Employment rights on the guillotine in no-deal Brexit – John Lee

Removal of EU regulations opens the door for possible changes to safeguards for UK workers

John Lee is an Employment Partner, Ledingham Chalmers

Last week’s Scottish Government announcement saw a significant milestone for easing lockdown in Scotland. Measures this week included a welcome reopening for the likes of indoor hospitality, holiday accommodation and hairdressers, subject to appropriate safeguards.

The changes take place against the backdrop of widely anticipated, large-scale redundancies. Looking forward, Brexit presents a further set of challenging economic circumstances for us to navigate. 1st July was the last date by which the Joint Committee of UK and EU representatives had to agree a further extension to the current transition period which ends on 31st December 2020. In the COVID-19 maelstrom, that date passed with no extension sought.

As a result, it appears the UK is now locked in to a ‘hard finish’ by which, if no deal is reached, we exit with none. Whilst further extensions are technically possible, there are significant barriers making this unlikely.

Does this all mean a further perfect economic storm towards the end of the year? It’s certainly possible. The coronavirus job retention scheme ends in October, the US presidential elections take place in November, further large scale redundancies are expected and, last but not least, we’re no closer to a Brexit deal, which is unsettling to say the least. The US influence is significant given that the trade negotiations, from a UK perspective, are not taking place in a Brexit vacuum. Our negotiators will have one eye on transatlantic negotiations in particular.

How might all this affect the employment landscape? During the transition period, the UK is, for most purposes, deemed an EU member. Any deal agreed before 31 December will include certain employment safeguards in order to ensure a ‘level playing field’. With no deal, the scope for change in UK employment safeguards is wider.

The EU has been pivotal in shaping our employment laws. These govern: our health and safety framework; discrimination and equality; working time; annual leave and pay; transfers of rights and employees on the sale of businesses; data protection; human rights and agency workers. Whether Remainer or Brexiteer, it is clear Brexit opens up important commercial and legal freedoms. The debate now is whether that freedom proves worth the cost.

Certain areas are likely to be a focus for the Government in future. It was EU law which set a precedent that long term absent employees (even for a full working year), will continue to accrue annual leave and to carry that over; that those who take sick whilst on holiday be entitled to substitute leave – and to carry that over; that overtime, bonuses and commissions require to be factored into holiday pay calculations (leaving employers seismic historic liabilities to tackle); that restricts employers on the acquisition of businesses from harmonising terms across their employees and that requires the same transfer of rights and employees in the transfer of service contracts; that required greater equality across core staff and agency workers.

Any proposals for change in these areas will doubtless be criticised (many will say properly) as a governmental raid on employment rights.

Some employers will welcome these freedoms as the intended benefits of Brexit to help them compete effectively in the post-Brexit economies. There are good reasons to expect some changes in these areas. In addition to the combination of circumstances mentioned, political appetite for change in employment rights and regulation is hardly new. Remember the so-called “Red Tape Challenge” with which the Cameron-Clegg coalition government was heralded to power? “We will tackle the commercial restrictions of employment law…” they said. “We will remove the UK’s gold plating of EU law for business” they told us. “We will sort out the haystack that is UK health and safety law”, they promised. In practical terms, this was much ado about nothing.

With Boris Johnson’s sweeping majority last year, one telling – and in my view prescient – omission in the Withdrawal Agreement Act 2020, was any commitment to safeguard employment rights. This was a conspicuous divergence from previous proposals, explained away at the time as necessary in the interests of ‘simplifying’ the course of the legislation through parliament. This may well prove to have been simplification, in the way the guillotine simplifies your choice of hats.

John Lee is an Employment Partner, Ledingham Chalmers