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Europe: in, out or shake it all about?

The Queen’s Speech on 27 May included the government’s proposals regarding the EU Referendum Bill to cover the renegotiation of the UK’s relationship with the European Union and an in/out referendum on continued membership of the EU.

Generic Euro imageWhilst there is speculation that a referendum could be held as early as autumn 2016, the government has undertaken to put it to a public vote by 2017 at the latest. In the event of a vote for the UK to leave the EU, the British parliamentary system could once again shape our laws without any involvement from our European cousins, so employers’ thoughts will naturally turn to what would happen to EU-derived employment law. Could a vote to leave the EU lead to the wholesale throwing out of laws relating to business transfers, discrimination, holiday, duties to agency workers, data protection etc?

In theory, this could happen. The European Communities Act 1972 was enacted to allow the British government to introduce secondary legislation to implement EU laws in this country.

If the government was able to get a repeal of this Act through Parliament and the Lords (a big “if”), the secondary legislation which has followed from it would potentially fall away. No more TUPE Regulations or Working Time Regulations? Although initially brought to these shores as a result of EU directives, many aspects of EU law are now intermingled with and enshrined in UK primary legislation (ie a standalone Act of Parliament), which would require individual repeal. This is highly unlikely in an environment where the government’s majority is such a slim one and they are outnumbered in the Lords.

It is much more likely that the Conservative government would take a more measured approach and, if there is a political appetite on certain issues, deal with certain laws on a case by case basis – either to repeal or amend them in line with the perceived needs of British business.

So what could that mean in practice?

Discrimination and family friendly rules

Equality is a key thread running through EU law which has resulted in the UK being obliged to incorporate new protected characteristics into UK law – arguably before there was a widespread appetite across the country for this. Protection on grounds of age, sexual orientation, and religion and belief (for example) are now firmly incorporated into the Equality Act 2010 and arrangements relating to maternity and shared parental leave etc built into other domestic legislation. So, whilst in theory an exit from the EU could raise the issue of their removal, it is unlikely that the Equality Act or swathes of the Employment Act 1996 will be repealed, or that there is any real likelihood of a significant reversal in these areas. Social attitudes have moved on significantly and most employers now recognise the enormous value in family friendly and equality policies. Very few politicians openly advocate the slimming down of anti-discrimination protection or family friendly rules. The one area where change could be more likely is that there may be an appetite for measures to be reintroduced to allow exemptions for micro-employers for whom there is arguably a high burden in adhering to family friendly laws.

It should be noted, however, that the trend in Europe is for the reach of equality to be extended further and it would be interesting to see if Britain kept pace with any new developments following any exit. Further, although this is impossible while Britain remains part of the EU, following an exit it would not be unexpected if the government sought to introduce a cap on discrimination related compensatory awards as part of its ongoing efforts to promote a more “realistic” expectation amongst claimants in discrimination claims.

TUPE

Whilst many employers might welcome the thought of returning to the old situation prior to the Transfer of Undertakings (Protection of Employment) Regulations 2006 and its predecessor, where there was no assumption of a transfer of staff in a business transfer or an outsourcing arrangement, in reality, given that commercial agreements have now been based on this for many years, it is extremely unlikely that the government would seek to remove TUPE from the statute books entirely.

Holidays and Working Time

The European Working Time Directive sets out minimum levels of holiday and maximum levels of working time, which in the UK was subsequently enshrined in the Working Time Regulations 1998. Whilst it is unlikely that we will see changes to annual leave, many employers would be keen to see the removal of the 48 hour maximum working week and the associated record keeping obligations. Given that companies are permitted to seek waivers from staff in this regard, this may not be something that is pursued, but it has been a consistently unpopular obligation with employers so the government may try to amend domestic legislation to allow British businesses more freedom regarding the weekly 48 hour maximum working hours and record keeping. The UK government may also acquire greater flexibility on how to deal with hot potatoes such as how to incorporate commission or overtime in holiday pay calculations as European Court of Justice decisions would not be binding post-“Brexit”.

Agency Workers

Under the Agency Workers Regulations 2010, agency workers who gain 12 weeks’ continuous employment have the right to the same basic working and employment conditions as direct recruits of the hirer, including terms and conditions relating to pay, working time, rest periods/breaks and holiday. Still relatively new, and still consistently unpopular in the British business environment, this is a likely candidate for attack by the government seeking to reduce the legislative burden on British businesses and promote a flexible workforce.

Conclusion

Aside from all of the above, even if there is an exit, Britain would still want to have access to the European single market as part of the European Economic Area. This would doubtless involve agreeing to retain/incorporate certain EU laws just as countries such as Switzerland and Norway do. Combined with the reality that European legal concepts have become embedded in the UK legal system, it is likely that the vast majority of laws originating from Europe would remain unchanged for many years to come.

More than anything else, concepts of equality are arguably the natural follow-on from Britain’s historic liberalism and are part of the social and legal fabric of the UK. Further, moves to strip away protection from discrimination are likely to be perceived as politically unpopular and that will likely deter all parties from trying to undo a legal framework which has been in place for decades.

Perhaps we are more European than we think?

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Legal news, views, trends and tools for HR Professionals. Stay ahead. Go further