Significant changes to employment law ‘unlikely’ in the short-term, says Marie Macdonald, head of employment law at MSHB Solicitors
ON June 23, the UK voted to leave the EU. Until the shape of the UK’s exit has been determined, its direct legal implications for employment law in the UK are unclear.
A significant proportion of the UK’s employment law is derived from EU law, including discrimination rights, collective consultation obligations, transfer of undertakings regulations, family leave, working time regulations and the agency workers regulations.
Since the referendum result, commentators have been speculating about which of these may be repealed, and when.
However, for practical and political reasons, it is likely that EU law will continue to exert a significant influence on UK employment law for some time.
It is likely that EU employment law will still exert an influence.
Even if the government wishes to continue its agenda of deregulation, it would not want employers to have to deal with a sudden, fundamental change in the law and is more likely to take a piecemeal approach, keeping the majority of EU-derived employment law, at least initially.
In addition, it is unlikely that any government will repeal laws that have promoted equality and diversity, are widely regarded as part of the fabric of society, and are generally popular.
Of course, there are some EU-derived employment laws that may be repealed sooner rather than later. These may include:
• Aspects of the Working Time Regulations 1998 (SI 1998/1833), possibly those giving holiday rights to workers on long-term sick leave and the inclusion of commission and overtime payments in holiday pay.
• The Agency Workers Regulations 2010 (SI 2010/93), which are commercially unpopular.
• The cap on bonuses in the financial services sector, which the UK unsuccessfully attempted to challenge in 2014.
Over time, individual employment laws may be varied where they are perceived to be unduly restrictive.
For example, the TUPE regulations may begin to diverge from the Acquired Rights Directive.
Some have suggested that the government could impose a cap on discrimination compensation, something which the ECJ ruled was incompatible with EU law.
Much will depend on the kind of ongoing relationship the UK has with the EU.
For example, if the UK adopts the ‘Norway model’, becoming part of the European Economic Area (EEA), many EU regulations and directives concerning employment rights – although, notably, not the Equal Treatment Framework Directive – will continue to apply. These rules would be interpreted and applied by the EFTA court, which is also bound by decisions of the ECJ.
It should be noted that, because the Equal Treatment Framework Directive does not apply, EEA countries are not obliged to put in place EU law prohibiting discrimination on grounds of race, disability, age, sexual orientation or religion and belief – although, as stated above, it would be very unlikely that these protections, which are enshrined in the Equality Act 2010, would be repealed in the UK.
Even if we do not join the EEA, any deal which sees the UK remaining in the single market or which involves a free trade agreement with the EU is likely to require continued adherence to fundamental EU employment rights.
In all of this there are political realities at play.
The UK is likely to want an ongoing trade relationship with the EU, which is its biggest export market.
The price of a free trade agreement with the EU may well be acceptance of EU social and employment regulation as is the case for the non-EU members of the EEA.
Ultimately, it seems unlikely that UK employment law will be transformed in significant ways, particularly in the short-term.
• Marie Macdonald is head of employment law at Miller Samuel Hill Brown.
