be imposed on discrimination claims. In unfair dismissal and constructive dismissal claims an employee cannot bring a claim to the Employment Tribunal unless they have been employed for two continuous years.

It is difficult to see how a minimum qualifying period could be imposed in discrimination claims because many discrimination claims arise over recruit practices such as discriminating against people on the grounds of race, sex or age. Discrimination can occur at the pre-employment recruitment phase.

We doubt that any future changes to discrimination claims could properly involved a minimum qualifying period as this would completely undermine the basis of such claims.

Working Time Regulations

In some instances UK law gives greater benefits to UK citizens than were originally set out in an EU directive. This has become commonly known as UK goldplating. For instance, the EU directive on paid holiday says that workers and employees in the EU are entitled to a minimum of 20 days paid holiday, inclusive of public holidays, per annum. The UK originally implemented 24 days, inclusive of public holidays, and this was subsequently increased to 28 days, inclusive of public holidays. It will be a strong-willed government that wishes to implement legislation to wind back these types of benefits.

There are, however, some aspects of EU case law that have caused much angst amongst employers, namely the right to have paid holiday and how that holiday pay is calculated. There have been a number of cases on this subject recently that have been subject to our blogs. The most controversial for employers has been calculating holiday pay and the basis of it. EU decisions have found that where employees are paid a combination of basic pay and commission that the commission should be taken into account in calculating the average weekly pay that should be included in paid holiday. There have been widespread criticism through UK employers about these rulings. One suspects that there may be some statutory definition of a calculation of holiday pay that avoids these controversies.

TUPE Legislation

The TUPE Legislation gives employees protection when there is a change of ownership of a business. Staff may have contracts of employment that provide them with certain perks and benefits. An incoming employer has to honour those perks and benefits, or risk substantive claims for damages from the employees if they do not.

The TUPE rules have, in the past, hindered many employers from harmonising the terms and conditions of employees and workers that have been subject to transfers. One can have a number of employees in the same workplace subject to different terms and conditions of employment, simply because of the history of previous takeovers.

Employees who are subject to a takeover are entitled to be informed and consulted about a change, and there can be penalties if the transferor or transferee do not comply with these rules.

This is an area where many employers and organisations have criticised the EU directives, partly because of their complexity and partly because it imposes a burden on business. This is an area that may be subject to Brexit amendments and changes to the Transfers Undertaking Regulations.

Redundancy Consultations

EU law is intertwined with the law of redundancy. Under current UK law, if an employer wishes to make 20 or more redundancies in a 90 day period then there is a compulsory 30 day consultation period. If the employer wishes to make 100 or more redundancies, the law until recently was that no redundancies could take place during a 90 day consultation period.

This period was recently reduced to 45 days. Many employers complain that this lengthy period of consultation is very burdensome. Companies that get into financial difficulties find it very difficult to comply with these lengthy consultation periods, and this can be a handicap.

It may well be that the consultation period may be further reduced and/or the configuration of the numbers of employees that may be affected may be altered once Brexit has taken place.

Agency Workers Regulations

The UK’s Agency Workers Regulations implement the EU temporary agency workers directive and require employers to offer agency workers, who have been working for them for 12 weeks, terms and benefits equal to their employees.

These regulations have been heavily criticised by employer groups and are very unpopular with employers. These regulations may be subject to attack once Brexit gets properly under way.

If you have any questions about employment law following Brexit or any other employment or workplace issues, please contact our employment law specialist team. 

Author: Gareth Price e:

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