Blog: Brexit: Trade deal implications for UK Employment Law – Lexology

The most immediate impact for employers of the expiry of the Brexit transition period is the end of freedom of movement which has significant implications for maintenance of an international workforce, business travel, international secondments and transnational recruitment between the UK and the EU. Our previous Be Aware on the UK/EU Trade and Cooperation Agreement (Agreement) addresses its implications for immigration law and practice. However, the Agreement, which provides a tariff and quota free trade deal between the UK and the EU, also contains important provisions in relation to labour and social protection. In this edition of Be Aware, we consider the implications of the deal for UK employment law.

Preservation of EU law

It has been clear for a considerable time that Brexit would not lead to any immediate significant change to employment laws given the UK’s previous commitment to preserving EU-derived workplace rights. This commitment was enacted in the EU Withdrawal Act 2018 (EUWA) which included “savings provisions” for numerous EU-derived laws, including employment laws, at the end of the Brexit transition period. This means that regulations such as those on, for example, business transfers (TUPE), working time, agency workers, and fixed-term workers stay in place. What had remained unclear, however, was the extent to which the UK would be able to diverge from these existing laws after the end of the transition period and also the UK’s position vis-à-vis new EU employment protection directives. These issues are now addressed in the Agreement.

Level playing field provisions

Under the Agreement, the parties agree that they will not weaken or reduce labour and social protection below the levels in place as at 31 December 2020 in a manner which affects trade or investment between the EU and the UK. Both the EU and the UK also agree that they will continue to strive to increase levels of protection in these areas. Either party may be subject to “rebalancing” measures if significant divergences in protection arise in future, if these have a material impact on trade or investment. Broadly, these “rebalancing” provisions mean that tariffs can be imposed and parts of the Agreement on trade can be suspended should significant divergences in employment law emerge.

For the purposes of the Agreement, labour and social protection encompasses laws and standards in the areas of –

  • Fundamental rights at work;
  • Occupational health and safety standards;
  • Fair working conditions and employment standards;
  • Information and consultation rights at company level; and
  • Restructuring of undertakings.

The Agreement also includes a commitment to effective enforcement of laws and standards in these areas including by way of –

  • An effective system of labour inspections;
  • Administrative and judicial proceedings that allow public authorities and individuals to bring actions against labour law/social standards’ violations;
  • Appropriate and effective remedies, including proportionate and dissuasive sanctions as well as interim relief; and
  • Respect for the role and autonomy of social partners (i.e. employer and employee organisations) at national level.

The effect of these level playing field provisions, therefore, is that the UK is not committed to keeping its EU derived employment laws fully intact. Changes can be made, so long as these do not affect trade or investment between the parties. Although the UK Government has not indicated any current intention to reduce employment rights, should it decide to do so the crucial question will be where the boundary falls between changes which do and which do not affect trade and investment. It seems evident that minor changes to an aspect of an employment right is unlikely to qualify, whereas wholesale removal of rights would. The ground between those two positions is, however, far from clear.

Perhaps the aspect of the Agreement where there is greater scope for dispute is the provisions on enforcement of rights as, arguably, the UK’s existing arrangements are in some respects inadequate. For example, unlike many of the EU Member States, the UK does not have a system of labour inspections nor is interim relief widely available as a remedy in employment disputes. Also, should the Government seek to reintroduce employment tribunal fees at a high level, this might conflict with the requirement that individuals should have access to justice. It may be that as an outcome of the Agreement, UK employers should expect to see the introduction of stronger enforcement mechanisms for employee rights, such as the introduction of a single enforcement body which the Government previously consulted on in late 2019.

New EU employment directives

Although the UK is not specifically required to comply with any future EU directives which introduce or enhance employment protections, the rebalancing provisions are also relevant here. If the UK does not have existing laws which provide equivalent protections to those mandated in the EU, and does not introduce new measures which are broadly equivalent, the EU may have recourse to rebalancing measures. Again, however, this will only apply where there is reliable evidence that the resulting disparity materially impacts on trade or investment.

There are currently three EU directives where member state implementation is due to take place within the next two years – the Whistleblowing Directive; the Transparent and Predictable Working Conditions Directive, and the Directive on Work-Life Balance for Parents and Carers. Given existing and proposed regulations in the UK, it seems unlikely that these are areas where there would be sufficient divergence with the EU regime to offend the requirements of the Agreement for a level playing field.

European Court of Justice

The continued influence of the European Court of Justice (ECJ), is addressed in the EUWA, rather than in the Agreement. By way of reminder, the position is that for laws which are preserved by the EUWA (see above), ECJ case law existing as at 31 December 2020 remains binding on the UK courts, but any subsequent ECJ judgments are not. This will continue to be the case unless either the underlying legislation is changed by Parliament or the Court of Appeal or Supreme Court depart from the pre-Brexit ECJ jurisprudence where they consider it “right to do so”. In terms of any post-Brexit ECJ rulings on preserved UK laws, although not binding, they are nonetheless likely to be highly persuasive in the UK Courts. This is likely to also be the case with post-transition ECJ decisions on any new employment protections which the UK implements in order to ensure compliance with the level playing field requirements.

European Convention on Human Rights

A final aspect of the Agreement which is relevant to employment law is the status of the European Convention on Human Rights. Despite previous suggestions from the Government that Brexit may be used as an opportunity to diverge from the provisions of the Convention, this has not been the outcome of the negotiations. The Agreement commits the UK to its obligations to respect the fundamental rights and legal principles of the ECHR and, as such, UK legislation will continue to be interpreted and given effect to in a way which that is compatible with the Convention.

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