UK: Gazing Into A Crystal Ball: Brexit, Employment And Immigration

Last Updated: 7 July 2016
Article by Anjali Raval

Much has been said about Brexit – the number of articles and reports published in the last few weeks has been overwhelming. Some filled with predictions of doom and gloom; others more optimistic. But that's just what they are at this stage – predictions. We've all become fortune tellers overnight – myself included.

No one can say for certain what's going to happen next. Much will depend on the deal the UK manages to negotiate with the European Union (EU). All we know is that not much will change in the next couple of years. European Commission President, Jean-Claude Juncker, has indicated that there will be no discussions with the UK on a possible post-Brexit relationship until the UK has formally notified the EU of its intention to leave by invoking Article 50 of the Lisbon Treaty. We will then have a two-year "negotiation period" before any of the changes take effect. 

Initial rumblings from the Union have suggested that it is fundamental that any trade agreement with the UK would be subject to the principle of free movement. Essentially, if we want to retain access to the single market, we will have to accept free movement of people. Simple. Again, of course we can't be certain about any outcome. However, politically speaking, it would seem that the Union has its hands tied in this regard. What concessions can it afford to make to the UK without sparking dissent amongst other union members? Free movement of people? The supremacy of EU law? Whilst some UK politicians have stated that they are not prepared to accept certain conditions to access to the single market, it seems to me that, in reality, the bargaining power lies with the EU.

So what does it all mean for the UK? Well that's the million (pound?) (euro?) (dollar?) question that's likely to take years to really determine. However, as the saying goes – we need to speculate to accumulate. 

The best starting point may be to look inwards and consider what arrangements European non-EU members currently have in place. The "Norwegian" and "Swiss" models are the ones currently most cited.  Both have partially surrendered sovereignty in order to gain access to the single market and both accept free movement of people. Indeed, both Switzerland and Norway have far higher levels of EU immigration than the UK as a proportion of their populations. Statistics indicate that if the UK had the same net EU immigration rate as Switzerland, it would mean nearly 400,000 more EU migrants a year.

In terms of immigration to the UK, my prediction is that, in the short term at least, figures for net migration from the EU are unlikely to fluctuate dramatically. If anything, we may see an increase in net migration in the next two years, as the government has indicated that anyone already in the UK before the changes take legal effect will not be repatriated. Businesses are still likely to have a ready pool of applicants from the EU and are still likely to be able to send their employees to work in other EU member states, without any particular additional employment costs. 

If, shock horror, the UK was able to negotiate a way forward with the EU without free movement of people, or negotiations were to fail and UK lost access to the single market completely, this would likely have the unintended consequence of making the UK a much less attractive destination for international businesses, and skilled and educated migrants. However, as it currently stands, I don't think that we need to panic just yet. 

So that's immigration, but what's the deal for employment law? Much was made by the Remain campaign about the fact that we should stay in Europe to "protect workers' rights". Indeed, Jeremy Corbyn, who is now under fire for his apparent apathy towards the Remain campaign, urged Labour voters to support the UK staying in the EU, saying it will protect workers' rights. I suppose it makes for a good headline but it doesn't truly reflect the reality of the situation, for the reasons set out below. 

As we set out in our briefing paper back in April 2016, it is a common misconception that statutory employment rights in the UK derive wholly or mainly from the EU. This is simply not the case.

The following rights derive either exclusively from UK legislation, or from UK legislation which pre-dated later EU directives requiring member states to legislate in respect of the same issues: protection against unauthorised deductions from wages; the right to a statutory redundancy payment; the right to equal pay; protection against unfair dismissal; protection against detriment or dismissal because of trade union membership; immunity from legal action in respect of legal strike action; protection against discrimination at work because of sex, race, nationality, ethnic origin or disability; the right to a national minimum wage; and all those family-friendly rights. I don't know about you, but that seems like a fairly impressive list to me. 

So which major UK employment rights do derive exclusively from EU directives? Protection of employment on the transfer of an undertaking (the "TUPE" Regulations); the requirement to consult collectively in respect of proposals for 20 or more redundancies within 90 days; limits on working time; and the right to statutory minimum paid leave.

EU law is often criticised as burdensome, overly restrictive and costly for businesses, but UK laws, at least in the employment space, have regularly gone beyond the strict requirements of the EU directives. 

Considering the issue of "gold-plating", take, for example, the Working Time Regulations 1998. These provide that UK workers are entitled to a minimum of 5.6 weeks' holiday a year, whereas the minimum required under EU law is only 4 weeks. Then consider the dreaded TUPE Regulations. The concept of service provision change (which relates to outsourcing scenarios) is a UK invention, nowhere to be found in the EU Acquired Rights Directive. Indeed feedback from the business community indicates that the introduction of the service provision change has been well received, to the extent that it provides greater certainty for businesses.

There has been an outcry about the potential effects of Brexit on maternity provisions. This is perhaps fuelled by polls of businesses, which seem to suggest that current maternity allowances are not popular within the business world. The suggestion is that the only reason we have the maternity provisions that we do in the UK is because we are bound by EU law. This is highly misleading and ignores the fact that our maternity provisions are far more favourable than the rights under EU law. Under EU legislation, women are entitled to at least 14 weeks' maternity leave, compared to our significantly more generous entitlement. 

Whilst theoretically the government could make maternity provisions and holiday allowances less generous post-Brexit, it could have done that pre-Brexit if it had wanted to. Indeed, the recent introduction of shared parental leave is an indication of the government's increased support for employment rights. Reducing these allowances is politically unattractive, although it is arguable that the government could use Brexit as an excuse to start making changes. 

Commentators refer to the perennial debate about the maximum 48-hour working week. However, the reality is that this has had little impact in practice, as many businesses already utilise the UK's opt-out provisions contained in the legislation. 

A recent (pre-Brexit) article in The Independent1 referred to the Beecroft report, a controversial report about employment law which was allegedly published by the coalition government in 2012 and then buried. The report advocated, amongst other things, employment at will, opt-outs for small businesses of pension auto-enrolment and certain family-friendly rights, a reduction in the consultation period on collective redundancies and repeal of third party harassment legislation (actually repealed in 2013). The article suggested that, if it were left to the UK government, without any restrictions imposed on it by the EU, the government would start to impose some of the changes suggested in the Beecroft report to "appease" businesses and cut red tape. Whilst this is not impossible, my view is that a knee-jerk reaction or abolition of key employment law by the government is highly unlikely. 

Repealing the Equality Act 2010, introducing length of service requirements, placing limits or caps on discrimination compensation awards? Theoretically, the government could make these changes but in doing so it would be unlikely to win the support of the general public. As I set out above, any radical departure from the status quo would be politically unattractive. In any case, the UK labour market is already one of the least regulated and most flexible in the developed world, notwithstanding its membership in the EU.

So back to looking at Norway and Switzerland. Statistics suggest that from the 23,000 EU laws currently in force, the EEA has incorporated around 5,000, meaning that Norway is subject to roughly 21 per cent of EU law (including the Working Time Directive)2. Switzerland, through its network of  bi-lateral agreements with the EU, is subject to an even higher percentage. Businesses from the countries are required to comply with EU law, including employment legislation, in order to market their products or services in the EU, and they are bound by the jurisprudence of the European Court of Justice in relation to the European laws which they submit to. 

Note that Switzerland does not have full access to the single market for its banking sector and other parts of the services sector, which together make up almost 80 per cent of the UK economy. If the UK wants full access to the single market it is likely that it will have to make even more concessions to the EU than Switzerland.

Assuming that the UK manages to negotiate an arrangement whereby it does not have to submit to European employment law, there is a chance that, even if we do not repeal any of our laws currently in place which implement EU law, our case law could take a significantly different path to European jurisprudence. Take holiday pay as an example: it is not inconceivable that, following Brexit, the UK Supreme Court (assuming an appeal to the Supreme Court of Bear Scotland3 and Lock4) could decide that holiday pay should be limited to basic pay only. However, looking to Norway and Switzerland, currently I still think it is more likely that under any negotiated agreement, in terms of employment law at least, EU law will still reign supreme.

So where do we end up? My prediction? Right at the beginning again. EU aims and legislation are so entrenched in our views of UK good employment practice that our employment laws are likely to remain fundamentally the same, at least in the short to medium term. Moving to a more US-style system where employees receive lower overall protection is potentially possible in the longer term, but it would require a broader cultural change. We need to remember that, even if our government is not bound by EU employment law post-Brexit, which I predict it may well continue to be, the government is bound by five-yearly elections and ultimately, as we've seen from the recent referendum, the people get what the people want. 

Footnotes

1 http://www.independent.co.uk/voices/eu-brexit-tories-eu-succeed-beecroft-report-employment-a7083746.html

2 http://eur-lex.europa.eu/browse/directories/legislation.html

Bear Scotland Ltd v. Fulton and another UKEATS/0047/13

Lock v. British Gas Trading Ltd (Case C-539/12)

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
14 Dec 2017, Seminar, Frankfurt, Germany

Partners from across Europe and the US will converge for a round-table discussion on hot topics relating to investigations. Our particular focus will be CEE and Russia.

Take the opportunity to schedule personal meetings with us before or after the conference, tailored to the topics and geographies that are most important to your company. This format allows us to engage in in-depth discussion of the issue that confronts all of us, namely how to conduct investigations effectively and efficiently.

7 Jan 2018, Seminar, London, UK

Join us for a review of legal developments during 2017 and a look forward to what is on the horizon. We will be looking at legislative and case law developments and what they mean for companies and transactions.

23 Jan 2018, Conference, Munich, Germany

On 23 + 24 January 2018 Dentons Europe LLP will participate at the Iran Trade and Investment Forum in Berlin – one of the biggest events related to Iran in Germany. The conference will target a lot of German and international companies and also involves lectures by four Dentons lawyers.

 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions