Nothing changes in the short-term
Based on the latest indications on the likely exit timetable, the UK will remain a member of the EU at least until the end of March 2019, and possibly longer.
The status of EU nationals currently living and working in the UK, and the ability of EU nationals to continue to travel to live and work in the UK, is unlikely to change until the UK leaves the EU. Equally the UK will continue to be bound by all EU legislation. In the employment field this includes the rules on collective redundancies, transfers of undertakings and working time and most of our anti-discrimination law.
The Government’s negotiating position
After many months of uncertainty and speculation, Theresa May confirmed in her speech on 17 January that the UK would not seek to retain membership of the EU single market. She has now conceded that the terms currently on offer for continued access would not be compatible with controlling immigration from the EU and removing the UK from the jurisdiction of the European Court of Justice.
It is now clear that the Government’s objective is to negotiate a comprehensive free trade agreement with the EU, possibly combined with some form of customs union. That is likely to give it more flexibility in imposing immigration controls on EU citizens, though it is not clear what form they are likely to take. However Theresa May has already indicated that she will be seeking an early agreement guaranteeing the rights of EU citizens from elsewhere in Europe who are already living in the UK, in return for similar guarantees for British nationals in other member states.
Transitional arrangements
Even if a future government is in a position to repeal EU employment legislation this will not happen overnight. The Government has announced that an Act of Parliament will be passed to preserve the status quo and allow time to work out which EU-derived legislation needs to kept, and what should be discarded. Whatever the practical arrangements adopted, this is likely to be a slow process taking many years. Employment legislation will not necessarily be at the front of the queue. Theresa May has in event promised that while she is Prime Minister EU-derived workers’ rights will be preserved.
Changing the immigration rules is likely to be a higher priority. However it is anticipated that transitional arrangements will be implemented for EU citizens to be granted immigration permission to remain when the UK leaves the EU (probably in return for similar treatment for UK citizens residing in other EU member states). The full details of such arrangements are likely to be the subject of debate. Potential issues to be determined may include: whether such permission will be indefinite or temporary; whether EU nationals will be required to have lived in the UK for a particular period of time in order to be eligible to remain (eg, whether it will be limited to those who have acquired permanent residence on the basis of having lived in the UK for five years); and whether EU nationals who entered the UK after the date of the referendum will be eligible to stay.
What employment law is likely to change?
It is difficult to predict what the UK’s Government will look like in a year’s time, let alone during the much longer period which is likely to be necessary to adjust to this hugely significant change.
On the assumption that the outcome of exit negotiations allow this, it is possible to identify areas which are more likely to change than others, particularly under future Conservative governments. However, as we have already noted, Theresa May has promised that workers’ rights will not be watered down on her watch.
Subject to the above, we think these four areas of law are the most likely to be targeted:
- Agency Workers: the regulations introduced in 2010 to implement an EU Directive have been unpopular with business and have not yet become embedded in workplace culture. We think they could be repealed at relatively little political cost.
- TUPE: the principle of protecting employment on the transfer of a business or service is unlikely to be challenged, but it is possible that some provisions protecting the terms and conditions of transferred employees will be watered down.
- Discrimination: no one wants to put the clock back to 1975, when the Equal Pay and Sex Discrimination Act came into force, but a future Government might wish to restore the relatively modest discrimination compensation limits that applied before the European Court of Justice intervened.
- Working time: paid holidays are here to stay, but a future government may wish to change the rules on accruing and calculating holiday pay to make then less costly to employers. These rules have become increasingly generous as a result of a series of decisions from the European Court of Justice.
What will our new immigration system look like?
As in the employment field, much will depend on the terms of the exit deal the UK negotiates. It is now looking likely that some immigration controls will be established for EU nationals, but Theresa May has indicated that she does not favour a points-based system, despite the fact that this idea was heavily promoted by the Leave campaign. This suggests that significant changes to the existing points based system may be on the horizon. It is early days, but a return to some kind of work permit system may be a possibility. Much uncertainty remains.
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