On June 23, 2016, voters in the UK referendum chose to leave the European Union. Exit from the EU will require the government to make a formal application under Article 50 of the Treaty on European Union. This provides for a period of negotiation of up to two years (which can be extended if agreed). During this period the UK remains a member of the EU but businesses are facing a period of uncertainty and are seeking a view as to what “Brexit” will mean for their business and their employees. The implications for employers will very much depend on the negotiated exit and the form of the UK’s continuing trading relationship with the EU. There are unlikely to be any immediate changes.
Key parts of UK employment law are derived from European law, and in theory withdrawal from the EU could result in the repeal of those areas of employment legislation. However, despite the fact that the government may come under pressure to repeal or amend certain laws it is unlikely that there will be wholesale change. For example, large parts of the Equality Act 2010 are derived from EU law, such as protection from discrimination on grounds of sexual orientation, religion and belief and age, but it is unlikely that the UK government will wish to repeal that legislation and so be seen to be denying equality to these groups. The areas which are most likely to be subject to change will be rules on working time, agency workers and aspects of holiday pay. However, if the UK wishes to secure access to the single European market there may be pressure to continue to apply EU employment legislation and the ability to amend these areas may be limited.
The ability to employ EU nationals in the UK or to transfer UK nationals within the EU is also not clear. It might be politically difficult for the UK Government to agree to the free movement of workers as part of the withdrawal negotiations; if it doesn’t there will at some point be implications for the permissions required for EU nationals to work in the UK and for UK nationals to work in the EU. It is to be hoped that those who currently work outside their home jurisdictions will be “grandfathered” into any new regime.
So what steps should an employer currently be taking in relation to its employees? Whilst we are in this period of uncertainty, there is little definitive action to be taken. However, HR teams could consider the following:
- Are there any contractual terms which may be affected, including in relation to the way in which staff are remunerated?
- Which key employees may require a change in their permission to work in the UK?
- Is there likely to be any structural reorganisation required and, if so, will this require consultation with the work force?
As matters become clearer, so too will the steps that employers should be taking.