The Government has recently published a series of technical notices setting out the position if no agreement is in place when the UK leaves the EU in March 2019. Despite constant reassurances that it is extremely unlikely we will not reach an agreement, the Government stated that it was important for the UK to be prepared. The Government has asserted since the outcome of the referendum that employment rights would not be watered down. But what if there is no deal? Are all cards off the table or is it business as usual?
A "no deal Brexit" means that on 29 March 2019 no deal has been made between the UK and the EU. There would be no transition period and EU law would be cut off with immediate effect. During his speech outlining the Government's technical notices planning for a "no deal Brexit", Dominic Raab, the Secretary of State for the Department for Exiting the European Union, made it clear "this is not what we want. And it's not what we expect. But, we must be ready".
The technical notice entitled "Workplace rights technical notice" was subsequently published providing guidance on the implications to employment law if no deal can be reached. In summary "legal certainty" is the order of the day (as it has been throughout the negotiations). Many UK laws come from EU law including: the Working Time Regulations 1998 (including annual leave, holiday pay and rest breaks), family leave entitlements, certain health and safety requirements, discrimination and harassment protection, the Transfer of Undertakings (Protection of Employment) Regulations 2006, agency worker protection and much more. The EU (Withdrawal) Act 2018 will convert the powers derived from EU Directives into UK law. The Government will make minor changes to the language of the legislation to ensure it makes sense post-Brexit but the policy behind the legislation will remain. In short: the aim is for UK workers to continue to benefit from EU derived employment protection.
If there is a "no deal" scenario the Government has highlighted two areas of potential change. These may not impact on the majority of employers but it is important to be aware of them:
If no deal can be reached, people living and working in the UK for a UK or EU employer will continue to be protected under the same UK legislation which implements the EU Insolvency Directive. This will allow the employee to make claims in the case of employer insolvency. However, UK and EU employees working outside the UK in an EU country for a UK employer may still be protected under the national guarantee fund established in that particular country but this cannot be guaranteed.
European Works Councils
The EU derived European Works Council Directive permits workers to request, in certain circumstances, that their employer establishes a European Works Council ("EWC") which must provide information and consult with employees on issues spanning two or more European Economic Area states. If there is no deal, the Government has stated that they will ensure EWCs are recognised as far as possible. Changes will however be implemented to prevent the creation of new EWCs.
So what does this all mean for UK employers?
The immediate implications of the technical notice are very limited. Further notices are expected in the coming weeks and employers should keep a close eye on developments in this area.
The most significant change with immediate impact is the fact that the Court of Justice of the European Union ("CJEU") will no longer have jurisdiction post-Brexit. Theresa May has confirmed that she intends the UK to take control of our own law. Post-Brexit (and any negotiated transition period) the Supreme Court will be the final arbiter of employment disputes in the UK. Employers have been heavily impacted by EU case law developments. For example, the concepts of holiday pay including commission payments and deferring holiday when sickness arises during annual leave have both emanated from the EU. At present it is unclear whether there would (or indeed could) be any changes to such principles, although any such changes made would clearly go against the theme of legal certainty, it may be that such rights are chipped away in the future.
What if there is a change of Prime Minister? The above is based on assertions made by the Government under the leadership of Theresa May. Arguably going forward, a new Prime Minister could easily amend employment laws and the guarantees given in the technical notices could be short lived. If there is a "no deal Brexit" and a new Prime Minister, the honest answer is "we'll have to wait and see".
What steps should employers take now?
Contingency planning. Following the Government's lead it is sensible to have a contingency plan in place should there be a "no deal Brexit". Consider the impact this could have on your workforce and the wider country. Should there be a "cliff-edge" Brexit there will inevitably be some disruption to business. Having a flexible and agile workforce can be a game changer for employers should the worst case scenario unfold. Can your workforce work variable hours? Will borders be impacted? How will your employees travel on business? Will employees' families be impacted?
Labour supply. Audit your workforce and update records to determine if labour supply will be an issue. Even if you do not employ EU nationals, consider the impact of Brexit on the wider labour market. Provide assistance to EU nationals to ensure they are updated on the latest announcements from the Government. Consider the impact on any UK nationals you have working in EU countries.
Brexit working group. If you haven't already done so consider appointing a Brexit working group which has responsibility for monitoring on-going Brexit issues and updating the wider business. Identify areas of concern for the group to focus on, such as working time.
With regard to the majority of employment laws it will be business as usual. Ensure current UK employment laws are adhered to regardless of whether they originated from the EU. It is unlikely that current EU derived rights will change in the short to medium term. If you have ongoing litigation which may be impacted please seek legal advice.
Although the challenges on the horizon are certainly apparent, employers in the UK have a strong track record and are well placed to face the turbulent times ahead.