Business Law & Compliance

Brexit: What lies ahead for employment law?

6 min read

09 September 2016

Here are the reactive measures that employers can take now to ensure they are best placed for what lies ahead with the forthcoming Brexit, and the proactive moves that will enable them to prepare and thrive in the future.

The ramifications of Britain’s vote to leave the European Union cannot be analysed or understood just a couple of months after the event. Once Article 50 is invoked and the negotiations between the UK and EU begin to take place there will be more clarity.

However, we do know that businesses are expecting to experience change in the coming years as a result of the vote. Some 74 per cent of the business leaders we polled believe that Brexit will have a significant impact on their business, and a quarter believe that the HR function will be the most affected.

Communicate to create confidence

Firstly, businesses need to communicate with their employees about what Brexit means for them at the moment; this is particularly important if the employees are EU nationals. We know that there shouldn’t be any immediate implications. When the government has introduced amendments to visa statuses in the past, it has always carried transitional provisions and any changes usually only affect new applications.

There may also be human rights arguments as to why EU nationals cannot be required to leave the UK in the event of Brexit, whilst other employees may be eligible for permanent residency or even a British passport.

Property is a demanding and challenging sector, particularly post-Brexit

Don’t expect a bonfire for current employment rights

Some politicians have threatened a bonfire of employment rights following Brexit because many are derived from EU legislation. In reality however, the government is unlikely to take this path and change our rights, as it would be a deeply unpopular move. In any event many of our benefits including maternity and holiday leave are more generous than the minimum required by EU legislation.

Of the legislation derived from EU law, one potential area of change is the Transfer of Undertakings Protection of Employment (TUPE) regulations. This legislation provides rights to employees in the event of a merger, transfer of business to a new owner, or an outsourcing situation. Currently the UK goes further than is required by EU law.

Any change to this legislation will provide businesses with more flexibility in restructuring a company. However, the government had the opportunity to pare back the legislation three years ago, yet chose not to do so because of the greater certainty achieved through these additional obligations.

Provisions to do with temporary and agency workers, along with the Working Time Regulations, which deal with holiday pay and maximum hours per week, are other areas that may undergo alterations, or at least become surrounded by less red tape.

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Immigration implications of the various options for leaving the EU

If Britain remains within the single market but leaves the European Union, it is almost certain that accepting freedom of movement will continue to be one of our responsibilities of membership.

If this is the case, employers will still be able to bring EU nationals into the UK, and likewise if a business moves to another EU jurisdiction, they could still recruit UK nationals to work in that country without restriction.

Alternatively, we could be granted some access to the Single Market without freedom of movement, or we could see a complete exit from the EU and the Single Market. Both of these scenarios are likely to result in some restrictions on hiring EU nationals, such as a points system based on the current one for bringing non-EEA nationals into the UK.

Determined by skills, qualifications, experience, age and salary level, 20,700 working migrants are allowed into the UK each year via this route. However there are exceptions to the cap if the person’s role is one which has been identified as a shortage occupation, or if the individual has been employed overseas and is being transferred to a group company in the UK.

As certain technology roles have recently been designated as shortage occupations this system would still allow technology businesses, particularly cyber security firms, to recruit without great difficulty.

With the current market unpredictability, it may be too early to completely restructure your business. However, it is the right moment for you to audit your staff, understand who the EU nationals are, what their role within your company is and their current length of service.

This will help you prepare for the outcome of the Brexit negotiations so that you’re ready for when the fog starts to clear.

Kathryn Dooks is employment partner at technology and digital media law firm Kemp Little

Voice of the VC: Ignore the Brexit noise and focus on building great products.

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