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Although much of our employment law derives from the EU, Brexit will have limited implications for employment law in the immediate term. However, there are key questions over workers’ rights after the end of the transition period, and uncertainty about the future status of key ECJ employment decisions.

Key point – employment law stays the same during the transition period

Under the deal negotiated by the Johnson government there is a transition period from exit day until 31 December 2020. During this time, EU employment law continues to apply and the UK has to comply with any new ECJ decisions.

This meant that the UK was required to implement the revised Posted Workers Directive, which all EU member states had to transpose into their national laws by July 2020. This gives additional rights to workers who are posted from one EU member state to another to carry out their work. The UK government took the position that it was already compliant with the revised Directive, except in respect of an obligation on a hirer to inform a temporary work agency of the posting of an agency worker. The Posted Workers (Agency Workers) Regulations 2020 (SI 2020/384) were enacted to modify the Agency Workers Regulations 2010 in this respect. The Regulations came into force on 30 July 2020 and will automatically expire at the end of the transition period.

The terms of the deal between the UK and the EU allow for the transition period to be extended to December 2021 or December 2022. However, the Johnson government has categorically ruled out any such extension, and the EU (Withdrawal Agreement) Act 2020 says that UK ministers cannot agree to one (although this could be overturned by new legislation). This means that the UK is not currently planning to transpose the Whistleblowing Directive (which has an implementation deadline of December 2021) or the Work-Life Balance and Transparent and Predictable Working Conditions Directives (both due to be implemented by August 2022).

Key point - EU citizens’ rights are protected by the deal

The deal between the EU and the UK contains provisions on the rights of EU citizens living in the UK which include protection against discrimination at work. Existing anti-discrimination laws will be largely adequate to reflect these rights, which will need to be observed even if no trade deal is reached with the EU.

In the context of recruitment, if employers adopt a blanket policy of not considering applications from EEA nationals after 1 January 2021, they will be vulnerable to claims of indirect discrimination on grounds of nationality. To minimise this risk, employers should consider candidates’ right to work in the UK on a case-by case-basis, and normally not until they have completed their selection process.

Key point - European Works Councils arrangements will change

European Works Councils (EWCs) can continue to operate as they did before until the end of the transition period. After that, however, arrangements will need to change.

Key actions

  • All multinationals will need to decide what to do about the ongoing involvement of the UK representatives in their EWC after the end of the transition period
  • Multinationals that are headquartered in the UK, or that have appointed a UK representative agent for their EWC, will need to have proactively designated or assigned a new representative agent based in an EU member state

Key point – legislation allows more flexibility to depart from ECJ decisions after transition period

Once the transition period comes to an end, all existing EU employment legislation as it stands at the end of the implementation period will be converted into UK law, with a few very small adjustments intended to make sure that the legislation is still comprehensible.

New ECJ decisions after the end of the transition period will not be binding on UK courts or tribunals, although could be taken into account if relevant. However, decisions of the ECJ during the transition period will be adopted into and retained in UK law, which means that they will remain binding unless and until they are overturned.

The Supreme Court will be able to depart from retained ECJ decisions on the same basis as it can depart from its own decisions (i.e. if it seems right to do so). In addition, the EU (Withdrawal Agreement) Act 2018 (Relevant Court) (Retained EU Case Law) Regulations 2020 extend the power to depart from retained EU case law to the Court of Appeal and other specified appellate courts at the end of the transition period following a government consultation earlier this year. The same test that the Supreme Court would apply (where it is considered “right to do so”) when considering whether to depart also applies to the lower courts. The Employment Appeal Tribunal is not listed as an appellate court which is able to depart from retained EU case law which is likely to result in less volatility and uncertainty in employment law than if it had been decided otherwise.

Key actions

  • Employers do not need to take any action at present but could expect uncertainty about the status of key ECJ decisions, many of which have had a significant impact on UK employment law, in the future.

Key point – scope for divergence on employment law in future

As explained above, the current arrangements mean that the UK will not be required to implement three new key EU employment Directives (the Whistleblowing Directive, the Work-Life Balance Directive and the Transparent and Predictable Working Conditions Directive). The deadlines for implementing these Directives all fall beyond the end of the transition period.

The deal negotiated by the Johnson government allows greater scope for divergence on employment rights once the transition period comes to an end, as compared to the version negotiated by the Theresa May when she was prime minister:

  • The original Northern Irish backstop included a commitment not to dismantle employment rights throughout the UK. Although this was only in a protocol, not the main text, it would have operated both as the baseline for a future trade deal with the EU and, critically, as the default arrangement on an indefinite basis in the event of no alternative arrangements (i.e. technological solutions for the Irish border problem)
  • The new Northern Ireland protocol does not contain this level-playing field commitment in respect of the UK as a whole. Instead, to protect the Good Friday Agreement, the new protocol commits Northern Ireland to continuing to abide by various EU Equal Treatment Directives (and interpret them in conformity with post-Brexit ECJ decisions) but this commitment does not extend to the rest of the UK

The revised Political Declaration, which was intended to serve as the starting point for the EU/UK trade talks, says that the UK is committed to maintaining a “high standard” of workers’ rights. However, this does not mean full ongoing alignment with EU rights. In fact, the current government has emphasised that it does not intend ongoing regulatory alignment. Equally, the EU has been clear that regulatory alignment is an issue that goes hand in hand with market access. It therefore remains to be seen what trade deal can be negotiated, and how far concessions on either side on the issue of regulatory alignment on workers’ rights are necessary to clinch it.

If no trade deal can be negotiated with the EU, the UK will not then need to keep pace with any new EU Directives and could potentially start dismantling some EU-derived employment rights. Historically, supporters of leaving the EU have cited scrapping working time legislation, placing caps on discrimination damages and repealing the Agency Workers Regulations as among the liberalising measures that could be taken, although none of these featured in the Conservative party’s manifesto for the December 2019 general election.

In Northern Ireland, however, under the new Northern Ireland protocol, EU Equality Directives and related case law will remain binding even if no trade deal can be negotiated. This has the potential to result in further divergence between Northern Ireland and the rest of the UK, although there are already several differences between Northern Irish employment law and that applicable to Great Britain.

Key actions

  • Employers should not take any immediate action in relation to the post-transition-period employment law landscape but should watch for developments
  • Some companies may be considering relocating some or all of their business into an EU member state after the transition period, depending on the outcome of trade talks. From an employment law perspective, companies should remember that they may need to consult on the business case for closure before any decision to close a UK business is taken, and that employees should be offered the chance to move with the business if it is relocating

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