Employment: legal implications of Brexit for your business

Brexit will bring some significant practical challenges for many UK employers.  Any changes to the rules on free movement of workers (which seems inevitable) will restrict access to the UK (and, in return, to the EU).  On a day-to-day level, this will necessarily affect recruitment practices, the pool of talent available, the “people” profile and dynamic of an organisation, and the movement of employees between countries.

Employers must also remain alert to the interaction between their workforce requirements and the impact Brexit has on their business. Is their business still operating in the right countries? Does it need as many employees, or employees with different skills? Relocation, redundancies and recruitment may all need to be considered. Human Resources, training and development and technology will all have a pivotal role in ensuring the post-Brexit workforce continues to deliver for their business.

In terms of the UK’s current employment laws, we do not anticipate that employers are likely to see any large-scale changes, at least in the short-term, as a result of the UK leaving the EU.  The UK’s on-going relationship with EU Member States, as well as the UK’s workplace culture, is likely to demand that the UK retains many of the EU-derived laws that have already been incorporated into domestic legislation.

Indeed, UK employers should seemingly be prepared for their workers to have potentially more enhanced rights.  The government’s Brexit white paper, published in January, expressly stated “.. not only will the government protect the rights of workers set out in European legislation, we will build on them.  Because under this government, we will make sure legal protection for workers keeps pace with the changing labour market – and that the voices of workers are heard by the boards of publicly-listed companies for the first time“.

However, whilst the government’s green paper on corporate governance reform has already started to tackle the issue of how workers voices can be heard at the very top of an organisation, there is the very real practical issue of how the government will make any significant legislative changes whilst grappling with ensuring that those rights derived from the EU are enshrined in the UK’s domestic laws going forward and, of course, negotiating the UK’s exit terms.

One area which the government is particularly focusing on is the rights of individuals working in the “gig economy”.  Matthew Taylor is currently carrying out an independent review on the rights of such workers and a parliamentary select committee is currently hearing evidence on this issue.  The recent Spring Budget also announced that this summer would see a consultation on “parental rights” for self-employed individuals.

One aspect of particular interest for employers will be what authority decisions of the Court of Justice of the European Union (CJEU) will carry post-Brexit. CJEU decisions have had a significant impact on the interpretation of the UK’s domestic employment laws (those which seek to implement EU laws) in previous years. Will the government take the opportunity to make specific amendments to UK legislation to reflect these existing interpretations, for example on holiday pay, associative disability discrimination etc?  Will CJEU decisions carry any weight going forward when UK courts rule on laws which previously emanated from Europe? These are just some of the thorny questions which employers will need to know the answer to going forward.

What should businesses be doing now?

• Ensure your recruitment and promotion processes do not penalise EU citizens. Whilst employers will have a keen eye on how Brexit may impact on retention of current or potentially new EU workers, all employers in the UK are subject to the Equality Act 2010 which expressly provides that job applicants and employees must not be discriminated against on a number of protected grounds, including “nationality”.   Likewise, EU employees should not be selected for redundancy on this basis and employers should keep a keen eye on and manage robustly any “Brexit banter”.
• Audit your workforce.  Employers should start planning now for any pinchpoints in their organisation should EU workers leave.  Employers can play a key role in ensuring that the UK remains an attractive place for talented employees to work, providing reassurance and keeping affected employees updated as negotiations unfold. Understand what immigration options your EU workers may have in terms of UK residency rights.  However, be prepared for the fact that it may be that no amount of reassurance will prevent an individual moving to a new role within another EU country, particularly where their family is also impacted.  Anticipate where gaps may be left and have a plan in place to fill them.  If you may need to fill gaps with non-EU workers, look at obtaining a sponsor licence (for more on immigration, see here).
• Identify where changes or issues may arise in employment documentation and contracts post Brexit.  What are the terms of any current or pending expatriate and secondment arrangements?  Are there any contractual terms which refer specifically to the EU?  Is it still appropriate for agreements to be subject to English law and the jurisdiction of the English courts? Whilst no significant changes to how the Transfer of Undertakings (Protection of Employment) Regulations 2006 are anticipated, should a contingency for any changes be built into outsourcing arrangements?
• Keep on top of what is happening – both on the ground, politically and in your sector.  With the potential uncertainties that Brexit brings, it will be critical for employers to make sure they stay ahead of the game – understanding what the roadmap for engaging their workforce and the future employment picture will look like.  How is Brexit impacting on business and service lines?  How are other businesses in the sector reacting?  And most importantly, how does this feed into workforce requirements?