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From frying pan to fire…and back again?

The EU has been pivotal in shaping many of our employment laws.

And, at some point after we leave the bloc, that might mean differences in more areas than some businesses currently realise.

Health and safety, discrimination and equality, annual leave and pay, the hours people work as well as the transfer of rights and employees when a business is sold are just some areas of Brussels’ significant influence on UK law.

It seems sensible to expect some legal changes. But will leaving ultimately be good news for business? And will the commercial and legal freedoms prove worth the cost?

The Brexit ‘price tag’, of course, remains to be seen. For context, Bloomberg Economics estimates the cost will be £200billion by the end of this year.

Economic landscape — a perfect storm?

Perhaps the economic landscape will make change all the more likely.

With the 1 July deadline for agreeing a further extension to the transition period now passed, it seems that we’re locked into a hard finish. As such, if no deal’s reached, we leave with none. Of course, we’re no closer to agreeing such a deal at the time of writing.

Add to that the fast-approaching end of the job retention scheme in October, the US presidential elections in November, and expected further large scale redundancies.

The US situation is significant given trade negotiations, from the UK’s perspective, aren’t taking place in a Brexit vacuum. Our negotiators will have one eye on transatlantic negotiations, in particular.

How might all of this affect domestic employment law?

Some business owners will have preferred to remain, valuing the free movement of labour and EU’s standardised trading environment. Conversely, the bloc’s many regulations are seen by others as overly complex and burdensome.

Even so, during the transition period, the UK is essentially deemed an EU member. Any deal agreed before 31 December will include certain employment safeguards aimed at ensuring a ‘level playing field’.

Similarly, if there is no deal, the scope for change to the UK employment safeguards is wider and certain areas are likely to be a focus for the government in future.

Change afoot?

Of course it’s too early to say definitively what will happen, and any changes are likely to be gradual.

It’s worth noting too that in a no-deal scenario, these differences are more likely to be more business, than employee, friendly.

For example, it may become the case that long-term absent employees can no longer accrue annual leave — and that would mean reduced costs for employers.

The same goes for carrying over sick leave for those who take ill while on holidays and factoring overtime, bonuses and commission into holiday pay calculations.

As for what happens when an employer has acquired another business — the main issue here is the transfer of employees, rights and liabilities such as employment claims or pay entitlements.

While it’s less likely we’d see substantial changes there, the government might propose some important alterations to make the legislation more business friendly.

This could include the ability for business purchasers to harmonise terms and conditions of employment following such a transfer much more easily.

And that would potentially make purchasing a business more attractive: streamlining, simplifying and reducing risks in corporate transactions.

When it comes to creating greater equality across core staff and agency workers, as an example, EU law stipulates, after 12 weeks, agency workers should be treated as permanent members of staff.

That has implications for the likes of holiday entitlement and rates of pay for agency workers. The Agency Workers Regulations 2010 are widely expected to be repealed, as the legislation is generally viewed as not having had the hoped-for impact.

This would potentially reduce costs for employers.

Any proposals for change in these areas will doubtless be criticised (many will say properly) as a governmental raid on employment rights.

Other employers will welcome these freedoms, saying they’ll help them compete effectively post-Brexit in terms of reduced cost and risk.

Expect changes?

There are good reasons to expect some changes including a telling omission in the Withdrawal Agreement Act 2020 of any commitment regarding the safeguarding of employment rights.

This was a conspicuous divergence from previous proposals, explained away at the time as necessary in the interests of ‘simplifying’ the course of the legislation through parliament.

Time will tell, but this may well prove to have been simplification, in the way the guillotine simplifies your choice of hats.

John Lee

Partner John Lee is qualified to practise in Scotland, England and Wales. He is one of only three solicitor advocates in the country accredited by the Law Society of Scotland in employment law and discrimination law.

Posted, 27 July 2020 by John Lee
Categories: Employment | Insights