Brexit: Impact on employment law

By:

Following the UK's vote to leave the European Union, we consider the potential implications for employment law.

Key issues

Free movement of workers: if, as seems likely, free movement of workers will end when the UK leaves the EU, the pool of talent and skills available to UK business is likely to diminish as visa requirements would make it difficult to recruit employees from, and move them within, Europe; also, individuals may prefer to be located in the EU where their movement would be unrestricted.

Data protection: The UK will become a 'third country' under EU data protection rules meaning that UK businesses operating in the EU would need to provide adequate protection for the rights of employees whose personal data is transferred from the EU to the UK. The Data Protection Act 2018 broadly mirrors the General Data Protection Regulation which came into effect across the EU in May 2018, meaning that in the long run the EU data protection authorities are likely to provide the UK with adequacy certification to permit free movement of data to and from EU member states. However, in the short term UK employers will need to rely on alternative protections such as binding corporate rules.

Corporate restructuring: Several multinationals that are headquartered in or have operations in the UK are moving or have moved their HQ or part of their operations outside the UK and more may follow. Any restructuring exercises will need to be handled carefully to ensure that employers do not fall foul of employment laws around the consultation of employees and business transfers.

EU-derived employment laws: Many of the established employment laws in the UK in areas such as agency workers, working time, holiday pay, business transfers and collective redundancies originated in the EU. While there is unlikely to be a full-scale repeal of these laws in the short term, there will inevitably be calls for some of the stringent requirements on businesses in these areas to be relaxed as part of a general move towards deregulation of the labour market post-Brexit.

Bankers’ bonuses: The cap on financial service sector bonuses, which is an EU obligation, might be abolished. This could make UK banks more attractive to key talent than those in the EU which remain subject to the cap; however, the potential loss of passporting into EU markets has lead to banks downsizing operations in the UK. See Brexit: Impact on Financial Markets for more information.

Potential impact

Employers face a period of considerable uncertainty as the impact of Brexit on the immigration status of workers and on existing employment legislation has yet to be determined.

Further considerations

Be wary of the potential for nationality discrimination in selecting non-UK workers for redundancy and/or not selecting UK workers for opportunities overseas.

The increased focus on immigration may lead to tensions in the workplace - managers need to monitor and ensure compliance with dignity and diversity at work policies.

Actions

  • Audit the immigration status of workforce
  • Review secondment arrangements to and from the EU
  • Determine approach to GDPR implementation
  • Audit European Works Council (EWC) agreements
  • Monitor opportunities to lobby/make views known on future direction of the law in relation to immigration and employment

For a more detailed analysis of the issues, please visit our Brexit page on GENIE, or contact the authors or your usual DLA Piper contact.