The UK’s plan for Brexit announced – the impact on UK employment law
The UK’s Prime Minister, Theresa May, set out her plan for the UK’s Brexit negotiation today, but what might it mean for employers and workers? Sarah Chilton and Clare Murray take a brief look at her plans for the UK’s exit from the EU, and in particular, the possible impact on workers and employers with UK operations.
Theresa May is not going half-way – this is a “hard” Brexit; in particular, a complete exit from the single market and the associated freedom of movement of people, services, goods and capital. That means that new agreements and arrangements will be required to deal with issues such as immigration, trade and customs, including the provision of financial services across Europe’s borders.
There were three key themes to come from the Prime Minister’s speech today: the need for certainty; a stronger Britain and a fairer Britain. Protecting and enhancing rights for workers was one of the twelve objectives and driving principles which Mrs May set out in her plan for the UK’s exit from the EU, so it seems to be an issue high on her agenda.
So what is the likely impact of the Prime Minister’s plan for Brexit on workers and employers with UK operations?
- The European Communities Act 1972, which provides for the incorporation of EU law into domestic law, will be repealed but all law in force currently will be converted to domestic law, so there will be no sudden changes as a result of Brexit. Therefore, the same rules will apply immediately post-Brexit as pre-Brexit. Any changes to those existing laws will have to go through Parliament, in the usual way for amending laws in the UK.
- The European Court of Justice will no longer be a part of our judicial system. It is expected that domestic courts will therefore have full control over the interpretation of our laws. It is not clear yet what will happen to previous legislation and case law which already relies on the decisions of the European Court, but the Government is expected to clarify that later this year so we will have certainty moving forward. The removal of the European Court will take away one layer of potential litigation and uncertainty for employers operating in the UK, particularly in areas which have ended up in the European Court quite often, like working time, paid holidays and discrimination. We hope this will allow those advising employers to be able to predict with some more accuracy the outcome of employment litigation.
- The Prime Minister wants to implement controls on immigration and focus on international talent, to make the UK a country welcoming to migrants but at the same time controlling the number of people coming to the UK from Europe. Post-Brexit this may place a higher administrative burden on employers who are recruiting from inside the EU, compared to pre-Brexit. But the UK will likely see a system implemented for EU migrants which is the same as or similar to that which the UK has at present for non-EU migrants.
- The Prime Minister did give some assurances that she wants to guarantee the rights of EU nationals who are already living and working in the UK, and, the rights of British nationals living and working in the EU. She wants to secure these protections as soon as possible, and indicated it could be done now (on a mutual basis), before the Brexit process is completed – which will give businesses certainty in relation to their existing workforces.
- There was a focus in the Prime Minister’s speech on ensuring that the financial services sector retains the freedom to provide its services across European borders. She considers that there is no point changing rules which have worked for years. So rules relating to, for example, remuneration limits will continue for now. It is too early to assess the impact of Brexit on the financial services sector but there is more to London’s popularity in the sector than just the UK’s membership of the EU. With the Prime Minister’s determination to keep London an international centre for financial services, the UK can expect arrangements and deals to be sought which will maintain the UK’s position as a global leader in the sector.
- In a speech primarily dealing with big picture issues, such as international trade and cooperation in relation to crime, terrorism and foreign affairs, specific mention was given to the objective of getting the voices of workers heard on boards of public limited companies for the first time. If Theresa May is serious about enhancing workers’ rights, then the UK might see some changes before Brexit because she does not need the UK to leave the EU to pass such legislation. However, since the Government has already back-pedalled on their initial plan to get workers on to boards, the UK can likely expect a more watered-down version of workers’ involvement with boards compared to that anticipated a few months ago.
- Trade was a key issue in today’s speech. The Government is seeking to negotiate trade deals with EU member states, and other countries around the world. The Prime Minister wants the UK to be free to pursue trade deals with countries it chooses, and it is expected that the US will be high on the list. Ted Malloch, expected to be named as Donald Trump’s ambassador to the EU, has challenged President Obama’s statement that the UK would be at the back of the queue for a new US trade deal following an exit from the EU. Trump is reportedly enthusiastic about signing a trade deal with the UK, and quickly. This is likely to be a comfort to employers from both the US, the UK and other parts of the world.
- The Prime Minister made it clear that the final Brexit deal will be put to a vote in both the House of Commons and the House of Lords. We are still awaiting the decision of the UK Supreme Court on the question of whether the Government has the power to trigger Article 50 without a Parliamentary vote so there may need to be two Parliamentary votes before the UK can leave. The Prime Minister’s intention is therefore clear – to leave the EU on the best terms possible for the UK and to secure the UK’s economic future in the process.
- Whatever the deal looks like, the Prime Minister offered assurance that the changes brought about by Brexit would be phased in gradually, to avoid disruption for businesses.
The Prime Minister was confident that the UK can achieve a deal and a new strategic partnership with EU countries, and others. She highlighted the benefits to the EU in cooperating with the UK, to prevent disruption to supply chains and retain the flow of financial services between the UK and other EU countries.
The Supreme Court’s decision on Article 50 is expected in the next couple of weeks, and if there is to be a Parliamentary vote on the triggering of Article 50, that may force the Government to provide some more meat on the bones of the Brexit process, but the real detail of any Brexit deal will likely remain under wraps for some time to come.
What is clear is that the deal will have at its heart a focus on protecting and strengthening the UK’s economy, including the services the UK exports, such as financial services, and international trade connections, including with non-EU countries – the UK remains, and will continue to remain, very much open for business.
In summary, from a UK employment law perspective the government’s position is essentially that the existing employment laws and protections derived from EU law will not be removed following Brexit. No substantive changes to existing EU-sourced worker rights are expected.
However it is likely that, post-Brexit, the UK courts will have a much freer hand to interpret UK employment law, and are unlikely to have to stretch their construction of domestic employment law to ensure it gives full purposive effect to the potentially wider EU law from which it originated.
There is also no suggestion that the UK would adopt further EU-wide employment protections which may come into force in future.
Both of these issues will mean that, on the one hand, workers will have a certain level of comfort that their current protections originated from EU law will remain in place post-Brexit (unless and until of course Parliament votes to change such laws). On the other, employers with UK operations can probably draw comfort from greater certainty in future as to the meaning and interpretation of UK employment law as decided by the UK courts, and from the fact that UK employment law may not keep pace with future developments of worker protections across the rest of the EU.
This could potentially make the UK a more attractive place for overseas businesses to invest in, whilst still ensuring a good pre-existing level of employment protection for UK workers.
Sarah Chilton and Clare Murray advise international employers with UK operations on UK employment law issues. If you have any questions, please contact Sarah Chilton or Clare Murray.
CM Murray LLP is a founder member of Innangard, an international employment law alliance which brings together leading employment law specialists from around the world to collaborate on international and cross-border employment law and HR issues.
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