ERIS Brexit Briefing #2 – Brexit’s Impact on UK Employment Law

ERIS: Saying ‘Yes’ to a Social Europe

The House of Commons Library produced the following Briefing Paper – Brexit: employment law (Number CBP 7732), on 12 October 2016. The paper highlight’s the scale of the task but also the lack of certainty that would follow. Please see the ERIS comment at the end of this paper. 

1. UK and EU employment law

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 Treaty2) – 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.

• Creation of new laws 

Once the UK withdraws from the EU it will no longer be required to transpose new EU law into domestic law. This, again, would be subject to the terms of any future legal relationship with the EU. The employment law consequences of this would be twofold. First, the UK would not be required to implement new EU laws promulgated in the employment sphere. Second, ECJ decisions, interpreting Directives that have already been implemented in the UK, would have no automatic binding effect on UK law.

2. The Government’s position

In her speech to the Conservative Party conference during October 2016, the Prime Minister committed the Government to preserving EU-derived employment rights:

The final thing I want to say about the process of withdrawal is the most important. And that is that we will soon put before Parliament a Great Repeal Bill, which will remove from the statute book – once and for all – the European Communities Act.

This historic Bill – which will be included in the next Queen’s Speech – will mean that the 1972 Act, the legislation that gives direct effect to all EU law in Britain, will no longer apply from the date upon which we formally leave the European Union. And its effect will be clear. Our laws will be made not in Brussels but in Westminster. The judges interpreting those laws will sit not in Luxembourg but in courts in this country. The authority of EU law in Britain will end.

As we repeal the European Communities Act, we will convert the ‘acquis’ – that is, the body of existing EU law – into British law. When the Great Repeal Bill is given Royal Assent, Parliament will be free – subject to international agreements and treaties with other countries and the EU on matters such as trade – to amend, repeal and improve any law it chooses. But by converting the acquis into British law, we will give businesses and workers maximum certainty as we leave the European Union. The same rules and laws will apply to them after Brexit as they did before. Any changes in the law will have to be subject to full scrutiny and proper Parliamentary debate. And let me be absolutely clear: existing workers’ legal rights will continue to be guaranteed in law – and they will be guaranteed as long as I am Prime Minister.

3. Further reading

At present, the best discussion of the potential employment law consequences of Brexit is contained in Michael Ford QC’s advice to the TUC. For a discussion of the history of the EU’s competence to legislate in the employment sphere see the Government’s Review of the Balance of Competences between the United Kingdom and the European Union – Social and Employment Policy.

 Source: House of Commons Library Briefing Paper – Brexit: employment law (Number CBP 7732)

ERIS Comment:

Once Brexit occurs, the Government can abolish and amend all employment legislation. The large amount of employment law derived from secondary legislation can be removed without full parliamentary scrutiny. In an article about the process of converting EU law into UK law, Professor Catherine Barnard, describes the Great Repeal Bill as ‘the great contradiction’ and questions Theresa May’s guarantees on worker protection. The process of implementing EU derived regulations into UK law will in fact increase the volume of legislation and there will not be sufficient parliamentary time for proper scrutiny and debate. Eurosceptic ministers are already talking about using ministerial powers to amend secondary legislation and the introduction of a five year ‘sunset clause’ on all EU derived regulations. We cannot trust the conservative government on worker protection as we have already seen in their recent attempts to appoint an employer to represent workers on the Health & Safety Executive.

ERIS: Campaigning for a Europe for working people