Brexit – the employment law perspective

On 23rd June 2016, the UK will be able to vote on whether to remain in the Europe Union (EU) or leave (known as ‘Brexit’). The vote is a once-in-a-generation decision, yet there is very little information about how being part of the EU affects us. With this in mind, we have set out below how being part of the EU affects legislation in the UK and the legislation likely to change.

We should stress that at present, it is impossible to state with any degree of certainty what will happen in the event of a vote to leave the EU and this article should be read in the light of that.

Why is European legislation different from other international treaties?

Minimum standards

The EU sets minimum standards in relation to social and economic rights which all Member States (i.e. countries which are part of the EU) are required to implement and comply with. Whilst Member States are free to enhance these rights, they cannot legislate contrary to them.

EU law primacy

This means that EU law takes primacy over UK law. This limits the UK Parliament’s sovereignty as it is ultimately subject to EU law. Similarly, the UK courts are required to, so far as is possible, interpret legislation so as to give effect to EU legislation. This permits UK courts to add words to domestic legislation to ensure that it complies with EU legislation. This requirement has resulted in UK law being extended and the enhancement of individual rights.

Individual enforcement

Many EU rights can be directly enforced by individuals against ‘emanations of the state’ (i.e. any body which provides a public service under the control of government such as local councils, British Gas etc.) provided that the EU directive is sufficiently clear. Where the government does not correctly implement EU law, the affected individual can, in some circumstances, bring a claim for damages against the UK government. The European Commission can also bring infringement proceedings against the UK.

Broad interpretation

Historically the UK has, when considering the interpretation of legislation, focused on the specific wording of the legislation rather than its intended purpose. As such, where there is doubt about the meaning of a particular piece of legislation, the UK courts have been minded to limit the legislation rather than extend it. However, the Court of Justice of the European Union (CJEU, the court which is the ultimate arbitrator when it comes to the interpretation of EU law) considers the purpose of the source directive and interprets the member state legislation in accordance with that purpose.

EU law must be effective

EU law requires that everyone has the right to an effective remedy before a tribunal and that exercising those rights is not excessively difficult. For example, UNISON has appealed (albeit not yet successfully) the introduction of fees in the employment tribunal on the basis that this prevents women from accessing their full employment rights. This is contrary to EU law as the fees prevent them from accessing an effective remedy. Discrimination claims are not subject to an upper limit because of an early CJEU decision which stated that a limit would be contrary to the principle that sanctions for breach of EU law must be effective, proportionate and dissuasive. Similarly, this rule has also led to discrimination protection being extended to cover post-employment victimisation.

All of the above has meant that EU law has affected a number of employment rights and curtails the government’s ability to legislate as it chooses.

Which laws are likely to change if the UK leaves the EU?

Ultimately, which laws are retained, removed or amended will depend on who is in power and what they can negotiate during the two year notice period that the UK is required to give if it wishes to leave the EU. During this time, the UK would set about trying to establish new trade agreements. It is unlikely that any government would immediately set about changing and dismantling the current legislation whilst it is negotiating new trade deals etc.

Some EU rights such as equal pay, race and disability discrimination, maternity leave and pay preceded the EU’s anti-discrimination laws. It is unlikely that the government will want to change such legislation.

Agency Worker Regulations

The Temporary Agency Workers Directive (transposed into UK law by the Agency Workers Regulations and the Conduct of Employment Agencies and Employment Business Regulations) give agency workers the right to no less favourable basic working and employment conditions as those recruited directly – after 12 weeks of employment. This includes pay, holiday, working hours, overtime, maternity and anti-discrimination provisions. It also establishes the right to equal access to employment opportunities. The UK initially opposed the introduction of the Directive and the legislation it implemented does not seek to enhance any of the minimum rights provided.

Holiday pay

EU case law has established that holiday is accrued during sick leave and that holiday pay should include regular overtime and commission. The government has previously legislated to limit the amount of unpaid holiday pay to two years to limit the effect of the case law, which may indicate that this is another area of law that may be changed in the event of ‘Brexit’.

Discrimination

Although some discrimination rights pre-date EU rights, some extensions to the discrimination laws have been unpopular. For example, retirement benefits were only included in equal pay legislation as a result of the EU and protection against age, religion and belief and sexual orientation discrimination were introduced because of the EU.

Rest breaks

Prior to the implementation of the Working Time Directive, rest breaks and limits on the working week were not really regulated. It may be that these enhancements are more vulnerable to being withdrawn.

Compensation limits

The government has introduced a cap on compensation in unfair dismissal claims so a cap may be applied to discrimination claims (compensation is currently unlimited with the highest reported award being in excess of £4 million).

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