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As the UK votes in favour of leaving the European Union, the question on many people’s lips is ‘what does this mean for me/my business?’ Unfortunately, however, there is no clear answer to this question in the majority of cases.
What is clear is that the UK will now need to start the long and arduous process of extricating itself from all the various elements of the EU. The Leave campaign envisaged that this would take place by May 2020 – a process of almost four years. Once the UK invokes article 50 of the Treaty on European Union, it will have two years to negotiate the terms of its exit. However, it does not have to invoke article 50 immediately, and the Leave campaign had originally said that it would seek to negotiate terms before taking this step. In any event, what happens in the meantime is unclear, and the impact on employment law is no exception to this.
Much of our employment legislation comes from EU laws – for example, the discrimination legislation, working time laws, and the rules on the transfer of undertakings – and there is an obligation on the UK courts to interpret such laws based on the original EU legislation. We have seen this most recently in relation to the interpretation of the laws on holiday pay. Given that we have now voted to leave the EU, it will be interesting to see how the courts deal with interpretation of such laws going forwards. For example, will the Court of Appeal consider that it is bound to interpret the rules on holiday pay in the same way as the EAT, to include commission and overtime pay? Or will it revert back to the letter of the UK legislation which does not require such payments to be included?
Unfortunately we simply do not know at present what will happen. However, the Schofield Sweeney employment team’s current view is as follows:
1. TUPE is unlikely to change to a significant extent, save perhaps in relation to the ability to make post-transfer changes to terms. The UK had already ‘gold-plated’ TUPE to include the service provision change rules, which were not required by the Acquired Rights Directive. We do not therefore anticipate that this will change to any great extent in the immediate future.
2. Discrimination legislation is unlikely to change. The discrimination rules are enshrined in UK law by virtue of the Equality Act 2010, and it would be likely to be politically very dangerous to start making wholescale changes to this legislation to remove existing protections. However, we would not be bound by any potential extensions to existing laws which may arise in the future/ as a result of decisions of the ECJ. In addition, there may be an appetite to cap the compensation which can be awarded in discrimination cases – as this is something that has not been possible in the past as a result of EU rules.
3. Rules on collective consultation in redundancy cases may be relaxed. They are notoriously unpopular with businesses, and it may well be that they are relaxed, perhaps just to apply to cases of over 100 redundancies, rather than 20.
4. The rules on working time, and holiday pay, may well change. The recent cases of British Gas v Lock and Fulton v Bear Scotland revolved around interpretation of EU legislation, and the implementation of the Working Time Regulations in accordance with the EU Working Time Directive. Both cases are currently subject to appeal. It may well be that any future appeal court hearings will not feel it possible or appropriate to interpret the UK legislation in accordance with the Working Time Directive, given our impending exit from the EU. It does mean however that there will be a continuing period of uncertainty in relation to what payments should be included when calculating holiday pay.
Ultimately, time will tell what impact the UK’s exit from the European Union will have on employment legislation. However, the team at Schofield Sweeney will do our best to keep you informed as things develop! For now, it really is a case of ‘watch this space’.