The EU Referendum and Employment Law

27 June 2016

European law is the source of many UK employment rights, but how could the decision to leave Europe impact your role as an employer?

Our Employment Law expert, David Hewitt shares his thoughts on the current impact of EU legislation on UK law, as well as the impact of the ‘Leave’ vote.

Although the vote to leave the EU could see some EU-derived employment laws being unpicked, the likelihood of major changes in the short to medium term is small, particularly as employment law was not one of the areas that the UK government sought to renegotiate prior to the proposed referendum.

In fact, depending on the UK’s relationship with the EU following the ‘Leave’ vote, the UK government may be required to retain some EU employment laws in order not to gain an unfair competitive advantage over EU member states.

Many of the EU minimum employment requirements are already exceeded in the UK, such as the EU minimum 14 weeks’ maternity leave compared to the UK’s 52 weeks. In addition, some of the EU laws that the UK government was ‘forced’ to accept at the time, such as the EU Working Time Directive’s four weeks’ paid holiday, have not only become the norm but have since been exceeded.

However, some adjustments might be made; for example, the requirement to formally ‘opt-out’ of the maximum average 48-hour week, or a cap on discrimination compensation.

It should also be remembered that not all “family friendly” rights are derived from Europe. The current government’s proposal to introduce “shared grand-parental leave” is purely home grown – this isn’t about the EU, it’s about the UK government announcing that it wants to “…make the UK the most family-friendly country in Europe.”

What about the EU-derived case law, such as the current debacle surrounding holiday pay? The Court of Justice of the European Union has determined it must be based on ‘normal earnings’, whereas the UK legislation says it is based on normal (basic) pay? In theory the UK national courts and tribunals will no longer be bound by previous CJEU rulings, although unravelling these divergences might cause some difficulties.

The current right of EU citizens to freely live and work across the EU is of great importance to many employers as it significantly expands the labour pool. In theory, when the UK leaves the EU then EU citizens would no longer have an automatic right to work in the UK (and UK citizens would no longer have an automatic right to work in the EU). It’s likely that it would form part of the exit negotiations with the EU, with the EU expected to demand some form of free movement of citizens in return for the UK having free movement of goods.

In the event that negotiations fail for any reason and the free movement of people ends, one possibility is that it could be replaced by a points-based type system currently applied to non-EU nationals or by separate border controls agreed with different countries.

If UK restrictions were imposed, EU countries would also be free to impose their own restrictions on UK citizens. However, it is likely that EU nationals already working in the UK would be permitted to stay in return for similar arrangements for UK citizens working in other EU countries. 

Not yet considered the impact on Health & Safety? Take a look at our Health & Safety and the EU Referendum article.

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