WorkLife 2.0: Brexit – the changes and challenges for employers

Brexit has already brought significant change to the world of work. As the dust settles on the new relationship between the UK and EU, employers are focusing on compliance with the new arrangements while keeping an eye on future developments resulting from the UK’s potential freedom to diverge from EU standards. This is the next in our 'WorkLife 2.0' series of blog posts on what to expect in 2021 (and beyond), looking at some of the key challenges faced by employers from Brexit, and the potential roadmap ahead.

The next stage of Brexit was completed with the signing of the EU-UK Trade and Co-operation Agreement (‘the Agreement’), building on the Withdrawal Agreement that was finalised in late 2019. The Agreement sets the direction of the UK and EU’s future relationship and also confirms the extent to which the UK will be free to diverge from current and future EU law, including employment law.

Short-term HR challenges include ensuring compliance with right to work requirements resulting from the end of the UK’s participation in the EU’s free movement arrangements. The Withdrawal Agreement had confirmed that British workers in the EU before 1 January 2021 will have the right to remain for work. It also ensures them protection from discrimination and protects social security rights. However, those that fall into this category may need to apply for a new residence status in the EU country where they are living. Similarly, EU workers living in the UK will need to confirm their status under the EU Settlement Scheme. Even where there is no physical cross-border worker movement, employers will also be considering other compliance issues such as ensuring their employee privacy notices are up to date and reflect the latest technical amendments to the GDPR required as a result of the end of the transition period.

Looking further ahead, the Agreement confirmed that the UK and EU will now be able to set their own employment laws independently. However, both parties agree that they will not weaken or reduce their labour and social standards below the levels currently in place in a manner that affects trade or investment. This commitment applies to fundamental rights at work, health and safety standards, fair working conditions, employment standards, information and consultation rights, and restructuring of businesses.

Some divergence will inevitably arise, however. Courts including the UK Supreme Court and Court of Appeal will now be able to overrule previous rulings from the Court of Justice of the European Union, and UK courts will not have to follow future decisions (although they can in some circumstances still request preliminary rulings on issues such as citizens’ rights for a time-limited period). The UK Parliament may choose not to implement future EU legislation such as the Whistleblowing Directive (which we have discussed in a previous blogpost), and may even repeal or amend some existing protections, subject to the overarching constraints described above. Employment law is frequently a topic of political controversy and the UK government’s first post-Brexit moves in this area involved announcing a review into employment rights which was later cancelled after political pressure was applied. However, in February 2021 the UK government set up a task force on 'Innovation, Growth and Regulatory Reform' to actively consider what EU regulation could be amended or removed. The task force is due to report in April 2021 but early indications from its members are that substantive EU-derived rules including the GDPR will be targeted by the review.

More widely, EU law has had a profound effect on UK employment law in areas including transfers of undertakings, discrimination law, equality and human rights law, holidays and working time, and collective redundancy consultation. The degree to which the UK may choose to diverge from the EU position in these areas and others in the months and years ahead is still unclear and will be monitored closely by employers across the EU and UK.

Please see this post (relating to the EU Whistleblowing Directive) for further discussion of the potential divergence between UK and EU employment law in the future.