Brexit is going to be in the news for the foreseeable future and it will, like it or not, impact on payroll and HR in the future.
The House of Commons has produced a briefing paper on the subject of how Brexit could potentially impact on employment law in the UK.
Primary legislation
A substantial component of UK employment law is grounded in EU law. EU employment law where it exists provides a minimum standard below which domestic employment law must not fall.
In some cases EU law has entrenched at an international level provisions that already existed in domestic law; for example, race discrimination and certain maternity rights. In other cases, new categories of employment rights have been transposed into domestic law to comply with emerging EU obligations. These new rights were often resisted by the UK government during EU negotiations; for example, agency workers’ rights and limitations on working time.
Subject to the provisions of the EU withdrawal arrangements or a subsequent trade agreement, withdrawal from the EU would mean that UK employment rights currently guaranteed by EU law would no longer be so guaranteed. In consequence, a post-Brexit government could seek to amend or remove any of these. The precise mechanism by which this could be achieved would vary depending on the right in question: some rights are enshrined in primary legislation: these are alterable only by primary legislation (e.g. equality rights under the Equality Act 2010); some EU-derived rights are located in secondary legislation, and are therefore susceptible to revocation by secondary legislation (e.g. agency worker and working time rights); some EU rights have direct effect, meaning that individuals can rely directly on EU law (for example the right to equal pay contained in the Treaty – these rights would automatically cease to apply upon exit from the EU, absent any domestic legislation saving them, or new international obligation to maintain them.The main point to note is that EU-derived employment rights featuring in primary legislation would be relatively insulated from the effects of leaving the EU, although would be newly susceptible to the possibility of change. Greater uncertainty surrounds the implications of Brexit for secondary legislation, in which much employment law is contained.
Secondary legislation
There are three ways by which EU employment law is implemented via secondary legislation:
under section 2 of the European Communities Act 1972, which provides a power to implement EU obligations via secondary legislation under a power contained in another Act of Parliament; and under a mixture of both, where, for example, certain parts of a set of regulations are made using the power in the 1972 Act, and other parts are made based on a power in a different Act.Brexit’s potential effect on employment rights contained in secondary legislation would differ depending on how that legislation was made. If it was made under the 1972 Act, or partly under it, it would likely need to be saved before we leave the EU (or perhaps partly saved, if based on a mixture of the 1972 Act and some other Act), otherwise it would cease to have effect going forward. The Government has already indicated that it would seek to achieve this through the ‘Great Repeal Bill’ (see below). As such, the question that remains is less what would happen automatically once we leave the EU, more what powers would a government have to remove employment rights via secondary legislation after we do? The answer to that is, broadly: if the Great Repeal Bill saves EU employment rights contained in secondary legislation but does not move them into primary legislation, all employment rights contained in secondary legislation, no longer entrenched in international law, would be newly susceptible to revocation by secondary legislation.
Case Law
A somewhat thornier – and important - question concerns the status of European Court of Justice (ECJ) case law. There is a sizeable body of ECJ case law interpreting EU employment rights, which domestic courts are currently bound to follow. In many cases, the ECJ has enlarged the scope of rights beyond the limits that would have been set by domestic courts. Post-Brexit, UK courts would no longer be required to follow existing and future ECJ decisions, and may merely regard them as having persuasive force. A potential consequence of that approach may be the re-litigation of controversial judgments, such as those relating to the calculation of holiday pay.
Commentators have voiced uncertainty as to how best to prevent this, although some have suggested that transitional legislation, dealing with the issues discussed above, could also freeze in place principles derived from case law. For example, Stephen Laws (First Parliamentary Counsel 2006-2012) wrote:
“How far should UK law originally deriving from EU law, so far as it survives, continue to be construed in its EU context? What relevance should ECJ judgments, past and future, continue to have on the construction of law with an EU inspiration?
A single Bill could apply a transitory patch - keeping most things in place, with general transitional modifications - until later primary or secondary legislation can produce more comprehensive solutions. But there will undoubtedly be demands for more of the detail to be settled early. It will be difficult, in practice to prevent a consideration of the issues involved in any later legislation from arising during the passage of a paving, patching Bill; but, if the legislation is not to become totally unwieldy, some matters are bound to have to be postponed and so patched in the meantime.
The briefing paper goes on to consider:
The implications of withdrawal on the creation of new laws The government’s position as currently stated