BREXIT or BREMAIN? – the Employment Law Implications

The EU referendum is beginning to loom large.  The choice will be Brexit (irritating but handy short-hand for leaving the EU) or Bremain (short-hand for staying in the EU which hasn’t caught on enough to be irritating). Many employers and employees want to know what the likely changes will be to employment law if Britain leaves the European Union to assist them in making an informed choice.

In theory, if the UK did leave the EU, the Government could rip up all of the current employment law and start again un-hampered by the so-called “bureaucrats in Brussels”. Of course, this is extremely improbable and the consequences are likely to be far less dramatic.

On the one side we have the trade unions who fear Brexit will lead to the serious erosion of employment rights. The TUC have published what it describes as ‘an independent legal opinion on Brexit’ which identifies the rights at greatest risk include maternity rights, holiday pay, protection against age discrimination and protections for agency workers. The General Secretary of the TUC says the erosion of rights over the last decade (such as unfair dismissal rights) shows the direction in which the Government would prefer to travel. In other words it is saying, given free-rein, the Government could scythe through workers’ rights and, given past performance, it is likely to do so.

On the other side we have the Brexiteers who say that the EU unnecessarily hampers business (and, indeed, workers). Without those constraints, the argument goes, Britain could pick and choose its immigrant workforce. Rather than having to take any European into Britain looking for work who wishes to come, it could turn the tap of the immigration workforce on and off as it pleases and make the criteria bespoke to its needs (much as Australia does). Businesses could welcome highly skilled workers from around the world who currently find it difficult to move to Britain (e.g. doctors and engineers from India, China and Australia) whilst limiting the numbers of unskilled immigrants to those actually required.

Brexiteers also argue that over-complex and restrictive (to business) employment legislation could be reined in if Britain left the EU. For example, discrimination laws could be tempered by putting a cap on unlimited (and potentially business crippling) tribunal awards. Business sales and take-overs could be made easier by making the transfer of undertakings (TUPE) legislation less restricting and opaque. Likewise, it would no longer be bound by the European Court’s judgments that occasionally overrule the UK Courts. It is argued that decisions which frustrate employers most, such as the recent inclusion of overtime/ commission in holiday pay, the entitlement to sick pay where an employee is ill on holiday (rather than lose holiday) and the right to keep accruing holiday while on sick leave could be a thing of the past.

But what is the reality? Is there likely to be a huge change if Britain leaves the EU?

It is unlikely we will see wholesale changes if Brexit materialised. The reality is that many of the EU laws were already provided for by the UK. For example, race discrimination, maternity leave and equal pay all preceded EU rights. It would be a bold and brave Government to row back considerably on these historical protections, and potentially risky in electoral terms for it to do so.

The Government has certainly seriously curtailed employment rights in recent years by introducing employment tribunal fees and increasing the length of service required to bring an unfair dismissal claim from one year to two. This has resulted in a dramatic falling off of tribunal claims. This was a change to domestic legislation (nothing to do with Europe). Len McClusky (leader of the union Unite) perhaps understandably says this is an indication of what may happen if the Government is given free-rein over all employment matters.  But is this really the case? In some areas, the Government has improved rights of workers without any requirement to do so by the EU. For example, rights to shared parental leave and to make flexible working requests are both inventions of British governments, the former introduced by this Conservative government and the latter significantly improved upon by it.

The inference by some in the Bremain camp is that the Government cannot be trusted with its own employment legislation. But we do have elections every five years which allow us to change unpopular governments. In any event, serious detrimental change is often met with serious resistance. Any government would wish to avoid complex and lengthy legal challenges to its legislation (such as the Judicial Review challenges in respect of the introduction of tribunal fees). In addition, most governments do not court unpopularity; members of parliament tend to like their place of work and wish to remain in the House of Commons as long as they are able to!

If we exit the EU, it is more likely is that we will see some minor changes to employment law and these changes may, on the whole, favour employers rather than employees. In practice the Government could use the opportunity to tidy up some legislation that has been confused by European Court decisions which have caused uncertainty for employers and employees alike (and often result in expensive and unnecessary litigation). Likewise, it could attempt to simplify some of the more complex and clunky EU driven legislation. I say ‘attempt’ because in the past such efforts have often led to further complications.

All of that said, were Britain to exit the EU, I suspect the Government is going to be quite busy over the next 5 years dealing with more pressing matters than employment law.