Brexit and employment law: where are we now?

At the start of this year, Aleksandra Traczyk wrote about the implications of Brexit for employment law.  In this article, Aleksandra examines what, if anything has changed since then, and what employers need to be thinking about as the end of the transition period on 31 December 2020 approaches.

Update on Brexit and employment law

At the start of this year, there was a possibility that the transition period, during which the UK is treated as de facto member of the EU, may be extended beyond 31 December 2020.  The UK Government has now rejected the possibility of an extension and at 11pm on 31 December 2020 the UK will move to full third country status and the new UK/EU27 relationship will commence to the extent negotiated.

From 1 January 2021, the UK will no longer be required to transpose new EU law into domestic law and the jurisdiction of the Court of Justice of the EU (CJEU) will cease.  The existing body of EU-derived domestic legislation and any directly effective EU law and certain rights and obligations under treaties will be absorbed into UK law and the existing CJEU case law will remain relevant, until altered by the UK courts or legislature.

Any EU directives with the implementation period that falls after the end of the transition period, such as the Whistleblowing Directive, which has an implementation deadline of December 2021, or the Work-Life Balance and Transparent and Predictable Working Conditions Directives, both due to be implemented by August 2022, will not be required to be implemented by the UK.

At present, the UK and the EU 27 are negotiating the terms of their future relationship including in relation to trade taking into account the Political Declaration.  The Political Declaration, which is not legally binding on the UK, contains a level-playing field clause intended to maintain “employment standards at the current high levels provided by the existing common standards” which would likely impose some limits on how far the UK legislature can depart from EU law.

However, in the last few months the UK Government has made statements that common standards are no longer the aim in the negotiations. The EU has insisted on inclusion of level playing field provisions as part of a trade deal but it seems no deal at the end of December 2020 is now an ever closer possibility. Downing Street has recently hinted that the outcome of the upcoming US presidential election may influence its decision on whether or not to enter a trade deal with the EU.

In relation to the retained CJEU case law, just before the UK’s exit from the EU on 31 January 2020, a controversial provision was inserted into the Withdrawal Agreement Act (which enacted the Withdrawal Agreement) enabling Ministers to make regulations that would allow lower courts to depart from the retained CJEU case law after the end of the transition period.  This power was previously reserved only for the Supreme Court.

The UK Government’s consultation on this issue ended on 13 August 2020. On 15 October 2020, it confirmed its intention to extend the power to depart from retained CJEU case law to the Court of Appeal and other appellate courts.  It has stated that expanding the power to depart from retained CJEU case law to the relevant courts will mitigate the risk that retained EU law “remains tied to an interpretation from the [CJEU]”. This will provoke a faster speed of change since the appellate courts will not have to wait for the Supreme Court rulings before following suit.

What do employers need to be thinking about now?

In terms of changes to the employment law landscape, from 1 January 2021 any legislative change is unlikely to come immediately and the scope of any deregulation may be limited by level playing field provisions included as part of any trade deal with the EU.  The changes to retained CJEU case law are also likely to take time since cases will first need to reach the appellate court level for any departure to happen.  From an immigration perspective, the changes are going to be more immediate as on 1 January 2021 the new points based system will be implemented for new arrivals from the EU, EEA and Switzerland.

There are a number of things that employers can do to prepare which include:

1. Employers should conduct a review of their workforce. If they wish to employ anyone arriving from the EU after 1 January 2021, they will need to be a Home Office licenced sponsor and should apply for a sponsor licence as soon as possible. Any EU, EEA or Swiss citizen arriving before or on 31 December 2020 will be subject to the old immigration rules and able to apply for settled status under the EU Settlement Scheme until 30 June 2021.
2. Employers should continue to check any job applicant’s right to work in the UK in the same way as now until 30 June 2021 and have a duty not to discriminate against EU, EEA or Swiss citizens by requiring them to show their status under the EU Settlement Scheme until after 30 June 2021.
3. Those employers who transfer personal data outside the UK (which from the EU and data protection perspective on 1 January 2021 will become “a third country”) should review the adequacy of their organisation’s data processes and protections in place.
4. Employers should conduct a review of contracts of employment in relation to post-termination restrictions and references to geographical limitation (i.e. non-compete clauses that refer to “throughout the EU”).
5. Employers with an international workforce should examine whether they wish to retain existing works council agreements, both domestic and European and consider any impact on its UK workers who are temporarily posted abroad.