Employment law and HR implications of Brexit Olly Jones Peter Lockwood 13 July 2016
Brexit What has happened so far - UK voted on 23 June 2016 52:48 in favour of the UK leaving the EU The referendum outcome is advisory only it does not bind the Government Theresa May to be confirmed as our new PM and will have responsibility for starting the exit process The UK remains a full member of the EU and the law is unchanged (for now)
Withdrawal agreement Uncharted territory Orderly exit arrangement Immediate consequences of the UK leaving the EU Future relationship between EU/UK Likely to be transitional rules (e.g. vested rights of the two million UK citizens living in the remaining Member States, and EU citizens living in the UK)
Brexit: Impact on your business - Short term Very much business as usual (albeit lack of certainty for future) Existing EU law will continue to apply Continuation with current EU regulatory reform / implementation (e.g. PRIIPS / MIFID2)
Right now action plan Plan Communication Audit Who is leading in the organisation? What is the initial response plan? Know potential obligations Likely to have already been initial communication Future communications /Q&As Workforce Documents Structures
Impact on your business Long term Business as usual in UK/with UK, non-eu clients Ability to use UK entities to service EU clients will depend on a number of factors London very likely to remain a major global financial capital (perhaps with a more off-shore focus)
HR checklist Communication Structures Movement of people HR Checklist Documents Relocation Information and consultation Retention
EU law and English law EU law is tightly woven into English law and will not be unpicked easily Simply repealing the European Communities Act 1972 will leave large holes in the legal system and not remove all EU law Treatment of Regulations: most likely approach must be some form of bridging legislation to treat EU as applying until changed Directives which have been implemented will remain in force unless repealed
Pre-Brexit impact on UK employment law May see willingness for UK to interpret in UK domestic situations ECJ less interested in UK challenges? Challenge to new measures once Article 50 invoked/the closer to exit
Employment law: wholesale repeal unlikely Renegotiation New economic trade arrangements may require UK to comply with certain EU laws (see e.g. Swiss and Norwegian models) Domestic Law Much does not stem from Europe (e.g. minimum wage, unfair dismissal) Some predates European equivalent (e.g. discrimination) Some goes further than European legislation requires (e.g. holiday entitlement, maternity rights) These areas are unlikely to change as a result of Brexit Political Considerations Main political parties and public would see much as fair and reasonable
Which UK employment laws might change? Agency Worker Regulations Remuneration (CRD IV) Working Time Directive Discrimination TUPE
GDPR short-lived regulation for UK entities? The GDPR will replace the Data Protection Act 1998 (DPA) in the UK from 25 May 2018 i.e. before any likely withdrawal date After withdrawal Transitional legislation is likely UK will need to receive a Commission finding of adequacy, as we can expect UK businesses to continue handling EU citizen data Adequacy is not necessarily GDPR standard (e.g. Israel, Canada). However: ICO wishes to bring companies up to GDPR standard EU operations of international firms (incl. UK operations) will also need to comply with GDPR Businesses should therefore continue to focus on GDPR compliance, albeit there is less potential for large fines.
More information Brexit microsite IEI microsite European employment law matrix
Appendix 1 - Which UK employment laws might change? Employment law Potential changes Business impact Agency Workers Regulations Repeal Reduction of costs in using agency staff Potentially makes use of agency staff more attractive Greater degree of flexibility CRD IV Removal of bonus cap (1:1 ratio of salary to variable pay; 1:2 with shareholder consent) Greater freedom to control and structure pay Potential competitive advantage
Employment law Potential changes Business impact Working Time Removal of the 48 hour maximum Simplification of holiday rules (interaction with sickness absence) Simplification of rules on calculating holiday pay (overtime, commission) Qualifying period for entitlement to holiday. Simpler practices, wider discretion on what to include as holiday pay, and how (or whether) to arrange carryover of leave to the next leave year Discrimination Introduction of cap on compensation Decrease potential financial liability for such claims Increase likelihood of settlement of accompanying claims (e.g. unfair dismissal) TUPE Relaxation of information and consultation requirements before a TUPE transfer. Loosening of restrictions on changing terms and conditions Simpler process
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