“Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements…and shall notify the European Council of its intention” (Article 50, the Lisbon Treaty).
After months of debate about if and when Theresa May would trigger Article 50, she has finally set the Brexit wheels in motion. The government will soon commence talks with its EU counterparts to bring about the UK’s exit from the European Union and so this uncertain journey begins. In a series of three articles we explore the consequences of the UK’s exit from the EU on employment law and the rights of workers in the City of London.
To date, the focus of the Brexit debate in the City has centred around the key issues of the impact on the banking and finance industries, the future prosperity of the Square Mile and whether the UK will remain a ‘passport’ jurisdiction (enabling financial organisations to freely sell products and services across the single market). The mood in some quarters is downbeat, especially since the prime minister confirmed that the UK would not seek to retain membership of the single market. Foreign finance organisations have touted the idea of moving their European HQs to Dublin or Frankfurt and most institutions will be monitoring the Brexit negotiations closely with a view to jumping ship and relocating if needs be. Clearly, City workers will be anxious to know the thought processes of their employers and will have concerns about job security.
Should workers be worried about the impact Brexit might have on their rights?
Some experts would say that they should. Indeed, many people are nervous that one consequence of the UK leaving the EU could be the eradication of workers’ rights, many of which derive from EU law. If the government, unshackled from bureaucracy in Brussels, embarks on a journey to create a low tax, low regulation jurisdiction with the aim of attracting and keeping business in London, we could see a steady overhaul of the protection of workers that have built up over the past 50 years. The position seemingly adopted by Theresa May’s front bench suggests that a hard Brexit could result in the reversal of tighter regulation introduced after the 2008 financial crisis as well as large cuts to the rate of corporation tax and many believe that the government will change employment rules to make them more business-friendly.
It is highly unlikely, however, that the government will introduce swathes of change to employment law in the immediate aftermath of Brexit. Theresa May and David Davis have both promised that all employment rights deriving from the EU will remain in force when the UK leaves the Union. In fact, the government has all but confirmed that the Great Repeal Act will convert all existing EU law into UK law. As recently as February, David Davis said that it is the government’s intention to “maintain every single piece of employment protection that exists now…and to enhance it”. This amplifies the promise Theresa May made in January that she “will ensure that workers’ rights are fully protected and maintained” and “will build on them”.
The government’s stance has not satisfied everyone, however. Some pro-remain Tory MPs have said that they will oppose the Great Repeal Bill if negotiations go badly and a hard Brexit is on the cards. The effect of the Great Repeal Bill being voted down by Parliament would be that the European Communities Act, which incorporates EU law into domestic law, would remain in force. Frances O’Grady, TUC General Secretary, meanwhile raised concerns about the longer term prospects for workers’ rights regardless of the government’s promises when she said in February:
“While it is good to see the government maintain its commitment to protecting existing workers’ rights, people need to know the government won’t seek to compete in a race to the bottom that allows their rights to fall behind workers in the rest of Europe.”
Despite the threats of pro-remain Tory MPs, it is almost inconceivable that the Great Repeal Bill will not become law. In the immediate period following the UK’s departure from the EU, the government will probably be far too busy setting the political and business agenda in a post-Brexit world, to have any appetite to make employment law more business-friendly. The picture is less certain, however, once Britain has established its position outside the EU. After Brexit, the government has made it clear that rulings of the European Court of Justice (ECJ) and any new EU laws will no longer apply to the UK. This will be of concern to workers because, traditionally, judgments of the ECJ have been more employee-friendly than UK rulings. (In our next article we will focus on some of the areas of employment law affecting workers in the Square Mile that are susceptible to change post-Brexit.
Currently, the ECJ has authority to determine UK employment laws; the UK must comply with ECJ judgments and with EU duties set out in Treaties and Directives. The UK Parliament cannot legislate contrary to EU law and the British courts must interpret UK law in accordance with EU principles. In fact, if the UK government fails to implement EU law, workers can take action against the UK in Luxembourg. The landscape will change dramatically when we leave the EU. In a post-Brexit world, the highest court in the land will be the Supreme Court in London and it will fall to the UK courts to preside over workers’ rights.
Workers should have confidence in the UK court system upholding their rights, but what happens if the government disagrees with a ruling of the UK courts?
Currently, if dissatisfied with a ruling of the ECJ, the government can do little other than complain about the decision or the consequences to business. However, in two years’ time, after the UK has completed the exit process, if the government opposes a ruling of the Supreme Court it has one of two options. It can accept the ruling of the court or it can introduce new legislation to change the law. In recent months, the government has shown that it is not afraid to challenge decisions of the High Court. The effect of Brexit on the government’s ability to set the legal framework without challenge cannot be underestimated. If it has a majority in Parliament, the government will theoretically have carte blanche to set and amend the law as it chooses. Whilst those who campaigned for Brexit will celebrate the day that Parliament can set law unopposed by the EU, many workers may wonder if they would rather have retained the protection of the ECJ.
You can find further information regarding our expertise, experience and team on our Employment pages.