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Impact of Brexit on Employment

  • Ireland
  • General

07-02-2020

The main areas of employment which Brexit is likely to affect include: 

1. Restriction on free movement of workers;
2. Divergence in Employment Laws between the UK and Ireland;
3. Recognition of Professional Qualifications; and
4. Transfers of Employment Data.

Restriction on free movement of workers

The most significant implication of Brexit from an employment perspective will undoubtedly be its effect on the free movement of workers.

On 31 January 2020, the UK officially left the EU after the Withdrawal Agreement, concluded between the EU and the UK on 17 October 2019, was fully ratified. The UK is now in the so-called transition period, which is due to last until 31 December 2020 (although this may be extended once by up to one or two years), during which EU and the UK will attempt to agree the terms of their future relationship. EU Law will continue to apply to and in the UK during the transition period, and EU and UK citizens will continue to enjoy full freedom of movement during this time. 

The Withdrawal Agreement guarantees that EU nationals residing in the UK, and UK nationals residing in any EU member state before the expiry of the transition period, in exercise of their free movement rights, will retain their residency rights after the transition period has ended. EU nationals living in the UK may apply for the EU Settlement Scheme to allow them to continue living and working in the UK after the transition period. 

After the transition period, free movement will no longer apply. The UK and the EU have indicated that they intend to introduce visa free travel for short-term visits. However, EU nationals who intend moving to the UK to work, may require employment permits and visas, and vice versa.

Ireland, however, enjoys a separate status to other EU member states due to the existence of the Common Travel Area (the “CTA”).

The CTA, which dates back to 1922 and therefore predates the European Union, allows Irish and UK citizens to travel freely between and reside in either jurisdiction, as well as giving them the right to work, including on a self-employed basis, without the need to obtain permission. The CTA also confers associated rights of access to education, social protection, health care and social housing, and the right to vote in certain elections.

On 8 May 2019 Ireland and the UK entered into a Memorandum of Understanding reaffirming their shared commitment to the protection of the CTA and the reciprocal rights and privileges which it confers. The Memorandum notes the UK and Ireland’s commitment to taking any necessary steps to give effect to these rights, including any legislative steps and bilateral agreements required to give effect to the CTA arrangements.

The Withdrawal Agreement specifically acknowledges the CTA and provides that UK and Ireland may “continue to make arrangements between themselves relating to the movement of persons between their territories (the "Common Travel Area")”.

While the CTA guarantees that UK and Irish nationals will be able to work in their respective jurisdictions without the need to obtain an employment permit, it does not remove the obligation on employer’s to comply with the 50:50 rule under the Employment Permits Act 2006, as amended. Employers of non-EEA nationals in Ireland will be very familiar with the fact that at least 50% of their workforce must be EEA or Swiss nationals at the time of applying for an employment permit or its renewal.

In its current format, the 50:50 rule would mean that following the transition period UK national employees could no longer be counted towards the minimum 50% EEA national quota, and instead would be counted among non-EEA national employees, meaning previously compliant employers could find themselves very much non-complaint and therefore unable to apply for new or renewal permits.

Thankfully, legislation is being introduced which will address this issue, namely the Employment Permits Consolidation and Amendment Bill 2019, which, when enacted, will amend the 50:50 rule to include UK nationals for the purposes compliance with the 50:50 rule.

Divergence in Employment Laws between the UK and Ireland

Employment laws in the UK are currently in line with overarching EU Directives and case-law and, accordingly, there is significant overlap between the employment laws in Ireland and in the UK.

Employers who have operations across Ireland and the UK often seek to align, insofar as is possible, their handbooks, contracts, policies and procedures to ensure consistency across jurisdiction.

At the end of the transition period, it is unlikely that the UK will be required to adhere to EU laws, making it likely that divergences in employment law will occur over time, particularly as the UK ceases to adopt changes required by EU Law.

Of particular concern is the possibility that the UK could change its laws with regard to the Transfer of Undertakings (“TUPE”). If the obligations on transferors and transferees were changed following Brexit, for example the obligation on a transferee to take on the employees of a transferring businesses, the result could be that a UK transferee could refuse to take on employees, meaning the transferor would have option but to redeploy or make the affected employees redundant.

Recognition of Professional Qualifications

The Directive on Recognition of Professional Qualifications (Directive 2005/36/EC) allows EEA nationals to have their professional qualifications recognised in an EEA state other than the one in which the qualification was obtained. The Withdrawal Agreement provides that professional qualifications of UK and EU citizens which are recognised by a host member state (ie a state other than the one in which they obtained their qualifications) prior to the end of the transition period, will continue to be so recognised in that state after the transition period. For those seeking to have their qualifications recognised after the transition period there is no such guarantee. 

The Memorandum of Understanding concerning the CTA includes a commitment on the part of the UK and Ireland to ensuring that the continued mutual recognition of qualifications, including professional qualifications, as an essential facilitator of the right to work.

Transfers of Employment Data

A transfer of data to the UK post-Brexit is expected to constitute a transfer of data outside of the EU. Accordingly, employers transferring personal employee data to the UK after the transition period will need to ensure adequate safeguards are put in place to protect the transferred data. 

For further information please contact

Joanne Hyde, Partner and Head of Employment and Labour Law - JoanneHyde@eversheds-sutherland.ie

Maria Gallagher, Senior Associate, Employment Law - MariaGallagher@eversheds-sutherland.ie

This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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