29 June 2016
Employment
Law Alert
Brexit: what
does it mean?
Does anyone
know yet?
Further information
For further information on the
issues raised here or to discuss
employment issues more generally,
please contact one of the following
or your usual EY contact:
Daniel Aherne
[email protected]
020 7951 9706
Justin Roberts
[email protected]
020 7806 9317
Stacey Tring
[email protected]
020 7951 8475
Gillian Holmes
[email protected]
020 7951 8737
Nick Logan
[email protected]
020 7951 9027
Whilst employment laws such as those dealing with minimum wage and
unfair dismissal are unrelated to the EU, a significant proportion of UK
Employment Law comes from the EU. This could be either through EU
Directives the UK is required to implement or decisions of the Court of
Justice of the European Union (CJEU) which interpret EU derived
employment rights.
The outcome of the referendum was for the UK to leave the EU but the
current uncertainty leaves open the question of how such an exit would be
achieved, if indeed an exit occurs. Until there is an actual exit (that is to say
the UK formally leaves the EU, whether by triggering the ‘Article 50’ process
or otherwise) all existing UK and EU employment law legislation remains
unaffected and in place.
When (and if) Brexit occurs, it will be open to the UK Government to reform,
or potentially repeal, the substantial number of legislative provisions
relating to employment law which derive from EU legislation. In practice, we
believe this highly unlikely since there appears to be a broad political
consensus amongst UK political parties to maintain the employment law
status quo. Even if this were not the case, it is likely that given their
pronouncements during the referendum debates, the Labour and Liberal
Democrat parties would insist on maintaining the majority of EU-derived
worker protection rights. In light of this, we believe that if and when Brexit
occurs, substantial change to the suite of existing UK employment laws is
unlikely to occur.
This does not mean that all EU-derived legislation will remain unchanged.
There will certainly be an opportunity to tidy up and rationalise existing EUderived UK legislation and we set out below some areas where this might
apply.
Discrimination
There has been a constant trend towards further protecting individual’s
rights not to be discriminated. Indeed, during the recent Pride Festival,
further calls were made to ensure individuals are not treated less
favourably because of their sexuality or otherwise. As such, the main
thrust of discrimination laws are likely to remain in place.
One area that may be subject to change is compensation for
discrimination. Currently awards made by an Employment Tribunal for
discrimination are uncapped as a result of EU case law. Following Brexit,
the government may consider introducing a cap similar to that for unfair
dismissal but, given the opposition to the introduction to Tribunal fees,
such a move would likely attract much criticism
TUPE
The Transfer of Undertakings (Protection of Employment) Regulations
(better known as TUPE) implements the EU’s Acquired Rights Directive
(ARD) which seeks to safeguard employee rights on a business transfer.
TUPE is often referred to as ‘gold plating’ the ARD by going further
than the EU Directive and also applying to service provision changes.
Employees are further protected by restrictions on the harmonisation
of terms and conditions post-transfer. Whilst TUPE is sometimes
viewed by companies as burdensome and restrictive, the fact that
TUPE goes further than is required by EU law suggests that there will
be little appetite to repeal TUPE in its entirety but we may see some
changes allowing greater harmonisation of terms.
Holiday
The EU’s Working Time Directive (WTD) provides that employees must
receive a minimum of 20 days’ paid leave a year. The UK’s Working
Time Regulations (which implements the WTD) has again gone further
than the EU-minimum by providing employees with 28 days’ paid
annual leave. This, coupled with the fact that reducing holiday
entitlement would likely prove unpopular with trade unions and
employees, means it is unlikely that the UK will reduce holiday
entitlements.
Various European cases over the past couple of years have widened
the scope of holiday entitlement so that employees continue to accrue
holiday whilst on long-term sick leave and that holiday pay is calculated
on the basis of wider-remuneration and not just basic salary. These
decisions have proved unpopular with businesses and, in the case of
calculating holiday pay, still remain uncertain. This may be a potential
area for review post-Brexit as may the limits on hours worked
(although the UK already has the 48 hours per week opt-out).
Brexit: what does it mean? Does anyone know yet?
2
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Agency workers
The Agency Workers Regulations (AWR) were introduced in 2010 and
have been viewed by many as unduly complex and unpopular with
businesses. Unlike other areas, the AWR have not yet become so
entrenched in UK employment law that this may be an area in which it is
politically easier to make a change. This needs to be balanced against
the fact that the AWR are extremely popular with trade unions, putting
unionised agency workers on an equal footing with permanent staff so
there may still be resistance to change in this area.
Collective consultation
Due to relatively low uptake, amendments may be made to collective
consultation rights and works councils introduced by the Information and
Consultation of Employees Regulations. However, the obligations
imposed on UK businesses are not overly onerous so this one may be
pushed to the end of the queue.
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Collective redundancy consultation requirements in the UK were reduced
in 2014. Any further dilution of collective consultation obligations are
likely to be opposed by trade unions which may prevent any further
amendments being made.
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All Rights Reserved.
Case law
Information in this publication is intended to provide only a general outline
of the subjects covered. It should neither be regarded as comprehensive
nor sufficient for making decisions, nor should it be used in place of
professional advice. Ernst & Young LLP accepts no responsibility for any
loss arising from any action taken or not taken by anyone using this
material.
Even if there is little amendment to UK employment legislation itself
once the UK exits the EU, the UK courts will no longer be bound to follow
the decisions of the CJEU. It is through this separation of the UK courts
from the EU that we may see the greater changes to UK employment law
with UK case law potentially moving away from that of the CJEU and
other EU Member States.
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environment, this document has been printed on paper
with a high recycled content.
ey.com/uk
The greater impact in the short-term is likely to be the uncertainty
caused to businesses and consumers and the repercussions this may
have on the UK economy with possible redundancies and restructuring of
workforces.
Why law at EY is different

Sitting within the wider EY professional services firm, our lawyers
work with complementary teams in immigration, payroll, pensions
and HR advisory. This means our advice is set in a wider context of
employment services to better meet our clients’ business needs.

By linking our lawyers with experienced professionals from across
our EY networks, we combine a knowledge of local employment law
with strategic insight into how organisations operate within the UK
and across international borders.
How we can help
Our team services employers in the core areas of:

HR advisory (all day-to-day employment law matters)

Support on corporate transactions

Employment litigation
Brexit: what does it mean? Does anyone know yet?
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