Brexit - What now for UK employers?

Following the UK's vote to leave the European Union, there is considerable uncertainty about the precise mechanics and what our legal and commercial relationship with the EU will be.

24 Jun 2016
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However, one area which is very likely to be affected is workplace regulation.

Any change will not be immediate: the UK will need to give 2 years' notice of withdrawal from the EU and negotiate exit terms. It may take months before the implications of Brexit become clearer but HR and legal teams will want to ensure they are engaged at the heart of their organisation's planning.

What is likely to change?

The changes will depend on many factors, including the new trading relationship negotiated with the EU. Many of our employment and discrimination laws derive from EU law and there is some appetite among businesses for deregulation. But the UK has chosen to enhance many of the basic rights required by EU law so they are not likely to be removed. And, even if there is full freedom to repeal European employment laws currently enshrined in UK law, wholesale change is unlikely. These rights are well-established in UK workplaces and are priced into outsourcing and commercial agreements.

The status of EU nationals working for UK businesses and UK nationals posted in EU states could have a greater impact on businesses. Both could theoretically lose their right to live and work in their current location but transitional arrangements and negotiated concessions seem likely.

We anticipate changes to:

TUPEWe expect the overall TUPE framework to be maintained but that the Government will legislate to make it easier to harmonise terms of employment after a TUPE transfer, and may disapply or water down TUPE obligations for smaller businesses.

Collective redundancies: The obligation to consult with employee representatives if making 20+ redundancies may be removed or the consultation period shortened, particularly for smaller businesses.

Agency Worker Regulations: These are relatively new and unpopular with businesses and may be repealed or substantially watered-down.

Working Time Directive: The UK already provides for greater holiday than required under EU law so that will stay. But the Government may legislate to prevent voluntary overtime and commission payments being included in the calculation of holiday pay, and/or to prevent holiday being accrued during long-term sick leave.

Discrimination law: It seems likely that discrimination laws would remain largely in place. However, the CBI has long argued for a cap on compensation for discrimination claims, which was not possible as it would breach EU law. This may now come back on the agenda. Likewise, protection against less favourable treatment for part-time and fixed-term workers may be reduced.

Immigration: It is difficult to predict how EU workers in the UK will be treated in immigration terms. EU workers who wish to stay may need to make an application under the Points Based System and some may not fit neatly into the required categories, particularly low skilled and low paid workers. Alternatively, EU migrants with British family members may wish to apply to remain on the basis of that relationship.

What can HR do at this stage to prepare?

Engage your business leaders: It will be important to take the opportunity to work with other senior stakeholders to ensure that there is engagement with the workforce implications of the business strategy on Brexit.

Communicate with staff: The messaging will be important. Staff may need reassurance that there will be no immediate change and that management are actively monitoring the position.

Audit your workforce: Identifying the EU nationals working in the UK and UK employees posted to EU member states, and their immigration status, will be essential. Some may have the right to apply for permanent residence rights or dual nationality: this should be carefully investigated.

Review expat employee terms: Review current secondment/employment terms, in particular whether they are guaranteed a job on the termination of their secondment.

Evaluate the likely impact of Brexit on the business and consequent workforce change: Whilst long-term planning will be difficult until there is greater clarity over the post-Brexit regime, HR may need to help plan for restructuring, redundancies or relocation. Businesses with operations in Scotland should also consider the impact of a likely renewed push for Scottish independence, while those based in Northern Ireland should consider how any hardening of the border with the Republic of Ireland would affect their operations.

Consider the impact on contracts and HR policies: Less urgently, policies on business travel and similar may need to be updated, while references in contracts of employment to the European Economic Area (e.g. in restrictive covenants) may require updating.


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