The impact of Brexit on employment and labour in the UK

To say that Brexit was a lengthy and excruciating process would be an understatement. This is my third KeyNote on the impact of Brexit on UK employment and labour since 2017!

The aim of the UK-EU Trade and Cooperation Agreement[1] (TCA) issued just before Christmas 2020, was to bring some certainty to the rules of trade and business between the UK and EU going forward. The TCA appears to have created much more certainty than existed before, but much uncertainty still remains in many areas including in the area of employment and labour (in the EU called Labour and Social Policy).

The TCA is a hefty document consisting of some 1,246 pages and the accompanying UK-EU Trade and Cooperation Agreement – Summary document a mere 34 pages. For those with an appetite and interest in the detail coupled with, perhaps, a touch of insomnia, these two documents can be found here.

As I mentioned in my last KeyNote, Brexit – Employment and Labour Implications (January 2020), since joining the EU in 1973 a considerable number of EU-derived workers’ rights have become an integral part of UK law. Below is an alphabetical list of the common names of the principal EU laws implemented into UK law:

Agency Workers Directive
Business Transfers Directive or Acquired Rights Directive (known in the UK by the acronym TUPE)
Collective Redundancies Directive
Contracts of Employment Directive
Data Protection Directive
Enforcement of Workers’ Rights Directive
Equality Directive
Equal Treatment Directive
European Works Councils Directive
Fixed-term Workers Directive
Framework Health and Safety Directive
General Data Protection Regulation
Information and Consultation of Employees Directive
Parental Leave Directive
Part-time Workers Directive
Posted Workers Directive
Pregnant Workers Directive
Racial Discrimination Directive
Trade Secrets Directive
Working Time Directive
Young Workers Directive

Many of these laws have become an accepted part of UK employment law and HR practice and, I believe, are unlikely to be significantly changed in the near future.

However, the directives shown in bold above, have always been an issue for conservative UK governments and UK businesses were strenuously resisted from the outset with considerable and protracted debate and argument within the EU before they became EU laws and even after then, in a few instances, requiring EU enforcement proceedings or the threat of such proceedings.

In my last KeyNote and right up until the TCA, I and many others involved in the employment and HR area believed that going forward, the UK legislation which implemented the above directives (in bold) would, in the relatively near future and subject to parliamentary time, be revised and parts removed or tweaked to make them more acceptable to UK business.

This, however, is no longer my view because of the TCA.

This change of opinion is related to one of the highly contentious part of the TCA negotiations, argued right up until the end, in connection with there being the need for a “level playing field” in certain areas (including labour and social policy) between the UK and the EU. It appears that the EU moved away from its firm and ambitious position during the negotiations demanding that one of the costs for the UK being allowed tariff and quota free trade within the EU was for the UK to be legally required to maintain equivalent legislation systems to the EU’s in some areas. This would include employment and labour law. Essentially, the EU’s fear was that the UK would lower its employment and labour regulations and also in other areas, to create what the press dubbed a ‘Singapore-on-Thames’,  which would, as a less regulated jurisdiction, unfairly attract business that might otherwise have been attracted to the EU.

Like much in the TCA, there remains much more detail to be thrashed out over the coming years  but, in order to reach a deal in this area, the parties finally agreed as a compromise to the TCA, Part Two: Heading One: Title XI: Level playing field for open and fair competition and sustainable development.

Title XI means that the system now agreed will enable either side, subject to arbitration, to take counter measures (this could include tariffs) if they are being damaged by measures taken by the other side in subsidy policy, labour and social policy, or climate and environment policy. Moreover, if such measures are used too frequently, either side can trigger a review of these provisions and the trade aspects more broadly, aiming to end with a different balance of rights and obligations. The last sentence sounds like Westminster–Brussels political language to mean a renegotiation of these parts of the TCA.

Chapter 6 of Title XI goes on to provide for reciprocal commitments not to reduce the level of protection for workers or fail to enforce employment rights in a manner that has an effect on trade. This provision is not subject to the TCA’s main dispute resolution, but will be governed by a bespoke Panel of Experts procedure.

While any TCA arbitration process and the Panel of Experts procedure will undoubtedly involve a lengthy process, I nevertheless expect that the UK government will now be far more cautious before making any changes to UK employment and labour laws (both home-grown and EU-derived) which could be seen to reduce the level of protection for workers or fail to enforce employment rights in a manner that will have an effect on trade.

As a result of the above provisions of the TCA, I therefore would not expect, as I had previously, that there will be many significant changes to the above listed extensive EU employment and labour laws which form part of UK law. Furthermore, the UK government when introducing new UK employment and labour laws will also need to be cognizant of the above TCA restrictions.

If you would like to discuss more about the topic, please contact Malcolm Mason using the contact details below.

[1] Full title: Trade and Cooperation Agreement between the European Union and the European Atomic Energy Community, of the one part, and the United Kingdom of Great Britain and Northern Ireland, of the other part.