This is the second of a three-part series, the first article can be found here – ‘What threat does Brexit pose to workers’ employment rights?’

As each day passes, we learn more about the process of the UK’s exit from the EU. The UK government and the EU have now published outlines of their respective Brexit strategies and the UK government has set out details of the legislation which will set the framework for the transfer of EU law, known as the ‘acquis’, into UK law.

“Clarity and certainty,” said David Davis in an address to parliament on 30 March, will be provided to businesses and workers by the Great Repeal Bill, which will convert EU law into UK law before Brexit is completed. He also confirmed that the Bill will give parliament the power to change these laws once it is enacted.

How much more do we know about the impact of Brexit on workers’ rights now than we did on 24 June, the day after the referendum?

The government’s Brexit white paper does not provide much detail on employment law other than to say the government is “committed to maintaining the UK’s status as a global leader on workers’ rights and will make sure legal protection for workers keeps pace with the changing labour market”. That could mean anything, and many legal professionals believe that despite this reassurance there are areas of employment law that protect workers which are at risk of being diluted.

After Brexit, the highest court in the land will be the Supreme Court in London. David Davis made it clear in his speech that the Bill will not give the European Court of Justice a future role in the interpretation of UK laws and the UK courts will not be obliged to take account of ECJ judgments.

This is an immense change. Currently, the UK courts must interpret UK law to ensure compliance with EU law. Lock vs British Gas is a recent example of the UK Employment Tribunals interpreting UK law in line with EU principles. The Tribunal held that commission should be included in the calculation of holiday pay, a principle now established in UK law. If the UK courts had been left to settle this matter without involving the ECJ, it is possible that the UK courts would have held that commission should be included in holiday pay but by no means is that certain. This is not an area the government had paid much attention to and the decision is unpopular with business. 

If the UK courts do not need to take any notice of EU judgments, the direction of employment law in the UK could take a very different route to the direction taken in Europe. As I pointed out in my last article ‘What threat does Brexit pose to workers’ employment rights?’, if, after the UK has completed the exit process, the government opposes a ruling of the Supreme Court it can introduce new legislation to change the law as it sees fit.

Will workers’ rights be diluted post?

Some will be worried that the ECJ will not be able to influence or enforce workers’ rights after Brexit, especially since the ECJ is regarded as being more employee-friendly than the UK courts.

There are a number of areas of employment law that may be modified or even repealed after the UK leaves the EU. There is speculation that changes will be made to the Transfer of Undertakings (Protection of Employment) Regulations 2006 and the Agency Workers Regulations 2010, which give effect to the Acquired Rights Directive and the Temporary Workers Directive respectively. Both are unpopular with businesses.

Workers will be concerned about some equality laws being watered down. Protection of older workers set down in the Equality Act could be weakened and it is not inconceivable that the government could seek to reintroduce a legal age for forced retirement. Having said that, any preference by the business community for the reintroduction of a statutory retirement age must be considered against the background of an ageing workforce, an ever-increasing pensions deficit, tighter immigration rules post Brexit and a shrinking workforce.

The principle that compensation awards for discrimination in the Employment Tribunal are uncapped is a major deterrent to employers acting in a discriminatory manner. Employers are fearful of facing potentially unlimited financial liability if found guilty of discriminating against their staff. We regularly read in the newspapers about huge payouts to senior executives in well paid roles whose bosses fail to comply with equality legislation. However, some fear that government, under pressure from businesses and free from the influence of the EU, could seek to introduce a cap on these awards. Indeed, the government has already advocated introducing a cap on compensation in the Employment Tribunals for discrimination awards. This would be in line with the position prior to 1993, when employees in the UK could only claim up to £10,000 in compensation in discrimination cases. This changed when the ECJ held that the UK could not cap compensation for discrimination.

Workers already face the prospect of paying various hearing fees in order to gain access to the Employment Tribunal and if discrimination compensation awards are capped workers might be less likely to seek justice via the Tribunal in the future.

Even if the government does nothing and does not repeal any EU-derived employment laws, British workers could still end up being worse off than their European counterparts. Although many who campaigned for Brexit pointed out that the UK had some equality legislation before it became a member of the EU, the impact of ECJ decisions in the area of equality law cannot be overstated. Many of the principles of equality in the workplace set out in UK legislation derive from ECJ decisions, including the principles that women must not be discriminated against because of pregnancy and must receive equal pay for doing equal work.

In the area of family-friendly rights, the EU is considering a number of progressive proposals including introducing special leave for fathers, carers’ leave and more flexibility in working arrangements for parents. UK workers will miss out on the benefits of these policies if the UK doesn’t introduce identical legislation.

The focus of this article has been on changes to employment law that many workers might find objectionable. However, that is not to say that it is all bad news for workers.

In the final article in this three-part series, we will consider the positive impact on remuneration for workers in the City with a focus on what Brexit might mean for bonus pay.

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Media contact: Lydia Buckingham, Senior Marketing Executive, +44 (0) 20 7822 8134, lbuckingham@stewartslaw.com