Employment law after Brexit

30th January 2020

As the UK prepares to leave the European Union on Friday, some key employment law details are beginning to crystallise. However, many uncertainties remain, in particular the degree of deviation from common EU employment standards, including case law, commencing January 2021. We summarise the latest position below.

Status quo during the implementation period

The EU and UK have agreed that, in broad terms, nothing changes from 1 February until 31 December 2020. This has been termed the implementation period (‘IP’ or transition period) and the parties will use the time to enter into negotiations over their future trading relationship and ready themselves for the UK’s new status outside the EU. Currently, the Prime Minister has ruled out extending the IP beyond the end of 2020.

During the IP, it will be as if we are still an EU member state. EU employment law will continue to have the same effect in the UK as before Brexit and EU employment case law will continue to bind the courts (including any new European Court of Justice judgments).

Employers should prepare for a degree of uncertainty around the future treatment of EU case law precedent when risk assessing employment litigation beyond 2020.
 

Employment law after the implementation period

At the end of the IP, most EU-derived UK employment legislation will be preserved in domestic law to ensure legal certainty and continuity. Going forwards, this EU-derived employment law will continue to apply indefinitely, unless and until the Government is minded to seek legislative change.

While the Government has made (non-binding) commitments to “maintain” existing EU-derived employment standards after the IP, it has been silent on keeping pace with new EU employment law in the future. Workers’ rights are expected to feature in the EU/UK trade negotiations, with the EU seeking binding commitments on maintaining existing standards, and further details may emerge during the year.

Turning to the treatment of EU case law after the IP, UK courts and tribunals will not be bound by new European Court of Justice (‘CJEU’) judgments after the IP. However, the extent to which judges will be bound by the existing large body of EU-related case law is less clear.

This case law has been instrumental in interpreting many UK employment rights which originate from EU legislation, such as working time, collective redundancies, TUPE and more. For example, CJEU judgments in relation to whether holiday pay accrues during sick leave and whether overtime pay forms part of holiday pay. The Government intends to legislate this year to permit some lower courts, not just the Supreme Court, to depart from retained EU case law after the IP.

This means that employers should prepare for a degree of uncertainty around the future treatment of EU case law precedent when risk assessing employment litigation beyond 2020. Further details are expected over the next few months when the Government consults on making this change.

Comment

Employers will see little change, as a result of Brexit, in the application of EU-derived employment law during 2020. However, this is expected to change from January 2021 and we will update you as further information emerges.

For more information or to discuss what this means for your business please contact Dianne Gilhooley or Tom Bray. 

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