The impact of “Brexit” on employment law

By Mike Emmott, CIPD Employment Relations Adviser, @emmott_m


What would happen to employment law if the UK were to leave the EU?  Would the legislation introduced in response to EU directives, including TUPE, working time and agency working, simply fall away overnight?   Nothing seems more improbable.  The likelihood is there would be very little immediate change, but rather some limited changes over time.

David Cameron has not denied reports that he is seeking to restore the “opt out” over EU employment laws secured in the 1990s by then Prime Minister John Major, telling European leaders he wants a programme of deregulation as part of his renegotiation ahead of a referendum on Britain’s EU membership. The Times quoted an unnamed senior Conservative as saying: “A big item is the return of the opt-out from social and employment legislation that would include the working time and temporary worker directives.  For later on, we want a protocol and line in a future treaty saying employment conditions are the responsibility of member states”. 

So it seems that the UK is currently looking for a “promise” of an opt-out, which would mean leaving detailed negotiation until after a referendum.  Which draws attention to the difficulty of distinguishing between renegotiating EU membership, and a possible “Brexit”, in terms of the likely impact on employment law.   Clearly the Government believes that the UK has more leverage now, with the possibility of Brexit lurking in the wings, than it would have following a “No” vote in the referendum, but the outcomes on employment law might not be all that different.  

Given that Brexit would mean a return of sovereignty in the field of employment law, why shouldn’t we anticipate radical changes in legislation?  This partly depends on a judgement about the political and economic relations between the UK and the rest of Europe in the event of Brexit.  Even if we were to leave the EU, trade agreements (such as EFTA) would require the UK to accept the majority of EU regulations.  In practice, the options for the UK would be either to join the European Economic Area (EEA), like Norway, or negotiate bilateral agreements with the EU, like Switzerland. If this happened, the UK would still have to comply with EU social and employment laws.

The suggestion that Britain should be exempted from EU employment law is likely to meet fierce resistance from other member states, whether or not the UK remains a member.  France and Germany will not sign up to what they would see as “social dumping”, or cutting back on legal protections for UK workers in order to win competitive advantage.  “Sovereignty” in the field of employment law - as in other areas – will be heavily constrained by the need to satisfy our trading partners, whether the UK stays in or leaves the EU. 

Even if the UK left the EU, it’s not clear how this would impact on decisions taken by UK courts.  Lewis Silkin have pointed out that past ECJ rulings in areas such as TUPE and discrimination have in many instances become part of UK legislation and case law and would continue in practice to influence UK law.  For instance, the leading Supreme Court decision about the type of factors that might justify age discrimination depends upon ECJ reasoning.  In recent cases on holiday pay the courts have read additional wording into UK legislation to give effect to ECJ decisions.  And past decisions remain binding on lower courts, subject to their ability to distinguish them because the particular facts of the case are different.

There is no doubt that some areas of employment regulation are unpopular with UK employers.  Particular areas that many UK employers would like to see abandoned or amended include the regulations on working time, agency working and transfer of undertakings (TUPE).   However:

  • the individual opt-out in relation to the 48 hour limit – to which many other EU members, not just the UK, are strongly attached - has substantially limited the practical impact of the working time regulations.  The ECJ ruling that holiday pay carries over to another year if the employee is prevented from taking it by sickness is probably an irritant rather than a major burden;
  • repealing the regulations on agency working could possibly look like a “quick win” but would hardly appeal to other EU members, who are concerned at the fragmentation of employment status and committed to the idea of “flexicurity”
  • on TUPE, the ability to harmonise terms and conditions of employment would be popular with employers.  However the courts have suggested that this would undermine the purpose of TUPE, which is to safeguard the rights of employees on a transfer.  So in order to achieve any useful purpose the UK might have to seek more radical changes. 

There are one or two areas in which relatively modest changes might be negotiable.  There would for example be significant support among UK employers for imposing a cap on discrimination claims, which are currently uncapped, though it seems unlikely that employers would push for more sweeping changes in this area.  Exclusions from specific pieces of legislation for micro-employers might also be negotiable. 

The direction of travel has for some time been towards the extension of family friendly rights reflecting social, workplace and technology changes.– again this was a domestic measure only and not introduced because of EU law. Similarly, in relation to maternity leave, the domestic rights already exceed the minimum required under EU law so this is unlikely to change at all.

Despite some appetite for change in these areas, getting out from under employment regulation is not UK employers’ greatest priority.  Most employers are not keenly anticipating the opportunity to throw employment legislation overboard.  The right to shared parental leave, for example, was supported by both the coalition Government and the Labour opposition. The same applies to extended rights to request flexible working introduced in July last year.  

Research suggests that the impact of employment regulation on small employers has been overstated.  And it’s possible that employer concern about the EU as the source of significant further employment regulation is becoming somewhat outdated.  Why else would UK unions be contemplating withdrawing their support for EU membership? 

More details about what Britain’s relationship with the EU would look like as a non-member state are likely to emerge in due course. But for now big changes to employment law look unlikely.



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  • What is the thinking on being able to continue to employ workers from other EU countries who currently have the right of free movement to live and who have jobs in the UK?