On 23 June 2016, the UK public voted to leave the EU. Under Article 50 of the Lisbon Treaty, the EU Treaties shall cease to apply to the UK:
- from the date of entry into force of the withdrawal agreement that the UK negotiates with the Union, acting through the Council; or
- two years after the UK has notified the European Council of its intention to withdraw, unless the European Council, in agreement with the UK, unanimously decides to extend this period.
Therefore, in practice the British exit (Brexit) date cannot be before July 2018, or September 2018 assuming that notification is not given before September 2016.
This briefing note considers the potential impact on employment and immigration law and the steps that employers may wish to take now to prepare for a Brexit.
Some areas of UK employment law - such as the National Minimum Wage and the law relating to (unfair) dismissal - are outside the scope of EU law and regulated by UK legislation. These are unlikely to be affected by a Brexit. However, other areas - including unlawful discrimination, certain family-friendly rights, working time, collective redundancy consultation and business transfers - have been heavily influenced by the EU, often having a basis in European Directives or case law. It is also important to note that, although that the EU provides a legislative benchmark, in many instances the UK provides protection in excess of the EU minimum requirement.
The impact of a Brexit on UK employment law will depend, to a large extent, on the specific arrangements put in place to formalise a Brexit. If, for example, the UK followed the Norwegian model and joined the EEA, the UK would still be subject to most aspects of European employment law. The Swiss model, involving access to the single market and many bilateral agreements, could also restrict the sovereignty of employment law due to the need to satisfy trading partners.
If the UK seeks to negotiate a bespoke relationship, theoretically, significant changes could be made. The government would have freedom to depart from EU employment law by repealing and amending legislation and the UK courts would not be bound by the decisions of the ECJ. If Parliament chose to repeal the European Communities Act 1972, all of the Regulations passed under it would cease to have effect. Due to the significant legal and commercial upheaval that this would cause, it is more likely that changes will be addressed in a piecemeal fashion. Equally, it is likely that the UK courts will continue to treat any ECJ decisions as persuasive if not legally binding, at least in the short-term.
The free movement of people is one of the four economic freedoms of the EU.
Following a Brexit, EU citizens will no longer have the automatic right to reside and work in the UK, and vice versa unless they have already obtained permanent residency. In reality, however, freedom of movement is likely to be an integral part of the negotiations around the post-Brexit relationship between the UK and EU and the UK is, therefore, unlikely to take any immediate steps to curtail EU nationals' freedom of movement rights. There was much press coverage in the run-up to the vote on the extension of the current Points-Based System to cover EU nationals; however, as is the case with employment law, the extent of change to immigration law will depend on what the post-Brexit relationship entails. For example, if the UK were to join the EEA, the current rules would be required to largely remain the same, whereas alternative models hold more uncertainty. It is anticipated, however, that the government will honour existing residence rights for EU citizens residing in the UK (or at least put in place transitional arrangements) in return for the same treatment for UK citizens residing in other member states.
How will a Brexit legally impact employers?
With the vote to leave the EU having only just been taken, it is very difficult at this stage to predict how Brexit will impact upon employers as changes to employment and immigration legislation will require consideration of a number of issues (e.g. social, political) rather than just a legal analysis. In any event, as the UK will remain subject to EU law and applicable EU decisions before and during the notice period there are unlikely to be any significant (if any) changes until a Brexit is confirmed. Further, since many EU employment laws have become entrenched in the UK's legal and ideological framework, the UK government is likely to be disinclined to make drastic changes at least in the short-term following a Brexit. Laws that are considered to impose the greatest burden on businesses - such as agency worker rights, collective consultation and working time rights - are most likely to be subject to change. However, the general consensus is that the changes will be neither radical nor immediate, giving employers ample warning to prepare.
The position on immigration is less clear. Labour shortages, a loss of talent and mobility restrictions are all ways in which businesses could be affected depending on how the government elects to regulate or remove European nationals’ right to live and work in the UK. There has been significant press coverage about the prospect of extending the current Points-Based System to apply to EU nationals but this is not a foregone conclusion. A short-term concern is that businesses will be less likely to invest in the UK until there is clarity on what the post-Brexit landscape really looks like.
- Communicate with employees where affected or concerned
- Audit your workforce in terms of where they work and their immigration status
- Review employment contracts and policies
- Determine the effect, if any, on benefit schemes
- Check your European Works Council arrangement; for example, information/consultation obligations that could arise from restructuring proposals following a Brexit
- Reconsider pending expatriate arrangements and address any immigration applications that could be made now
- Consider adapting contracts to address any unenforceability risks that could arise as a result of a Brexit
We intend to update our guidance in this area as the employment/immigration law implications become clearer.
This article is part of our Brexit series