Brexit Institute News

Continuity and Change: The Impact of Brexit on UK Employment Law

Niall O’Connor (University of Essex)

There is no doubt that the EU has become an important source of employment rights in the UK. The Union has already exercised its legislative competence in fields as diverse as working time, business transfers and collective redundancies. The protection granted in this legislation is often reinforced by fundamental employment rights found within the EU Charter of Fundamental Rights. For example, article 31(2) of the Charter, which provides for the right to paid annual leave, has been used by the Court of Justice of the EU to reinforce its purposive, employee-friendly reading of the Working Time Directive (WTD).

As an area of shared competence between the EU and its Member States, it is unsurprising that key employment law protections are also found entirely within domestic law. Important sources of employment rights including legislation governing the minimum wage and unfair dismissal operate entirely independently of EU law and will not be directly affected by Brexit.
In some areas, the UK has, in fact, over-implemented its EU law requirements in domestic legislation. For example, the Working Time Regulations (WTR) 1998, which implement the WTD into domestic law provide for 5.6 weeks of paid annual leave, thereby going beyond the minimum four weeks provided for in EU law.

At least in the short term, the protection found in both domestic and EU employment law is unlikely to be eroded. This continuity is provided for in the European Union (Withdrawal) Act 2018 (as amended), which creates a new category of domestic law known as ‘retained EU law’. Section 2(1) of the Act ensures the continued applicability of EU-derived domestic employment legislation in the UK once the transition period has ended on 31 December 2020. This category includes any domestic legislation implementing EU employment rights within the UK, such as the above-mentioned regulations governing working time. Section 3 of the Act guarantees the continued preservation of ‘direct’ EU legislation which does not require national implementation, such as EU regulations.
Also protected by Section 4 of the Act are certain rights derived from the EU treaties as well as any directly effective rights contained in directives, as recognised by the courts before the end of the transition period. Although directives will not, in and of themselves, form part of retained EU law, key provisions of directives in the employment field have already been recognised by the CJEU as having direct effect and are therefore likely to be caught by Section 4. An example of such a provision is Article 7 WTD, which provides for a right to paid annual leave.

Excluded from retained EU law and thereby constituting a clear break with the continuity provided for in the Act is Section 5(4) which states that the Charter will no longer form part of domestic law post-Brexit. The absence of the Charter is somewhat mitigated by the recognition in Section 5(5) that fundamental rights that exist as general principles independently of the Charter are preserved. In the past, the CJEU has referred to certain pieces of EU legislation as being no more than a mere expression of a pre-existing general principle, for example the principle of non-discrimination. It remains unclear precisely which EU employment rights may also be classed as general principles, but in any case, the Withdrawal Act provides that general principles cannot provide a right of action.

Overall, then, the new category of retained EU law will continue to enjoy a (more limited) form of supremacy under Section 5(2) in the ‘interpretation, disapplication or quashing of any enactment or rule of law passed or made before exit day’. In practice, this means that retained EU law will prevail over domestic law that existed at the end of the transition period if there is a conflict between the two. In addition, the domestic courts will be required to interpret retained EU case law in line with CJEU decisions delivered prior to the end of the transition. It should be noted here that the Charter is increasingly influential in the interpretation of EU employment legislation, notably the WTD. Unpicking the influence of the Charter post-transition is likely to be a difficult task, thereby providing a further measure of continuity even if the Charter’s precise constitutional status remains in doubt.

The task of departing from retained case law will fall to the UK Supreme Court (and the Scottish High Court of Justiciary), both of which will have the power to diverge from existing EU case law where they consider it right to do so, although domestic courts may continue to have regard to post-transition case law where this is appropriate. The Government has recently launched a consultation on whether to allow lower courts to diverge from retained EU case law. This power has the potential to be significant in areas where there has previously been conflict between domestic and EU employment law, for example in the context of paid annual leave.

Of course, none of the continuity contained in the Withdrawal Act can prevent future legislative changes to UK employment law, including changes to retained EU law. In reality, this is likely to be a slow process and there may be a political cost to any weakening of existing employment rights. It should be noted, however, that the Government has already watered down previous commitments to protecting workers’ rights, with the European Union (Withdrawal Agreement) Act 2020 no longer containing any provision dealing with the protection of EU-derived employment rights, with their protection being left to a promised Employment Bill. The non-binding Political Declaration does, however, reiterate the determination of both parties to ‘safeguard’ workers’ rights.

While it is important to recognise that the EU has not always been a bastion for the protection of social rights, there is a real risk that workers’ rights will be watered down in any Brexit-driven deregulatory thrust, with commitments to a level playing field remaining a key sticking point in the UK-EU trade negotiations.

The views expressed in this article reflect the position of the author and not necessarily the one of the Brexit Institute Blog

Niall O’Connor is a Lecturer in Employment Law at the University of Essex

Image credit: Pixabay

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