Connecting North West business to relevant training, insight, conversation and each other
Referendum: What is the effect on Employment law if the UK votes to leave the EU?
The current status
It is no secret that laws of the European Union reign supreme over UK laws. This has been the position since Parliament passed the European Communities Act 1972 which govern how employment law is implemented in the UK. Courts and Employment Tribunals must consider both EU laws and previous decisions by the European Court of Justice when making their decisions in the UK courts.
The UK’s ‘in-out’ referendum is now fast approaching and is to take place on 23rd June 2016. This means that there could potentially be a decision on an EU exit this summer, sometimes dubbed as ‘Brexit’, Britain’s exit from the EU.
However, departing from an amalgamated relationship between our laws and those of the EU may not be as simple as it first seems; employers and employees alike rely on current provisions and as such they implement procedures, policies and practices based on EU law.
How could the UK operate if we exit the EU?
Whilst a ‘yes’ or ‘no’ vote to whether the UK should remain in the EU appears to be relatively straightforward the consequences are more complicated.
Firstly it is likely that the UK will want to continue trading with EU member states in the same way that they do now and the UK will have to decide whether to remain a member of the European Economic Area (‘EEA’) and the European Free Trade Association (‘EFTA’).
If the UK were to remain a member of the EEA and EFTA the UK would still be subject to directives that affect members of the EEA and EFTA. Therefore negotiations will have to take place to decide how a relationship between the UK and EU would operate in practice. In order to agree on a free trade relationship with the EU the UK will almost certainly need to conform to certain EU laws.
Additionally, the UK will still need to coordinate its rules on the free movement of people to match those of the EU. The alternative would be for the UK to create their own model which may involve creating agreements with individual member states on trade.
The likely impact on UK Employment Law
A substantial amount of the current UK employment law comes from EU provisions; this includes discrimination rights, transfer of undertaking regulations, family rights such as family leave and working time regulations. If the referendum results in the UK leaving the EU, all these provisions could theoretically be repealed by the Government.
A complete overhaul of the current legislation is likely to be unwelcome by employers and employees alike due to the confusion it would cause and the cost in implementing new policies and procedures.
There are certain UK employment rights which pre-date EU requirements such as equal pay, race and disability discrimination and maternity leave. Similarly developing family friendly rights such as shared parental leave and the right to request flexible working are domestic in origin and appear to offer more protection than EU laws require.
Discrimination laws are also unlikely to be affected. The Equality Act 2010 would remain in force and although the UK could repeal the act in principal it would be controversial and extremely unlikely.
Another consideration is the impact on the free movement of people. There would be no automatic right to live and work in the UK for non-UK citizens. This may be problematic for Companies that recruit experts and employ overseas workers. This point is likely to form part of negotiations on trade as founding countries such as Germany and France consider the free movement of people as a fundamental principle within the EU and the UK may need to agree to the same to have the benefit of free trade.
It is important to note that there will not be any immediate effect if there is a vote to leave the EU as the UK is required to give at least two years notice to leave the EU. This period would involve negotiation on the terms of the exit.
The UK Government is unlikely to completely overhaul the current system; it is more likely that any changes will be implemented periodically over time to make the laws more adaptable to the UK market.