Brexit: employment update

30 March, 2017
by: Cripps Pemberton Greenish

Following the royal assent of the European (Notification of Withdrawal) Bill (the ‘Brexit Bill’) Theresa May has confirmed she will be invoking Article 50 on 29 March 2017. Although questions still remain as to exactly what form our exit from the European Union will take, this is an opportune time to take stock and review what recent developments there have been in the employment law sphere.


Statistics – the whole picture?

Figures released by the Office for National Statistics show that in the three months to January 2017 the UK unemployment rate was down to 4.7% (it hasn’t been lower since 1975) and average weekly earnings had increased by 2.2%. On that basis, the labour market is looking buoyant for now.

However, such statistics may not show the full picture.

There are many people working under zero-hours contracts, and although they are employed, in reality they may be working far less hours than a full-time employee.

Also, it has been reported that the uncertainty of Brexit has driven companies to engage self- employed contractors rather than employees – self-employed individuals have substantially less rights than employees, such as no unfair dismissal protection, and may not appear on the balance sheet in the same way – and that not only has the demand for self-employed contractors gone up, but the fees companies are willing to pay them have increased as well.


Worker status- the plot thickens

Although, suggesting this is due to Brexit could be misleading. The trend for companies engaging individuals as self-employed contractors has received plenty of recent media attention but this was on the increase well before the Brexit vote, reflecting the burgeoning ‘gig economy’. We also note, that this practice may be on the decline following several high-profile court decisions.


New destination for employment status

Irrespective of the above, back in January both HSBC and UBS indicated they may move staff out of London when Brexit comes into effect and a report commissioned by TheCityUK estimates that up to 75,000 jobs in Britain could disappear. It’s not just the financial services industry that could be hit, a survey of EU nationals working in the NHS undertaken by Channel 4’s Dispatches found that 66% were worried about their careers in the UK.


EU workers in the UK

The status of the 2.24m EU nationals already living and working in the UK (source: Office for National Statistics) has been a hot topic recently.

The House of Lords proposed an amendment to the Brexit Bill which would have guaranteed the rights of those already resident in the UK; however, it was rejected by the Commons after the government argued that it can only make such a guarantee if a reciprocal agreement is reached with the other EU member states. The government has made it clear that it hopes to reach such an agreement ‘at the earliest opportunity.’

How the government intends to control immigration beyond that is not yet clear.  It has rejected the points based system favoured in Australia, and is reportedly exploring the option of introducing work permits.  

A concern for some businesses going forward has been the retention and recruitment of ‘talent.’ Somewhat reassuringly in its Brexit White Paper, published in February, the government said that it would encourage ‘the brightest and best to come to this country’ and is committed to consulting businesses and communities on the options.   


Employee rights

It remains too early to say what impact the UK’s departure from the EU will have on specific employment laws. In the White Paper, the government pointed out that UK law already goes further than EU requirements in some areas, for example statutory annual leave entitlement and maternity leave.  Please read our initial Employment Brexit Blog here

Encouragingly the White Paper largely re-iterates the positive comments regarding worker rights made by Theresa May at the Conservative Party Conference in October, namely that the government shall ‘continue to protect and enhance workers’ rights’ and that it is ‘committed to maintaining our status as a global leader on workers’ rights’.  To that end, an independent review of employment practices was launched on 1 October 2016 (full report, Employment Practices in the Modern Economy).  The panel is considering how employment practices need to change in order to keep pace with modern business models.  


What now?

It is important to remember that there have been no immediate changes to UK employment law. Don’t treat EU nationals any differently to their colleagues and don’t allow potential changes in EU nationals’ immigration status to influence your recruitment practices or redundancy processes, as to do so could amount to discrimination.    

An important practical consideration is to maintain open communication with employees, in particular those that may be impacted by any immigration law changes, and to keep them updated if and when any changes occur.