Employers must now plan for the consequences of the EU referendum decision. The uncertainty is likely to impact economically but for HR and HR legal the questions are what is likely to change and when?
To start the process the UK Government issues a Withdrawal Notice, in accordance with Article 50 of the Treaty on the Functioning of the European Union. The withdrawal is effective on the earlier of two years from that notice or the terms of withdrawal being agreed. Given David Cameron’s announcement this morning, the withdrawal notice will be delayed.
Greenland withdrew in 1982 and took three years so the two year period may need to be extended by unanimous agreement of the Council of Europe. One view may be the sooner the better, to avoid a prolonged period of ongoing uncertainty.
Once the EU has agreed the withdrawal terms, it will need to be ratified by the UK Parliament.
What will change?
The withdrawal will not, of itself, repeal UK employment laws or immigration rules wholescale. Parliament will repeal the European Communities Act 1972 but many of our employment laws from Europe or Directives have been introduced through other UK legislation or regulation: these individual laws will have to be amended or repealed.
There has been much discussion about the UK being ruled by the European Court and not having its supreme court in the UK. Employment case law includes EU law principles. Freedom from the Court of Justice of the European Union (NOT the European Court of Human Rights) decisions is likely to lead to case law changes as cases proceed to appeal. Whilst holiday pay and accruing holiday on long term sickness may be prime examples where change may arise, legislation may get there first.
Views differ as to which employment legislation will be dismantled, if at all:
- TUPE provisions derive from the Acquired Rights Directive but their application to service provision changes do not – the UK extended TUPE rights to service provision changes through domestic law, not because it was a European obligation; an area likely to change is post TUPE harmonisation.
- Holiday entitlement, flowing from the working time directive, is another area likely to be the subject of debate. However, will we really reduce holiday? Will holiday pay calculation change for example by excluding overtime and commission in future? Even if the law does change, this will not override existing contractual rights. The perennial debate about the 48 hour working week and opt out may well be top of the list for repeal.
- Atypical Workers rights – range from Agency, Part time and Fixed Term worker and Posted Worker provisions ; so those businesses using or supplying contingency workers may gain more freedom.
- Equality Rights – many UK anti-discrimination provisions predate European obligations – sex, race, disability and protection beyond employment into goods and services, all existed before the UK joined the EEC. A more likely change could be to place limits or caps on discrimination compensation awards.
Other areas of HR law will undoubtedly be considered: data protection, the impact on pensions, consultation obligations when restructuring and planning redundancies, to name a few.
The time this will take and impact on business is best illustrated by data protection: the General Data Protection Regulations: how many businesses will face difficulties trading cross border if they opt out of these provisions even if UK law allows this? Read more.