Brexit: will we see employment laws exit stage left?

For the first time in a generation, we are facing the real possibility of the UK leaving the EU. When we consider its potential impact on UK employment law, there are many differing opinions and we wait with interest to see the outcome for ourselves.

The EU is the source for many UK employment rights. We are currently bound to reflect EU directives within our national legislation. If we were to leave the EU then UK parliamentary sovereignty would return. As a result, strictly speaking, the government could seek to repeal current employment laws that have been implemented as a result of EU membership. The operation of some laws introduced from the EU, such as holiday pay, have been unpopular and problematic for employers. The government have already indicated that some reforms would form part of their trade negotiations in the event of a ‘no’ vote. If the UK were to leave the EU, we could retain a relationship with Europe, but the price of a trade agreement could require our continued adherence to certain EU employment legislation.

The Brexit referendum (a system whereby the public votes ‘yes’ or ‘no’) will be held on 23 June 2016 when the UK people will decide on whether to remain or exit the EU. In the interim we have set out a contingency plan for employers to consider:

1. It may be helpful for employer’s to audit their workforce by identifying those working from within the EU, and those workers who are UK nationals but who are based elsewhere in the EU. Brexit may result in labour mobility restrictions and shortages, so considering this information in advance of any changes will allow employers to assess the possible impact of an EU exit.
2. Employers should decide whether to be proactive or reactive in communicating any possible employment implications to their workforce. This might depend on the level of concern amongst employees. Employees may be worried about possible restructures or relocations as a result of a ‘no’ vote and it is often better to communicate with staff about such matters in advance. However, there are significant uncertainties as to the overall impact an EU exit could have, so employers will want to proceed with caution before confirming any pre-emptive plans to their employees.
3. Employers might try to identify any gaps which are anticipated to appear in their employee skill set in the event of an EU exit, and consider how they might fill them in the event of changes to their workforce.
4. Employer’s might also consider their own contracts and policies. If they include intellectual property obligations, post termination restrictive covenants or confidentiality provisions with a geographical restraint linked to the EU, these may need to be reconsidered. For example, if an employer’s contracts of employment prevent employees working within the EU immediately after termination, and the UK were to leave the EU, then it seems likely that the employee would still be able to work within the UK. Whilst direct impact upon individual contracts of employment are likely to be unusual, employers should consider whether individual contract terms might be impacted in the event of a ‘no’ vote, and how any difficulties might be minimised.

If we ignore the possible impact on the free movement of workers for a moment, then it is unlikely that any major changes will be made to employment law after Brexit, at least in the short to medium term. But having a plan will ensure that employers are prepared and feel more secure, regardless of the outcome on 23 June 2016.

Should you have any concerns about retaining your international workers, discuss possible options with our immigration adviser, Louis Harman, and read his article on Brexit.

The Chattertons Employment and Immigration Law Team can advise you about your options on Brexit or any other HR related issues.