Brexit and Employment Law: What employers need to know

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Fact: No UK business is fully prepared for Brexit!

With 31st October 2019 looming, Deal or No-Deal… are you ready for the changes Brexit will bring to your business?

Given there appears to be little in the way of certainty as to whether we will “Brexit” with or without a deal, you would be forgiven if you are feeling somewhat unprepared.

By now, unless you have been in hiding, you will likely be aware that following formal notification of the UK’s intention to leave the European Union (EU) issued on 29 March 2017 (and two agreed extensions to our departure) if the UK and EU cannot conclude a draft withdrawal agreement (or a third extension), withdrawal will take effect on 31 October 2019 at 11pm with “no deal”. This is seeming more likely following the Queen’s exercise of her prerogative powers to allow the government to suspend Parliament, on the Prime Minister’s advice.

Our Employment Law Specialists will be on hand to support you through this period. We will ensure that you and your business are protected and aware of any planned changes to the law and the impact this may bring to your business and employees, to ensure as little disruption to you as possible.

Before EU anti-discrimination obligations in our employment law, the UK had already implemented protection in many key areas, such as race and disability discrimination. The UK law also already provided protection for equal pay and rights for maternity leave and pay.

However, unquestionably, a substantial amount of the UK’s employment law now comes from the EU and after 31 October 2019, the Court of Justice of the European Union will no longer have jurisdiction over the UK courts and its future.

Our Courts and Tribunals may still have regard to EU decisions before or after Brexit, so far in that it is relevant to the matters before it, pursuant to the European Union Withdrawal Act 2018. However, the Supreme Court and High Court of Justiciary (Scotland), when sitting as a court of appeal, are not bound by any retained EU case law and may therefore depart from previous EU case law decisions subject to legal tests.

Below we have considered some of the most employment laws that impact employment and how they may be affected by Brexit:

Freedom of movement: Of particular interest is what will happen to freedom of movement within the EU after Brexit. This very much depends on whether we leave with a withdrawal agreement or not.

If the UK leaves the EU with a deal, it has been agreed:

  • There will be an “implementation period” from 31 October 2019 – 31 December 2020. Within this period, free movement will effectively continue between the UK and EU, and those EU citizens legally residing in the UK will be able to continue to do so. However, those EU citizens arriving after 31 October 2019 with the intention of staying longer than the three-month right to reside, will be required to register.
  • EU citizens residing in the UK lawfully for five years by 31 December 2020 will be able to apply for “settled status” to stay indefinitely under the EU Settlement Scheme.
  • Those EU Citizens in the UK for fewer than five years by 31 December 2020 will be entitled to apply for “pre-settled status” under the EU Settlement Scheme until they acquire the necessary five years’ continuous residence to obtain settled status. This means they will continue to be able to work, study, or maybe be self-sufficient until they have been here for five years.
  • Irish citizens will not need to apply for settled status in the UK.

The EU Settlement Scheme is open now and you can find further information and apply online here.

If the UK leaves the EU with no deal:

In the event of a no-deal Brexit, the government will seek to end free movement sooner, using the Immigration and Social Security Co-ordination (EU Withdrawal) Bill 2017-19. There will then be a transitional period until the UK’s new skills-based future immigration system comes into force on 1 January 2021.

The government has agreed to protect the rights of EU nationals and their family members living in the UK by 31 October 2019, even in the event of a “no-deal”. The EU Settlement Scheme will continue to run, but only for those in the UK by 31 October 2019 and not 31 December 2020 as it would if we left with a deal.

1. Parental leave and pay

UK maternity leave and pay rights are more generous than the EU rights and were implemented by the UK first. As they are purely domestic, they will stay. As will the right to shared parental leave and the right to request flexible working.

2. Holidays

Although a full repeal is unlikely, there may be some aspects of the right to a paid holiday that the government may want to amend. Such rights as the right to accrue holiday pay whilst on sick leave could be changed, which is often unpopular with employers. As is the right to holiday pay that represents all aspects of an employee’s pay (such as bonus and commission), not just their basic pay.

3. Discrimination law

The Equality Act 2010 implements the UK’s laws against discrimination so would remain in force. This is the case unless a controversial decision to repeal the Act is taken by the government. Although we may see some changes that may be welcomed by employers, such as a potential cap on discrimination compensation which under EU Regulations is currently uncapped.

What next?

Should we leave with or without a deal, it will be more important than ever that you, your business, and your employees are up to date with changes to legislation and practice. If you have any concerns or would like advice on this topic or any employment law matter, please call our 24-hour client advice line: 0800 151 2935 and quote your Client Account Number on all correspondence and telephone calls.