The benefits of Brexit - what it means for UK employment law

The government’s benefits of Brexit policy document has two main themes. It sets out the government’s desire for better regulation, along with vision statements for a variety of policy areas. As those policy areas do not include employment law, the main interest of the paper for employers lies in what the government means by better regulation.

The document highlights five principles for better regulation:

• Taking a sovereign approach, including reviewing retained EU legislation;
• Taking an approach that supports innovation;
• Regulating only where it is proportionate to do so;
• Reviewing regulation regularly to ensure it remains relevant and proportionate, using agreed criteria to assess whether intervention has been successful; and
• Working with others to tackle problems that require a global approach to regulation.

The promised review of EU retained law is likely to be of greatest significance for employment law.

Retained EU law

The vast majority of EU-derived employment law was retained as UK law at the end of the Brexit transitional period. In addition, CJEU decisions reached before the end of the transitional period remain binding on courts and tribunals, although the Supreme Court, Court of Appeal and Court of Session have power to depart from them.

The government is now keen to diverge from the EU position where it is beneficial to do so, with a view to amending, replacing or repealing “all law that is not right for the UK”. Its review of retained EU law is designed to help it meet this objective and will consider:

• How to amend retained EU law more quickly, for example through secondary instead of primary legislation;
• Whether to retain directly enforceable EU rights where there is an equivalent domestic law provision – for example, this could affect the directly enforceable EU right to equal pay for equal work, given the equal pay provisions in the Equality Act; and
• The extent to which domestic courts and tribunals should continue to follow historic CJEU decisions, and whether lower courts and tribunals should be able to depart from earlier decisions.

Before Christmas the government indicated that it would aim to put forward specific proposals in the spring, with legislation to follow as soon as parliamentary time allows.

What does this mean for employers?

In the short term, nothing has changed. However, if the government presses ahead with all or even some of these proposals, there could be significant future implications.

The government may be able to change aspects of employment law that are perceived to place a burden on business more quickly if this did not require an Act of Parliament. For example, it would be easier to amend the Working Time Regulations to overturn or minimise the impact of some of the holiday pay cases, such as the recent Court of Appeal decision in Smith v Pimlico Plumbers Ltd, if this only needed secondary legislation. When deciding how to exercise its powers, the government would obviously need to balance business interests against earlier promises not to reduce employment protection as a result of Brexit.

Even if the government decides not to make radical changes to retained EU law, it may be more willing to make technical changes that could benefit employers. One area that successive governments have grappled with is how to make it easier to harmonise terms and conditions of employment after a TUPE transfer. Such reforms may be less contentious than amending holiday pay or other fundamental EU rights.

Giving the EAT, or even employment tribunals, the right to depart from existing CJEU caselaw could have the most immediate impact on employment law. However, this would depend on how willing tribunals are to depart from the direction of travel the CJEU had established before Brexit. Employers may feel that the risk of a period of legal uncertainty outweighs the possible benefits if tribunals and the EAT prove willing to take an interventionist approach to retained EU law.

Authored by Jo Broadbent and Stefan Martin.