Employment Brexit changes

When the news broke in the early hours of 24 June 2016 that the UK was leaving the EU, I imagine many of us doubted that the process would be either swift or painless. Few of us could have foreseen that four and half years, two prime ministers and two elections later amidst a global pandemic, the terms of this departure would finally be agreed on a tiered Christmas Eve like no other.

Those years have not been without some guidance and direction; the settlement scheme for EU workers was launched on 29 March 2019 and a new immigration points system announced in early 2020 to assist employers as they looked to a future with no free movement of workers. However, the realities of the ‘Brexit journey’ for employers will only be truly realised over the coming months.

What should employers who have existing EU workers do; are any further checks required?
EU workers who were resident and working in the UK prior to 31 December 2020 can continue to be employed. The Government guidance is clear that no further checks need to be carried out and promises that “new guidance on how to conduct right-to-work checks on EEA nationals after 30 June 2021 will be provided in advance of this date”. This is of course subject to the completion and documentation of the necessary right-to-work checks on recruitment. 

Actions to take:   

• Ensure all right-to-work documentation is correct for all employees and workers;
• Put robust systems in place so that checks are always actioned; and
• Provide information regards EU settlement scheme to the workforce – research has shown that up to 40% of EU workers are still unaware of the scheme and what is required of them. Only those EU workers with settled or pre-settled status will be permitted to remain in the country post 1 July 2021 without a visa.  

Employing EU workers going forward; what needs to be done?
From 1 January 2021, the free movement of EU workers ceased. Consequently, employers who want to recruit workers from outside the UK (whether that be the EU or beyond) will need to be a Home Office licensed sponsor and the Government’s immigration points system will apply. As has been widely reported and discussed, this points-based scheme precludes low skilled workers; as such key sectors are facing a recruitment crisis although the Government have yet to give much comfort reporting that “we will not introduce a low skilled or temporary work route. We need to shift the focus of our economy away from a reliance on cheap labour from Europe and instead concentrate on investment in technology and automation”.

Actions to take:

• Revisit any staffing audit that has been carried out to assess the impact of this change; have staffing needs changed due to Covid-19, have any action points been put in place, what further measures are needed? and
• Seek further advice on becoming a sponsor, if relevant, for your organisation. Such advice is beyond the scope of this ebriefing. Please do contact a member of the team if you require more information. 

Will all EU based legislation remain in place?
EU based UK legislation remained in force as the clock struck one minute past midnight on 1 January 2021. Brexit did not obliterate EU derived UK laws, just as the millennium bug did not obliterate all IT systems at one minute past midnight on 1 January 2000!

Under the Trade and Cooperation Agreement (the “Agreement”) agreed on 24 December 2020, the UK and the EU agreed that it will not reduce employment rights below the standards of 31 December 2020 “where those rights affect trade or investment”. This is a restriction of the UK’s right to change existing employment law but not an outright prohibition. The Agreement was concerned with trade and commerce and not employment rights. The preservation of workers’ rights is not the tipping point; the creation of a commercially unfair advantage is. For example, the UK would breach this agreement if it removed certain holiday entitlement; reducing employment costs and giving UK companies a commercial advantage and not because it had breached workers’ rights to paid holiday.

The Prime Minister continues to provide reassurance that there will be no erosion of employment rights although his recent comment, “the UK won’t immediately send children up chimneys” may lack the clarity employers and employees would like. 

What about new EU legislation post-2021?
Under the Agreement, there is no requirement that the UK stays in step with any new EU legislation. However, the UK is required to ensure it does not “diverge” from EU employment law in a way that will commercially benefit the UK. If it does, then there will be a “rebalancing” to correct any commercial advantage the UK enjoyed from the divergence which will most likely be evidenced in tariffs.

Actions to take:

• Despite the vagueness of the language, it is unlikely that there will be any major changes to the UK’s employment legislation soon. Continue to assume that TUPE will apply where relevant, paid holiday remains in place and continue to ensure compliance with all employment legislation whether derived from EU sources or not.

Are European Court of Justice (ECJ) decisions still applicable?
UK legislation implementing EU rights must continue to be interpreted in a manner consistent with the relevant EU law. However, the Agreement veers away from this in respect of decisions made by the Court of Appeal and Supreme Court. Both courts may depart from  ECJ decisions (made pre 1 January 2021) if it “seems right to do so”. This extends to ECJ decisions that have already impacted UK law. This is particularly key in the three Supreme Court Decisions due in 2021 concerning holiday pay; Harpur Trust v Brazel – leave entitlement to part-year workers; Flowers and others v East of England Ambulance Services – holiday pay to include voluntary overtime; and Chief Constable of the Police Service NI v Agnew – a series of holiday pay deductions broken by a three-month gap. We will see whether our higher courts have the appetite to overturn ECJ decisions; under the Agreement, they will of course, only be permitted to do so if their decision does not affect trade or investment.

Actions to take:

• Ensure you are signed up to our updates for news of the Supreme Court’s decisions on these three key cases.

For more information

For further information in relation to any of the above, please contact your relevant ACS contact or Anna Dabek.

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