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Brexit: Good news for employers?

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Brexit: Good news for employers?

Many articles have been written on the national issues involved on Brexit, but what are the employment law implications if the UK does leave the European Union?

You would have had to be living on Mars or at the Earth’s core not to know that there is due to be a referendum on whether the UK should remain within the European Union on 23 June this year.

Employment Tribunal claims reduced by around 70%

During the last Parliament, the coalition Government reformed many aspects of employment law as it was felt that the pendulum had swung too much in favour of employees. Popular wisdom held that Employers were not able to manage their businesses without interference from employees or their lawyers.

Costly Employment Tribunal fees were introduced, the qualifying period for unfair dismissal increased from one to two years and “Protected Conversations” were allowed, making it easier for employers to put underperforming employees in the “departure lounge”. Early Conciliation via ACAS was subsequently introduced. The combined effect of these changes has helped to reduce the number of ET claims by about 70% per annum compared with pre-reform days.

Equality Act and Discrimination Law

However the biggest worry for employers was the threat of a claim under the Equality Act and Discrimination law. Although the Government tinkered at the edges by removing the compulsory questionnaire process, the substantive law remains in place. The law is complicated, there is no minimum qualifying period of employment and there is no maximum cap on the award that can be made by a Tribunal. Many employers claimed that they were being “blackmailed” by employees playing the discrimination card in order to offer a settlement package rather than fight the claim, risk adverse publicity and also a very heavy legal bill. In Employment Tribunal claims each party usually bears its own legal costs win or lose.

The reason for that, of course, is that most of the anti-discrimination law that is in place ultimately has its foundations in European law, as do the Working Time Regulations, Collective Consultation obligations, Transfer of Undertaking Regulations and Family Leave Provisions. On the face of it if the UK left the European Union it would be open to the Government to repeal all these pieces of legislation but what message would that send to the electorate? Would any Government want to be seen to be condoning discrimination between the genders, or against disabled people, or removing protection from an employee when their employer is taken over by another, for example? Sir Humphrey Appleby of “Yes Minister” fame would probably have described such a move as “courageous”.

At what cost?

There has been much talk in the media on how the UK would be able to arrange much more favourable exit terms than Greenland was able to achieve and we would be able to get better terms than Norway and Switzerland, both of whom have to adhere to EU regulations in order to deal with the EU. Whether this is true remains to be seen but it is hard to think that the EU would not want the UK to be compliant with most of the social provisions that exist at the moment and again, to what extent is it politically possible for a Government to repeal that legislation and at what cost? Trying to repeal the Working Time Regulations or the Agency Worker Regulations would not only make for bad publicity but would also cause industrial relations to deteriorate and provoke massive disputes with the unions.

It may be that Brexit would allow the Government to amend existing discrimination legislation, perhaps to allow positive discrimination under discrimination law, which is not currently allowed. It could make TUPE more business friendly, particularly in respect of harmonising of employment terms when one company takes over another. It might also be possible to amend the Working Time Regulations to say that holiday pay should be limited only to basic pay and not to all remuneration.

From an employment law point of view it may be that Brexit would have very little impact upon the workplace, at least in any significant way. By the time the next edition of this bulletin is out we will know how the public has voted. If the decision is indeed for “Brexit” it will be many months or years before the true effect in the workplace is felt.

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