It’s what so many people in the business community are talking about – the UK referendum on remaining in the EU.
We go to the polls next month, on June 23rd, and with the decision on the so-called ‘Brexit’ fast approaching, we must consider what could happen if the country does decide to leave Europe behind. In this article, we have focused on the potential impacts on UK employment rights should the UK vote to leave.
What could the effects of a ‘Brexit’ have on UK employment law?
Endeavour Partnership’s employment law partner and head of department, Stephen Elliott, explains: “Much of the UK’s employment legislation is derived from Europe. For example, discrimination rights, collective consultation obligations, transfer of undertakings regulation, family leave, working time regulations and duties to agency workers are all a result of EU legislation.
“In theory, the UK government could repeal all of this employment legislation if we vote to leave in June, but, in reality, it is unlikely that the government would take such a drastic step. Even if the UK does leave the EU, it is probable that EU law will continue to exercise a significant influence over domestic rights.”
Why could EU law still be influential?
Firstly, some UK employment laws preceded EU legislation; UK race and disability discrimination laws preceded EU anti-discrimination obligations and the UK right of return from maternity leave was implemented before EU maternity leave rights ever arose. It would therefore be unusual for the government to decide to restrict these rights following a ‘Brexit’.
Secondly, much of the employment law which has come from the EU is regarded by both employers and employees as a good thing – few are going to propose that family leave, discrimination rights and the right to paid holiday are not good things. In fact, some UK family leave rights go further than that which is required by the EU.
Thirdly, the UK will need to maintain a relationship with the EU and it is likely that the price of a trade agreement with the EU is likely to be adherence to a certain amount of EU employment and social protection.
Could we feel a short, sharp, shock then?
Stephen Elliott continues: “Whilst no one can be certain of the outcome of the referendum, what we can be certain of is that in the event that the UK does vote to leave, disentangling the UK from its EU commitments will not be a quick or easy process so we won’t feel any changes immediately but we should be aware and prepared to face any changes which are made. The UK must give two years’ notice of the intention to leave the EU and it is during this period that the parties would negotiate the terms of the departure and put in place any new trade agreements. The government could then gradually repeal any EU-derived law or, as we suspect may be more likely, modify them to make them more palatable to UK businesses.”
What changes could occur in the event of a ‘Brexit’?
There would be various options open to the government following a vote to leave. For example, the government may not repeal discrimination laws but they may impose a cap on discrimination compensation, comparable to that for unfair dismissal. Similarly, any decision to repeal the right to statutory paid holiday would be controversial but some decisions from the EU relating to holiday pay are unpopular with UK businesses, such as the right to keep accruing holiday while on sick leave and the fact that holiday pay should be based on all aspects of remuneration, not just basic pay. Whilst retaining the right to statutory holiday pay, the government may alter the scheme to make it more suitable for UK businesses.