If the UK votes to leave the EU on Thursday, June 23, a large amount of legislation protecting employers and employees could be put at risk.
How likely is immediate change?
The UK's exit from the EU would not take place immediately following a "leave" vote but would only occur following what could be a lengthy period of negotiation.
Brexit would then be achieved through the repeal of the European Communities Act 1972.
The result of this would be that, without saving provisions, huge swathes of UK legislation which derive from EU law (including much in the employment arena) would fall away leaving a large amount of practical problems.
Accordingly, it is expected that the UK Government would enact saving legislation to maintain the status quo, at least for a transitional period.
What would happen to employment law over time?
A wholesale repeal of EU employment rights seems unlikely in the short, or even medium term for several reasons.
It is important to remember that EU employment protections are now hard-wired into the UK labour landscape. For example, although the Equality Act 2010 derives from EU law, it seems unlikely that any government would want to be seen to be repealing or watering down anti-discrimination protections.
Similarly, the removal of other core rights such as parental rights and working time laws would be unpopular amongst employees.
Furthermore, the UK sometimes exceeds EU standards, for example allowing a longer period of maternity leave than the EU minimum, and it seems unlikely that Brexit, in whatever form it takes, would have an impact on these pieces of legislation.
Of course, many employment protections to which employees have become accustomed in the UK are not EU-derived at all.
Unfair dismissal is a UK law concept and the Equal Pay Act 1970. As such, unless political forces dictate otherwise, these provisions will not be affected by Brexit.
Most likely UK employment legislation to be repealed in the event of a Brexit:
- Agency Workers Regulations 2010
These essentially confer basic employment rights on agency workers similar to those enjoyed by permanent employees. They are highly unpopular with both employers and the current government. Many commentators believe that this will be the first piece of legislation to be repealed in its entirety.
- Working Time Regulations 1998
These impose a 48 hour cap on the working week (subject to an employee right to opt-out in the UK) and confer certain rights to holiday pay. The right to paid holiday is unlikely to be taken away but the ability to accrue holiday whilst on sick leave and the need to include some types of overtime in the calculation of holiday pay may be subject to change.
- Transfer of Undertakings (Protection of Employment) Regulations 2006
These are designed to protect the employment rights of individuals on the transfer of a business or the outsourcing of services. Major changes seem unlikely, although minor amendments might be made to enable businesses to harmonise terms and conditions of employment more easily following a transfer.
How about internationally mobile employees and migrant workers?
The impact on Brexit on employers with a mobile workforce or who rely on EU migrant workers would depend on what relationship is negotiated with the EU.
If it results in a similar arrangement to Switzerland or Norway, little would change as the UK would have to accept the principle of free movement to some extent.
However, if that agreement is not made, the UK may be free to make its own immigration rules for EU citizens, in the same way that it does so currently for non-EU citizens.
The UK may then adopt a points-based system, with a UK company licensed to sponsor individuals to work in the UK if they meet salary requirements, in most cases a resident labour market test (with the role advertised first to resident workers) and possibly and English language test.
If the points-based system were to apply to EU citizens, it would largely restrict economic migration to high skilled/high value migrants and reduce the flow of migrant workers doing low-skilled jobs.
This could be an issue for some industries (such as hospitality, manufacturing, construction and healthcare) which rely on foreign nationals to make up a significant proportion of the workforce.
Next Steps
It is our view that little would change immediately following a "leave" vote, as the UK would spend up to two years (and possibly longer) negotiating its exit from the EU.
It is during this time that employers should begin preparations for any changes affecting their workforce.