Thursday February 6, 2020
The United Kingdom is no longer a member of the European Union and has introduced a transition period until December 31, 2020, unless an extension of 1 or 2 years is agreed until July 1, 2020 (the Brexit Long Stop Date).
During this transition period, the UK will continue to deal with the EU in the same way it did before it left. Negotiations will take place this year to determine the future lasting relationship between the UK and the EU.
British Prime Minister Boris Johnson has repeatedly stated that the transition period will not be extended beyond the end of this year. This is an ambitious deadline for reaching a full agreement with the EU and the possibility of a ‘no deal’ Brexit remains an event for companies to prepare for.
With that in mind, this update summarizes the current state of the UK’s relations with the EU and highlights some of the key legal implications associated with a ‘no deal’ scenario in certain areas – one of which is employment, which we are examining here.
employment
In a deal or no deal scenario after the implementation period, little change in relation to British labor law is expected in the short term.
The government’s position has been reasonably consistent since the Brexit vote in June 2016. The State Secretary responsible for labor law told Parliament on November 7, 2016 that the government would “enshrine all existing labor rights in British law, regardless of the UK’s future relationship with the EU”. During her tenure as Prime Minister Theresa May affirmed several times that the government “will not only protect the rights of workers, but also improve them”.
Boris Johnson has made similar promises to protect current workers’ rights, but has been criticized for removing a section from EU law (Withdrawal Agreement) from the 2020 Withdrawal Agreement in previous versions of the EU bill (withdrawal agreement) in which the government was asked to report on the deviation from the new EU rights the future.
Regarding current employment rights, the government has issued a number of technical notices confirming that in the event of a ‘no deal’ Brexit, workers in the UK will continue to enjoy the rights they are currently entitled to under EU law – a key exception (in Reference to European Works Councils – discussed below). To achieve this, the 2020 Withdrawal Act provides that EU law (with the necessary changes to the technical elaboration) will be introduced into UK law on Brexit day.
The revocation agreement also provides that EU law will continue to apply during the transition period up to the Brexit Long Stop Date. Labor rights derived from EU law (such as anti-discrimination rights, collective consultation obligations, TUPE regulations, family leave and working time rights) will therefore be retained at least for this transitional period.
Some consolation, however, can be gleaned from the Political Declaration, which sets out the framework for future EU-UK relations (annexed to the withdrawal agreement), which includes the commitment to work together to maintain “high standards of … Workers’ Rights ”and a declaration that the future relationship must ensure open and fair competition, including provisions on social and employment standards.
European works council
The only significant changes concern the European Works Councils (EWCs), which can no longer function as they did after Brexit.
The revocation agreement provides that after the Brexit Long Stop Date, no new applications for the establishment of an EWC or an information and consultation process can be made.
For existing EWCs, the effects of Brexit depend on the conditions of the EWC. For EWCs that are not subject to UK law, the standard position is that UK employees are no longer entitled to be represented on the EWC and the seats of UK delegates must be reallocated unless the parties to the EWC agreement agree otherwise.
Those subject to UK law have to designate another EU country to govern the EWC. The choice of alternative law should be carefully considered as it has strategic implications for the composition of the EWC and the national legal concepts to which it will be subject.
Changes in labor law in the future?
In theory, parliament could make future legislative changes to labor law. However, given the commitments made by the government and, in the event of a no-deal Brexit, these are likely to be limited in terms of practical possibilities for negotiating future trade agreements with the EU.
With regard to case law, the Supreme Court could at least theoretically review the lessons learned from European case law and possibly turn it on its head under the 2020 Withdrawal Act. Multiple disputes such as vacation pay could therefore, at least in theory, be reopened. However, given the pledges of continued labor rights protection, a significant rollback would be surprising.
immigration
Immigration is an area that can have a significant impact on some employees and their families.
If the UK leaves the EU with an agreement, it has been agreed that there will be a “transition period” from Brexit day to the Brexit long stop date (31 December 2020 at the time of writing). During the transition period, free movement between the UK and the EU will effectively continue.
The UK government has promised that under the “EU settlement scheme”, all EEA nationals and their families living and working in the UK as of December 31, 2020, regardless of whether there is a Brexit deal or not, will have the right have to continue to live and work in the UK and, after five years of qualified residence, acquire the right to permanent residence in the UK.
The regulation came into force on March 29, 2019. The government has stated that if there is a Brexit deal (or in the case of a Brexit deal on December 31, 2020, a “no-deal” Brexit), requests for settlement or pre-calculation must be submitted before the end of June 2021), to protect an individual’s right to stay in the UK.
The UK government publishes the latest information on the ‘EU resolution system’. Further information can be found in the EU settlement system.
Practical steps for employers
The main impact will be for employers who hire or post cross-border workers. Employers with affected employees want to ensure that they are familiar with the “Billed Status” process and its deadlines.
Labor taxes: social security
EU rules currently help internationally mobile workers pay social security contributions in just one Member State. In the event of a no-deal Brexit, these provisions will no longer be effective in the UK long stop date after Brexit. Although the UK has legislated the continuation of the status quo, the question of whether this will be the case depends entirely on mutual action by the EU, which has not been agreed. The UK had a limited number of agreements with some, but not all, EU Member States before the rules came into force. However, these are far less comprehensive than the EU rules and can be limited in duration and scope.
Employers therefore need to review the social security status of workers entering or leaving the EU and review all international labor agreements to see if new social security obligations are triggered.
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