As stated by many commentators over the last few days, the impact of Brexit on employment rights and entitlements will to a large extent be determined by the exit model adopted. In the circumstances, it is far too early to say with any degree of certainty what impact Brexit will have in the field of employment law in the medium to long term.
There is clearly an immediate impact on businesses in terms of on-going investment, the recruitment of staff and possible redundancies and we expect employees to be cautious about moving employers and/or asserting their rights during this period of uncertainty. In terms of the law itself however we do not expect any short term substantive changes.
A great deal of UK employment rights are shaped by the European Union, from the Working Time Regulations to many family related rights. That is not the same however as saying that they are unilaterally imposed and we are ‘stuck’ with the legislation whether we like it or not. What is clear is that in many instances, the UK Government has ‘liked’ the legislation and in some instances, has ‘liked’ it so much, it has enhanced the entitlement given under the relevant EU directive; the much maligned Working Time Regulations are a good case in point, at least in relation to holiday entitlement.
These regulations introduced a statutory right to paid annual leave (which until that point had been provided by employers through the contract of employment), but the European Directive holiday entitlement is limited to 4 weeks of annual leave; in the UK, that entitlement has been enhanced to 5.6 weeks of leave. Likewise, it was the UK Government, not the EU that introduced shared parental leave where a couple working for different employers can share 50 weeks of a mother’s maternity leave and a UK Government that extended the Transfer of Undertaking Regulations to service provision changes and not just business transferred as envisaged by the EU Directive.
We understand that the ‘leave’ camp, pre vote, had begun to outline a post Brexit approach to employment rights and entitlements which involved dividing the law into three categories: (i) pure UK employment rights (like unfair dismissal) which we will retain, (ii) EU derived rights which we support and in some cases enhance and which will therefore be retained and (iii) EU derived rights which should be abolished subject to any constraints imposed by the relevant exit model. To date nothing has been published as to which EU derived laws are deemed to fall within (ii) or (iii) but it is hard to see how the exit negotiations could include any consultation with relevant stakeholders.
To date, it has been suggested by some commentators that category (iii) might include for example the following:
- making it easier make it easier for an employer to harmonise terms and conditions after a business transfer or change in service provider;
- addressing some of the complications that have arisen from EU case law on holiday pay; for example, the accrual of holiday during sickness absence or the calculation of holiday pay deepening on commission and overtime;
- repeal of the Agency Regulations 2010 which require agency workers who work for 12 weeks or more to enjoy comparable terms and conditions to permanent members of staff.
There has also been much talk of the repeal of the cap on bankers’ bonuses which limits bonuses for some bankers to 100% or in some limited circumstances to 200% of their basic salary. This has had the impact of increasing basic salaries which are not linked to performance but it does not seem to have had the ‘brain drain’ effect that was feared when it was introduced. That however may now change and there will be a strategic battle in the City between the competing aims of (a) maintaining the cap to retain ‘equivalence’ and strengthen the City’s position in negotiations for continued access to the EU single market for financial services and (b) attracting the top talent from other EU domestic markets with the promise of higher bonuses to help the City recover market which may be lost by Brexit.
This is a fast changing landscape and there are some basic building blocks that need to be put into place before any changes are introduced, not least the appointment of new Prime Minister and the timing and logistics of the service of the article 50 notice. We will keep you updated.
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