Practical Law

January 2016 has seen the Prime Minister set out her plan for the UK’s Brexit negotiation. In addition, the Supreme Court ruled that an Act of Parliament is required before Article 50 can be triggered and negotiations commenced. What might these developments mean for employers and workers?

The Prime Minister was clear in her speech that she is not going half way: this is a “hard” Brexit. This means a complete exit from the single market and the associated freedom of movement of people, services, goods and capital between the UK and EEA countries. New agreements and arrangements will be required to deal with issues such as immigration, trade and customs, including the provision of financial services across Europe’s borders.

Three key themes came from the Prime Minister’s speech: the need for certainty, a stronger Britain, and a fairer Britain. Protecting and enhancing rights for workers was one of the twelve objectives and driving principles which the Prime Minster set out and appears to be an issue high on her agenda.

The Prime Minister also made it clear that the final Brexit deal will be put to a vote in both the House of Commons and the House of Lords. However, now that the government has lost its Supreme Court appeal, an Act of Parliament will also be required before Article 50 can be triggered. The post-Brexit picture could therefore end up looking quite different if the government’s objectives are tempered by Parliamentary debate and cross-party politics.

Possible impacts on UK employment law

Assuming we do end up with something in line with what the Prime Minster set out in her speech, what will be the likely impact on workers and employers with workers in the UK? The following points are worth considering:

• The European Communities Act 1972, which incorporates EU law into domestic law, will be repealed. However all law in force currently will be converted to domestic law, so the same rules will apply immediately post-Brexit as pre-Brexit and no big changes are expected (at least in the short term).

• The Prime Minister confirmed that the ECJ will no longer be a part of the UK judicial system. It is expected that domestic courts will have full control over the interpretation of UK laws. It is unclear what will happen to the interpretation of domestic legislation which in the past has often been stretched by UK courts to ensure that full purposive effect was given to the potentially wider EU law from which the legislation originated. Will the EU case law in those situations remain binding, or persuasive? Or will UK courts be free to disregard those judgments and adopt a narrower interpretation of the legislation? No detail has been provided on the practical impact of the removal of the supremacy of the ECJ. What is clear is that the removal of the ECJ will take away one layer of potential litigation and uncertainty for workers and employers operating in the UK, particularly in areas which have ended up in the ECJ frequently, such as holiday pay claims. No ECJ may also mean that those claims which might have gone “all the way” will now stop in the Supreme Court. This should result in fewer claims being stayed for long periods of time while awaiting the ECJ’s judgment. This may mean lower costs for litigants and less time to wait for contentious issues to become settled law.

• There have already been efforts made by some MPs to try and protect EU-derived workers’ rights post-Brexit. In September 2016, the Labour MP Melanie Onn introduced a Private Members’ Bill to Parliament. The Workers’ Rights (Maintenance of EU Standards) Bill initially showed positive signs of cross-party support on its introduction and was voted through unopposed. However, very few Private Members’ Bills actually become law. Furthermore, the Bill not only calls for the UK to safeguard workers’ rights derived from EU legislation after Brexit, but also for ECJ case law to continue to have binding authority in respect of such legislation and for any new post-Brexit legislation to be compliant with EU law relating to workers’ rights. Therefore, it seems unlikely that the Bill will progress much further. The Bill was due for a second reading on 13 January 2017, but was filibustered by Conservative MPs. The second reading is now scheduled for 24 February 2017.

• An exit from the single market will have a huge impact on immigration, as it will remove the freedom of movement of people between the UK and the EEA. The Prime Minister wants to implement controls on immigration and focus on international talent, to make the UK a country welcoming to migrants but at the same time controlling the number of people coming to the UK from Europe. Post-Brexit this may place a higher administrative burden on employers who are recruiting from inside the EU. The UK will likely see a system implemented for EU migrants which is the same as, or similar to, that which the UK has at present for non-EU migrants.

• The Prime Minister has given some assurances that she wants to guarantee the rights of EU nationals who are already living and working in the UK and the rights of British nationals living and working in the EU. She wants to secure these protections as soon as possible, and suggested that this could be done now (on a mutual basis), before the Brexit process is completed. This would give businesses some certainty in relation to their existing workforces and would allow them time to plan their future recruitment needs.

• The Prime Minister specifically mentioned the objective of getting the voices of workers heard on boards of public limited companies for the first time. Enhancement of workers’ rights isn’t prohibited by any EU law and if the Prime Minister wants to enhance workers’ rights she may do so now. However, since the government has already back-pedalled on its initial plan to get workers onto boards, the UK should perhaps expect a more watered-down version of workers’ involvement.

• In relation to trade, the Prime Minister wants the UK to be free to pursue trade deals with EU member states and other countries it chooses. It is expected that the US will be high on the list. Reports suggest that the newly inaugurated US president, Donald Trump, is enthusiastic about signing a trade deal with the UK, and doing so quickly. With the Prime Minister being the first foreign leader to meet President Trump only a week into his presidency, it appears that the respective leaders are backing up their words with actions. This may be a comfort to employers with operations in both jurisdictions.

• Whatever the deal looks like, the Prime Minister has made it clear that the changes would be phased in gradually, hopefully avoiding sudden disruption for businesses.

As for what comes next, the Prime Minister confirmed that the press and the public are not going to be receiving a blow-by-blow account of the negotiations. She was clear that this was not in the national interest and that when information is leaked to the media, it can weaken the UK’s position and make it harder to get the right deal.

What does seem clear is that it will be business as usual until two years after the triggering of Article 50 or until an earlier deal with the EU is reached. It also seems clear that the government hopes to achieve a deal which will enhance the UK’s trade and international relations, with countries both inside and outside the EU.