For the majority of businesses in Britain, the possibility of a Brexit is a major source of concern. Especially given the uncertainty around the possible outcomes and how the UK economy could be affected as a result. In theory, with a significant proportion of the UK’s employment law coming from Europe – including discrimination rights, holiday pay and maternity and paternity leave – an “out” vote could bring drastic changes to the country, particularly if the government chose to repeal all EU-derived laws.
So what could a Brexit look like for the UK?The impact of a Brexit would depend on what was decided between the EU and UK after the referendum. It’s unlikely the UK would want to completely separate itself from Europe and instead would be keen to retain some form of partnership. One option could be to form a Norwegian-style relationship with the EU by joining the European Economic Area (EEA) and the European Free Trade Area (EFTA). This would allow the UK to keep its economic ties and continue trading in the European single market. But by remaining part of this trading block, the UK would still be bound by some EU policies, including policies governing employment law. However, now it would no longer have a say when it actually came to making these laws, a major drawback that should be taken into account if the UK finds itself negotiating a new agreement with the EU.
What would a leave mean for employment law?As a large amount of EU employment law has been incorporated into UK employment law, many would expect a break from Europe to have significant consequences for the country’s businesses and employees. In actual fact, the majority of EU employment laws have been integrated into the UK as “primary legislation” via Acts of Parliament. These laws are freestanding and so would not be directly affected by a Brexit, even if the UK was to completely leave the EU. Primary legislation can only be changed or removed if the UK Government specifically seeks to do so. As laws, such as the Equality Act 2010 which comes from the EU’s Equal Treatment Directive and out-laws discrimination, are so well ingrained into the UK legal system, it’s highly unlikely the government would look to amend them. Making changes to key legislation would cause a lot of uncertainty among business owners and would likely be controversial, so the government would want to avoid this. It’s hard to imagine that any business would be in favour of removing laws such as the Equality Act, meaning they would be free to discriminate against employees. Alternatively, it’s more likely that individual laws would be altered over time if concerns are specifically raised. Alongside primary legislation, some regulations from European Acts are introduced into UK law as “secondary legislation”. This type of legislation is based on interpretation of European laws by government ministers. For example, the Working Time Directive, which determines the maximum number of hours employees can work per week and also entitles them to paid holiday, was brought in under the European Communities Act 1972. If the UK was to leave the EU, the government could remove the European Communities Act which may mean that regulations passed under it also fall away, unless deliberately retained. Read more about the Brexit debate:
- The EU debate: A critical role for business
- Our readers have their say on whether a Brexit would negatively impact their companies
- How Brexit will impact UK investment market
Are any employment laws less likely to change following an “out” vote?In the short term, it’s unlikely there will be any major changes to UK employment law if a Brexit is decided on. And employers and employees will be particularly interested to know that some areas of law will definitely not change, as they’re not connected to the EU. For example, the National Minimum Wage, including the National Living Wage, is actually set by the UK government and so would not be affected. And when it comes to other employee-friendly laws which do come from Europe, such as the right to maternity pay and leave and holiday pay, these are also unlikely to be altered dramatically in the future. This is because the UK is relatively more generous with these policies, in particular offering more maternity leave than other countries in the EU, and would continue to do so. Holiday pay has become well established now in British culture so it would be hugely unfavourable to remove this. So although the European Communities Act could be removed following a Brexit, as we mention above, it’s unlikely the whole Working Time Directive would be completely repealed. Instead, the Government would probably seek to change unpopular rights, such as the right for workers on sick leave to still earn holidays while also being able to take unused annual leave over into the next holiday year.
How can businesses prepare for a Brexit?For now, there is little preparation needed by employers ahead of the referendum for two main reasons. Firstly, as any change to law takes time to implement, it should be business as usual for UK employers for the foreseeable future. However, it’s worth noting that if a Brexit vote is reached in June, businesses should keep an eye out for possible changes to ensure they’re up to speed on employment law and don’t get left behind. Alongside this, much of the country’s employment law is actually written into an employee’s contract of employment. As terms written within the contract, including entitlement to sick leave and holiday pay, cannot be breached, these would remain in place even if changes are made to regulations following an ‘out’ vote. As the UK is required to give two years’ notice when it intends to leave the EU, the process to break away will be a lengthy one. So any amendments the Government wants to make to employment legislation will have to wait until the leave has been completed. And given that the UK is unlikely to cut all ties with the EU if it does chose to leave, employment law will still be bound by some EU control. For this reason, employers and employees do not need to be concerned, as the country is unlikely to feel any major consequences in the near future. From prime minister David Cameron suggesting London mayor Boris Johnson was a great friend albeit wrong in opinion, to former shadow business secretary Chuka Umunna and Johnson telling each other to man up, the Brexit debate has caused a few UK politicians to squabble with each other. Karen Bexley is head of employment law at MLP Law.
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