Until we formally leave the EU, all our pre-referendum rights and obligations remain fully operational. But that is not to say that there are not immediate issues which need to be addressed.
Article by Julian Hoskins, Employment Law Partner – Bevan Brittan.
Staffing is the burning issue as – anecdotally – we already hearing that employers who recruit regularly from the EU are beginning to find it difficult to fill vacancies with EU staff, as incoming employees are reluctant to commit to the UK.
Let us look at the key issues, initial impacts and longer term implications: Budgeted agency spend for UK based staff may, therefore, need to be re-visited, in order to fill gaps, at least in the short term. Relocation cost budgets may also need to be re-considered, if you are likely to see a flow of EU based staff returning to the UK and vice versa. It may also be prudent to dust off your standard relocation clauses in your contracts of employment, to check whether you have the required flexibilities to reallocate staffing resource in order to backfill any workforce gaps caused by Brexit. In addition, you may need to focus on providing reassurance of your commitment to your EU workforce, whether based here or abroad. Keeping lines of communication open is important, sending clear messages of support, whilst also providing practical help. For example, some employers are providing ‘helpline’ immigration advice, information packs and ‘FAQ’ sheets, employer funded immigration law surgeries and / or access to specialist HR support. Some businesses may wish to steer their EU workforce towards strengthening their immigration rights by applying for permanent residence, British Citizenship or a Registration Certificate.
But what can business expect and plan for in the longer term? In terms of migration, all will depend on the terms of our exit, but if we are headed for a ‘hard’ Brexit, in which we ‘take back control’ of our borders by ending free movement of people, then businesses recruiting from overseas will need to start preparing for the possibility of an extension of our current Points Based Recruitment to workers from across Europe. Extra time and resource will need to be allocated for this process, if it is to mirror the current system for non-EU migrants. In terms of the long-term fate of EU derived employment law, it seems unlikely that there will be a major re-write. Theresa May announced at the Conservative Party Conference in October 2016 that, as long she remained Prime Minister, there would be no interference with existing workers’ legal rights, so the “…same rules and law will apply (to employees) after Brexit as they did before”. Under her ‘Great Repeal Bill’, EU derived rights would be absorbed into domestic law.
Another indication of a ‘business as usual’ approach to employment law was provided by David Davis, Brexit Secretary, in July 2016, when he wrote that he did not feel that there was any appetite for wholesale change to employment regulation, as long as the employment law environment stays “reasonably stable”. However, both those assurances rest of course on the assumption of stability in an environment which is informed by uncertainty and instability: it remains to be seen whether Theresa May will have the longevity to see through her stated approach to employment law; and David Davis’ remarks are based on a ‘stable’ environment, at a time when instability appears to be a theme – particularly given recent developments on the other side of the Atlantic. Of course, as the Great Repeal Bill works its way through Parliament and becomes the Great Repeal Act, we may well see a watering down of employment regulation as it becomes incorporated into UK law. Looking even further ahead, once we have left the EU and are free to retain, amend or repeal law which originated in the EU, what are the likely contenders for change? We understand that civil servants have highlighted to the Employment Lawyers Association the following five areas as being top of the list for change.
As for TUPE, it is thought that there may be some amendment to the current restrictions on post-transfer harmonisation of employment contracts. However, the concept of automatic transfer of employees and assumption of rights and liabilities of the outgoing employer are concepts that are likely to stay. Employers will, therefore, need to continue to factor this in to tendering processes and continue to ensure that the usual TUPE warranties and indemnities are covered off, at least for the foreseeable future. For contracts which have already been agreed and which have a significant period of time left to run, it may be prudent to review agreements to see how they may be affected if TUPE no longer exists. As regards current negotiations for future contracts, it would be wise to ensure that indemnities cover off the possibility that your existing workforce may need to be made redundant if TUPE no longer applies. That said, until we know more, it would not be sensible to rely on any cost saving or increased flexibility associated with a significantly neutered TUPE. As for the Agency Workers Regulations 2010 they are thought to be one of the first sets of regulation in line for disposal post-Brexit. Broadly, these regulations require businesses to allow agency workers access to the same facilities and working conditions as directly employed staff. Given that the AWR has a relatively low profile amongst workers, as well as being complex and unpopular with business, it seems very likely that they will quietly be shown the door and are unlikely to be much missed.
Another set of unpopular EU-derived regulations are the Working Time Regulations. However, like TUPE, they are unlikely to be subject to wholesale repeal, because they are now so embedded in practice. In addition, the Government has voluntarily gone further than the requirements of the underlying Directive and employers often provide more than the minimum rest and holiday breaks. It therefore seems unlikely that there will be much appetite for rowing back on these provisions. However, although comprehensive reform of holiday and rest breaks is unlikely, some tinkering around holiday pay is possible and may be welcomed: a number of recent European Court of Justice (ECJ) decisions on holiday pay have been costly for employers and unpopular – for example the right to keep accruing holiday while on sick leave and the inclusion of additional elements of pay (such as commission and overtime) in holiday pay. Following Brexit, the Government may want to curtail holiday pay, so that it is based on basic pay only and with limited rights to accrue and carry over holiday into new holiday years. In addition, it may be that we see the removal/reduction of the maximum 48 hour working week, although the impact of this may be limited given that most employees will have opted out, under their contract of employment.
Although, in theory, discrimination protections under the Equality Act 2010 could be repealed after our departure from the EU, there is little willingness to do so and opposition to any such move would be strong. The same applies for pregnancy and maternity leave. Therefore, prudent employers will continue to operate on the basis that such rights and protections will remain in place. The only likely future cost saving as regards EU discrimination law is that, post-Brexit, an upper limit may be applied to discrimination compensation in the same way as it is to unfair dismissal compensation. That said, it is unlikely that unions are going to accept lightly any loss or watering down of employer rights. Bronwyn McKenna, Assistant General Secretary of UNISON, has said that their approach will be to increase their focus on bringing claims under the European Convention on Human Rights, utilising the European Court of Human Rights. This is, of course, entirely separate from our EU membership and will continue to operate, notwithstanding our departure from the EU. Although Theresa May has indicated in the past that she would like to repeal the Human Rights Act, that is likely to take a back seat to the Brexit negotiations. So, the emphasis is likely to shift away from employment rights underpinned by the EU and towards a more generalised human rights angle. From a practical perspective, this should have little impact on how a business operates in relation to equalities, but prudent employers will bear in mind that an EU exit may see an increased emphasis on complex human rights issues. Over the coming months, the only recourse will be for HR Directors will need to keep a close eye on the smoke signals which come from both Westminster and Brussels, as the impact of Brexit on workforce issues will be heavily dependent on the nature of our journey towards the ‘sortie’.
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