· 2 min read · Features

How a 'Brexit' could impact on employment law

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The promise of an EU referendum on the horizon leaves many wondering what the impact on UK employment legislation could be.

The incoming government’s promise of an in/out referendum means the future of Britain’s EU membership is uncertain. And if the country votes to leave, there are a number of questions over the manner of the exit and how the UK’s relationship with Europe will continue.

Leaving the EU could provide opportunities to rethink various areas of employment regulation, but in reality the scope and the desire for change could be limited.

Among the areas that could be affected are working time and agency working, according to Hogan Lovells partner and head of employment practice Elizabeth Slattery. Regulations on record keeping, restrictions on working time and the 48-hour week, and rules around holiday pay, are areas that have been criticised by employers and likely targets for change if the rules set by EU directives become open to repeal.

Another example of legislation that could be affected is the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), which was adopted to implement the European Acquired Rights Directive. According to Slattery, employers could be keen to make it easier to change the terms and conditions after a transfer. This would allow businesses to be properly harmonised in the eyes of some, avoiding those uncomfortable situations where a takeover or merger leads to employees with different terms and conditions sitting next to each other.

Collective consultation could also be affected, with changes to either the threshold for consultation or the time period. And while a “big rollback” of discrimination legislation is unlikely, Slattery predicts that employers will want to address the current lack of a cap on discrimination compensation.

Some areas of employment law, while being based on EU legislation, would be unlikely to change. It would be unlikely that any scaling back of parental leave would be acceptable politically or desirable for employers, Slattery predicts.

It is early days in terms of knowing what kind of approach to its relationship with the EU the UK would favour in the event of a ‘Brexit’. But the likelihood of some kind of trade agreement means it’s unlikely total freedom to rework employment law would be the result. “It is not going to go into freefall,” says CIPD employee relations adviser Mike Emmott.

The UK may decide to follow the examples of Switzerland and Norway in forging a new trade relationship with the EU, opting to stay in the European Economic Area or the European Free Trade Area.

Such an arrangement would mean the UK would still be bound by EU employment law. “The UK will have to comply with EU laws but wouldn’t be involved in their development,” Slattery says.

Employment law has not been among Cameron’s priorities in negotiations. Nor, despite some appetite for change in the areas highlighted above, is it employers’ greatest priority, Emmott adds. Appetite for change is likely to be limited even if change is possible, he predicts.

“Employers are not anxiously looking forward to the opportunity to throw legislation overboard,” he says, adding that it’s hard to think of “big ticket” items that would see pressure for change.

Dispute resolution could however be one such area, according to Emmott. But the coalition government’s work in this area has helped address many employer concerns here already. “The last government has taken off the table the one area that has been a source of grumbling among employers,” he says.

More details about what Britain’s relationship with the EU would look like as a non-member state will emerge as the referendum approaches. But for now big changes to employment law look unlikely.