Filling the void: the Brexit effect on employment law

by David Cabrelli

Having been cast as unnecessary “red tape”, a burden on business, inflexible, uncompetitive and inefficient, it is widely assumed that a sizeable number of domestic employment laws derived from European Law will be in the firing line in the event of a Brexit. In a well-publicised written opinion produced for the TUC, the leading labour law barrister, Michael Ford QC, has provided some support for this assumption. He noted the vulnerability of these EU-derived employment rights and labour laws, and divided and categorised them according to whether a future UK government would be likely to repeal, dilute or preserve them. In this blog, I will probe what might fill any void created by the removal of employment rights rooted in EU law. Surprisingly, the common law would appear to have as significant a role to play as domestic legislation in this context. The potential involvement of the common law is somewhat paradoxical, particularly in light of its perceived ‘undemocratic’ credentials, it being a source of law crafted incrementally by unelected judges.

Turning to the legislation listed in the ‘repeal’ camp, the understanding is that statutory rights to information and consultation on collective redundancies are liable to removal. These rights afford trade union or employee representatives the right to be informed and consulted about managerial proposals to effect redundancies of more than 20 employees in any period of 90 days or less. The effect of any repeal of these provisions is likely to be partial, which can be ascribed to the domestic ‘unfair redundancy’ protections provided to employees on an individual basis pursuant to Part XI of the Employment Rights Act 1996 (ERA). These pre-date the accession of the UK to the European Economic Community in the early 1970s. It is a fundamental part of any fair and proper pre-redundancy process that the employer engages in consultation with employees provisionally earmarked for redundancy on an individual basis: a failure to do so will very likely render any dismissal for the reason of redundancy unfair under Part XI of the ERA, enabling an employee to secure compensation. As such, the notion that employees will no longer have any entitlement to be consulted about proposed redundancies is inaccurate, since domestic law will step into the breach.

Another piece of legislation that Michael Ford QC identifies as ripe for repeal is the Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246) (TUPE). This is rooted in the European Acquired Rights Directive 2001, which is designed to protect employees from dismissal or variations of their contractual terms in the event of a change of identity of their employer, e.g. on a sale of the business and assets of the employer to a third party, or an outsourcing situation. I am slightly more sceptical about the prospect of a UK Government repealing TUPE than some other commentators, despite the lack of enthusiasm of employers and the Government for such provisions. It is more likely that particular provisions will be cherry-picked and done away with.

Although it is probable that the right of transferring employees to be collectively consulted on a proposed transfer of their employer’s business will be removed, as will the right not to have the terms of their contract varied, it is likely that other domestic legislation and the common law will adapt to confer some protection, albeit admittedly not entirely equivalent to that removed. For example, the domestic protections on dismissals and redundancies conferred under Parts X and XI of the ERA will continue to impose an obligation on the employer to consult with an employee pre-dismissal about any proposed dismissal or redundancy. Likewise, the common law of the contract of employment regulating the variation and implied terms of that contract will function to ensure that some measure of control over the behaviour of the employer is imposed if the latter attempts to foist contractual amendments on transferring employees without their consent.

The common law will also be relevant in the event that the EU-derived rights to annual leave/holiday pay and maximum weekly limits on working hours in the Working Time Regulations 1998 (SI 1998/1833) are removed. For example, the implied terms of the employment contract place limits on the power of employers to exercise contractual options to extend the working hours of employees (Johnstone v Bloombsury Health Authority 1991) and it is likely that similar common law protections would be adapted to afford employees a range of rights to annual leave as a means of ensuring that employers exercise reasonable care for the physical and psychiatric well-being of their employees.

Finally, Michael Ford QC also pinpoints the protections for agency workers, part-time workers and fixed-term workers as targets for future repeal, each of which are grounded in EU law. These measures ensure parity of treatment with permanent, full-time workers directly employed by the employer. Whilst any repeal would be a regressive development for workers’ rights, in light of the statistical evidence that the majority of such atypical workers are female, domestic anti-discrimination legislation arguably could fill the gap to offer them redress if they were treated less favourably than permanent, full-time workers colleagues who are directly employed by the employer. This would be based on the statutory tort of indirect sex discrimination, since such unequal treatment would be in contravention of section 19 of the Equality Act 2010.

Of course there are deficiencies in the domestic legislation and the common law that could or would operate to plug any spaces left by the repeal of UK legislation based on EU labour laws. For example, the common law underwrites the ability of employers to dictate contractual terms, imposes implied terms designed to ensure the subordination of the employee to the employer, and confers unrestricted powers in favour of employers to dismiss and re-engage employees with few legal sanctions. However, I would argue that once EU laws are removed, domestic statute and the common law could well reach out and expand to occupy the field. The regenerative capacity of the common law and its ability to reinvigorate workers’ rights ‘in the gaps’ created by repealed labour legislation should not be underestimated.

As explicitly recognised in recent judgments, the judiciary are fully aware of movements in underlying social and economic conditions that are prejudicial to the cause of workers’ rights, and are not afraid to use them as a justification for common law expansion. In this way, they have shown themselves to be just as prepared to apply the accelerator on progressive common law developments as they are to hit the brake. The end result is that any post-Brexit legislation that is passed to strip back labour laws may not necessarily have the effect that is intended.

This entry was originally published on http://blog.oup.com/

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