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Education briefing - Beyond Brexit: employment rights and the UK-EU Trade Agreement

  • United Kingdom
  • Education - Briefings

07-01-2021

At 11pm on 31 December, the Brexit transition period ended and the UK, in the Government’s words, “recovered its national independence”.

In the immediate aftermath of 31 December, legal continuity is provided for by preserving EU-derived employment law applicable in the UK within the UK’s domestic legal framework. What happens to these retained laws, and the UK Government’s ability to depart from EU employment law in the future (should it wish to – see below), forms part of the UK-EU Trade and Cooperation Agreement agreed before Christmas.

Now that the dust is settling on the Agreement, we highlight below five key points for HR professionals.

1. Which employment rights?

The Agreement addresses the broad sweep of employment law and also includes occupational health and safety. For example, it covers law and standards relating to information and consultation rights, fair working conditions and employment standards as well as fundamental rights at work.

2. Can the UK deviate from EU employment rights?

Yes. The Agreement confirms the rights of both the EU and the UK to set their own employment laws and to modify them as they see fit (subject to international commitments such as the UK’s existing membership of the European Convention on Human Rights and the Agreement itself – see below).

3. Can the UK weaken or reduce employment rights currently in place?

Yes. However, the Agreement provides that such a reduction should not affect trade or investment between the EU and UK (if, for example, the UK gained a competitive advantage over the EU by weakening redundancy rights).

Interestingly, the Agreement considers two angles when assessing any reduction by either party in employment rights: whether the UK (or EU) has weakened employment law through changes to law and standards; and whether there has been a failure to effectively enforce those laws and standards. This will draw attention to the work of HMRC, HSE, Employment Tribunals and other enforcement bodies, including timely access, their resourcing and the effectiveness of sanctions, as well as the Government’s plans for a Single Enforcement Body.

Even where a reduction in employment rights may have occurred, the Agreement’s non-regression clause is only triggered where it impacts trade and investment between the UK and EU. As such, minor or piecemeal employment changes, such as to the accrual and calculation of holiday pay, may not pass that threshold. Indeed, it is currently unclear what degree of reduction in employment rights might be deemed to “impact on trade and investment” between the parties.

4. Must the UK keep pace with new EU employment rights?

No. The Agreement states that both parties shall “continue to strive to increase their respective labour and social levels of protection”. However, this wording is more aspirational, than enforceable, in practice.

5. How will disputes under the Agreement be settled?

Disputes over the Agreement’s application to employment rights and standards are subject to a process which escalates from dialogue and consultation, to submissions to a panel of experts and, ultimately, to the possibility of either the UK or EU taking strictly proportionate and time-limited “rebalancing” (retaliatory) measures.

UK-EU Trade Agreement: employment rights - practical implications

It should be remembered that the Agreement frames our future relationship with the EU. Other EU-UK agreements and domestic legislation provide continuity of pre-existing EU derived employment law to ensure legal certainty and continuity. This EU-derived employment law will continue to apply indefinitely, unless and until the Government is minded to exercise its new freedoms outlined in the Agreement above. Currently, it has not expressed an intention to do so.

Therefore, we do not expect any immediate or significant reduction in UK employment law arising from the Agreement given that the Government committed to strengthening workers’ rights, such as new rights for casual workers and working parents, in their 2019 manifesto. The demands of the pandemic may also limit the Government’s scope to bring forward new employment legislation.

Instead, institutions should be aware of the possibility for creeping change in employment law in the future, such as tweaks to legislation and a slow divergence in case law (reflecting the Supreme Court and Court of Appeals’ power to deviate from EU-derived case law). We may also see new interest in the enforcement of UK employment rights, including whether it is sufficiently effective within the terms of the Agreement.