March 30, 2016

What would an exit from the EU mean for Employment Law?

With an ‘in out’ referendum on our EU membership set for the 23rd June, employers will naturally be asking themselves, ‘how will an EU exit affect my business?’

Will it mean less red tape as many employers might hope? Or will it mean much the same as now, but with a few changes?

Here’s a quick guide to changes to UK Employment Law in the event of an exit from Europe…

What are the direct implications for UK businesses?

The big advantage of staying in the EU is of course the opportunity to be part of the single economic market. That makes it easier (in theory) for businesses to trade with their EU counterparts.

An exit from the EU would mean that the UK would need to negotiate a new relationship with Europe. That may include new agreements on employment law and regulations.

The UK Government would have greater freedom to amend or repeal regulations which have emanated from the EU.

But any changes to established law are likely to meet some internal opposition. Interested bodies such as the Trade Unions and opposition parties are likely to oppose proposals which weaken existing employment rights.

Would all EU derived law disappear?

Not necessarily  – quite apart from likely opposition from interested groups, it could be that well established law remains untouched.

What do employers’ organisations think?

The Institute of Directors (IOD) is examining EU based employment laws to decide what should happen to them should the UK quit the EU.

The IOD thinks that the more recent EU derived laws should be repealed, such as the Agency Workers Regulations and the Information and Consultation of Employees Regulations.

They also appear to favour simplification of some of the other EU derived laws such as Working Time and Discrimination laws.

Some feel strongly that EU derived law is burdensome and unnecessary.

The Federation of Small Businesses recently commented that the Working Time Directive was ‘one of the most expensive EU regulations to be introduced in to the UK and that it has created huge administrative and compliance costs for small businesses’.

Other Regulations which made the FSB top 10 hate list included ‘self-employed drivers’ and ‘temporary agency workers’.

What are the Views of Employees?

Employees’ organisations naturally fear that an exit will diminish rights and are likely to resist a withdrawal. Francis O’Grady, General Secretary of the Trade Union Congress said that ‘Unions will fight to stay in’.

Trade Union membership however sits at 6 million, half the membership of the late 1970’ so it would be interesting to see what practical effect resistance from this level of membership might have.

What about Employment Law which has a UK origin?

It is important to bear in mind that not everything has come from Europe. Many established employment laws have their origins here. Current law on:

  • Dismissal
  • Whistleblowing
  • Minimum Wage
  • Industrial Relations

Have had very limited influence from Europe and are unlikely to be affected to any extent by an EU exit.

What would be the Consequences if some EU law Disappears?

First of all, this would probably create confusion.

Employment Law is an ever changing landscape and to repeal some already well established laws would probably be difficult for some employers.

Many EU rights have already been transposed into employment contracts and policies. Some of these include:

  • Maternity entitlement
  • Discrimination protection
  • Holiday entitlement
  • Agency workers’ rights
  • Data protection principles

Changing the law on rights which have already been made contractual might mean changing employment contracts on large scale with possible termination and reengagement on new terms and all the pitfalls that this represents.

Would Changes in the law make the UK more or less competitive?

This is an interesting question. On the one hand, lower costs associated with less red tape might mean that businesses operate more efficiently than before.

However, trading with the rest of Europe might prove more difficult because businesses in other EU member states may well require EU standards of employment protection to be shown before they are prepared to contract.

Does an Exit from the EU end European Law?

Some bastions of Employment Law would still remain. The European Court of Human Rights (ECHR) would be untouched as it derives from the UK having signed the European Convention of Human Rights.

It has nothing to do with the UK’s membership of the European Economic Union.

What will it mean for employers?

The question of an exit is a controversial subject.

The UK has been a member of the EU since 1973. Apart from wider aspects of EU membership, the UK working population has benefited from greater employment protection and much of this has become expected and entrenched in organisations.

Whilst it would be good to see some of the red tape trimmed, a wider scale downsizing of employment rights might do more harm than good.

It would clearly alienate large sections of the working population whilst possibly putting the UK on a less competitive footing than its EU counterparts.

For help or advice on any employment law topic, contact us or call 0844 391 1921.

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About the author

Tom Muirhead

Tom has represented clients across the UK, both at Employment Tribunal and in the Employment Appeal Tribunal. With a strong background in HR at senior level, Tom is adept at explaining the legal framework to clients in a practical way.