July Hello and welcome to this month s edition of HR Focus

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1 July 2016 Hello and welcome to this month s edition of HR Focus At a recent seminar, a delegate asked whether Brexit meant that the UK would move to a US style employment-atwill model without unfair dismissal rights. The question illustrates the uncertainty which Brexit has raised for HR professionals and those dealing with employment issues. The answer to that question is no; unfair dismissal is firmly entrenched in UK law and is not EU based or dependent on EU law. Whilst Brexit might ultimately provide a UK Government with the ability to legislate about employment without restriction (and that is currently far from certain as Louise Singh explains in her article below), there does not appear to be any political will to do away with all UK employment law. What Brexit does do is raise some uncertainty about certain HR areas where European employment law is key, or where EU law is the very reason why the UK introduced a particular law in the first place. Whilst we cannot resolve that uncertainty for you, we have endeavoured in this month s HR Focus to look in detail at the key areas of employment law upon which Brexit may impact and outline what might change, and what we think is likely to happen. We also look at the technicalities of what Brexit could mean for UK employment law, and look at the increase in harassment which appears to have accompanied Brexit, confirming what you should do. We hope you find it useful, but if you do have any questions about how this complex area may impact upon your organisation or the decisions you are being asked to reach, please do get in touch. The members of the Weightmans employment, pensions and immigration team will be happy to help. TUPE The TUPE Regulations were introduced in the UK in the 1980s to comply with EU law. So will a post-brexit UK Government seize the chance to scrap them? Michael Ryley, London Partner, author and expert on TUPE, shares his views. Immigration Changes to UK immigration laws are likely to be one of the most significant consequences of Brexit for UK employers. Glasgow Partner and Immigration expert Elaine McIlroy recaps the current position and outlines the options going forward.

2 Discrimination Much of the protection against discrimination enjoyed by EU employees and workers derives from EU law. So will Brexit herald a stripping back of rights? London Partner Paul McFarlane explains how equality law has been shaped by the UK s relationship with Europe and considers what the future might hold. Working time, annual leave and holiday pay UK law on working time, annual leave and holiday pay is heavily shaped by EU influence. Leeds Partner Ben Daniel reviews this complex area of law and considers where it s heading post-brexit. Family friendly working and parental leave What will Brexit mean for parents and other employees seeking a balanced working life? The UK has traditionally been a trailblazer in supporting family friendly working. Is this likely to change? National Head of HR Rely, Andrew Forrest explains. Brexit: what will happen to UK Employment Law generally? The future of UK employment law is uncertain post-brexit. This much we know. But what will actually happen to the legislation on our statute books and the case-law currently relied on by UK Judges when the country exits the EU? Louise Singh, Professional Support Lawyer, examines the possibilities. The problem of Brexit harassment. Since the outcome of the referendum we have seen an increase in reports of race-related harassment at work, often with a Brexit link. In a version of an article which first appeared in Manufacturing Global, Manchester Partner Phil Allen explains the risk that arises and how best to tackle allegations of harassment. Don t forget to follow the Weightmans Employment Pensions and Immigration Team on social Weightmans Employment If you have any questions, comments or suggestions please do not hesitate to get in touch.

3 TUPE If ever there was an example of domestic law that the UK introduced reluctantly for the sole purpose of compliance with its obligations as a member of the EU, it is TUPE. A troubled history When the original Transfer of Undertakings (Protection of Employment) Regulations 1981 were introduced to a sparsely populated chamber of the House of Commons, the sponsoring minister recommended them with a remarkable lack of enthusiasm. The principles they embraced were alien to local tradition. For example, the principle that an employee may be moved without his consent from one employer to another had been likened to slavery by the House of Lords in a landmark judgment. Nothing in TUPE s subsequent 34 year history has generated any greater level of enthusiasm. The Regulations have been a minefield of uncertainty, the product of poor drafting and inconsistent decisions in the courts and tribunals. The strong focus on employee interests has arguably created wider commercial unfairness. Greater levels of risk have been introduced into procurement processes. Farewell TUPE? So will a post-brexit UK Government seize the chance to sweep TUPE from the statute books with glee? Well, maybe but this looks unlikely. Leaving aside the fact that we have yet to trigger Article 50 and actually leave the EU; leaving aside the question of whether the price of participation in the common market will be continued adherence to EU labour laws (and TUPE variants are alive and well in Norway and Switzerland, for example); and leaving aside the huge amount of parliamentary business that will be generated by Brexit, thereby slowing down the pace of change, there is a certain political attraction to retaining TUPE. TUPE promotes dialogue with employees at times of business evolution and preserves jobs, so politicians will wish to think carefully before making a change. Furthermore, change itself is unattractive because the goalposts are moved mid term for service providers who are in the middle of delivering contracts and the prospect of change destabilises procurement processes. Moreover, the UK has chosen not only to incorporate TUPE into domestic law but to go beyond the requirements of the Directive; the 2006 revisions and the concept of service provision changes created a wider scope for TUPE than exists in the rest of Europe. Policy has extended the reach of TUPE further, in that public sector employees transferring into the private sector enjoy gold plating. This was a political expedient to facilitate public sector outsourcing and it would doubtless be very difficult to reverse. There is a clear attraction to having a framework for the transfer of staff where outsourcing occurs. Better the devil you know? TUPE was conceived before the modern outsourcing industry had developed. It was never well suited to the circumstances it came to regulate. But things have settled down. The EU has run out of reforming steam in this area and changes in the UK have been limited to clarification and streamlining rather than policy shifts. If TUPE was to be abandoned, it is difficult to imagine that service provision changes and business transfers could be left unregulated employees would have no right to be consulted and jobs would be lost. Wage levels could fall as a consequence. On that basis, TUPE benefits from better the devil you know thinking.

4 What might be tempting would be to remodel and to refine TUPE free from the need to adhere to the requirements of the Directive. Yet the sheer weight of parliamentary business is likely to be such that these nice to haves will be well down the queue. It is surprising to say it, but TUPE has become part of the landscape. Those who prophesied, back in 1980, that TUPE would have a drastic effect on British business have been proved right. TUPE has become the framework for public to private transfers and for outsourcing generally, as well as in its core rationale of business transfers. An unregulated environment is likely to cause undue disruption and those who predict the demise of TUPE look to be well wide of the mark. Michael Ryley (michael.ryley@weightmans.com) is a Partner in the Employment, Pensions and Immigration Team and is based in London. If this article raises any issues for your business please do not hesitate to get in touch with Michael or speak to your usual Weightmans contact. Please also see Louise Singh s article on what happens to employment law generally for an analysis of what may happen technically to TUPE on Brexit.

5 Immigration Changes to UK immigration laws are likely to be one of the most significant consequences of Brexit for UK employers especially those who heavily rely on EU workers. There are currently around 3 million EU workers living and working in the UK with a substantial number of those working in London. At this early stage, we do not know exactly what immigration changes will result from Brexit and when they will take effect. However, we outline below some of the possible options. Current position For UK employers it is currently very straightforward to employ EU workers and their family members. The ability to live, work and study anywhere within the EU has been an integral part of EU membership for decades, giving UK employers access to a broad and flexible labour market. Such employees do not need any sort of sponsorship or work permit. EEA workers and their family members have been able to live and work in the UK by exercising their treaty rights with relative ease. They can usually apply for permanent residence in the UK after a period of 5 years. An employer s only obligation is to carry out right to work checks on such staff. For multinational employers with sites across Europe, transferring staff throughout Europe has been very simple to date with little planning and no paperwork needed in many cases. Future position: some options The position of EU workers following the UK s exit from the EU is uncertain. It is clear that the UK will need to come to some sort of economic agreement with the EU for trade purposes but at present it is unclear what that agreement will involve. On the one hand European leaders have been asserting that access to the single market will be conditional upon the UK continuing to recognise freedom of movement of workers. However, new Prime Minister Theresa May could still seek to negotiate a new agreement with the EU which does not recognise free movement of workers and which allows the UK to control EU migration. Experts on European law have indicated that if the UK seeks access to the EEA (allowing the UK access to the single market) it would be extremely unlikely that the UK could do this without recognising the principle of freedom of movement of workers. This is because any one of the existing 27 member states, the European Parliament and members of the European Free Trade Area each has the right to veto any agreement that does not recognise freedom of movement. So a deal on that basis would need to be unanimous (and is therefore unlikely). Options If the principle of freedom of movement is retained, there may be minimal impact for UK employers. However, as the Leave campaign was heavily focused on controlling immigration, there may be political pressure to avoid this outcome. If freedom of movement is not retained, then it is likely that the UK s current immigration rules will need to be completely revamped to take account of the needs of the UK economy post Brexit. Points-based immigration system Until now the points based immigration system has been restricted to skilled workers (graduate level or above) and a limited number of jobs which are on the shortage occupation list. Although Tier 3 of the points based system is

6 for low skilled workers, this Tier has never operated in any form since the points system commenced in This is because the UK labour market has not had a shortage of low skilled workers due to the considerable numbers of EU workers from the new EU accession countries who have been able to fill any gaps. That position would change if freedom of movement of EU workers is discontinued. The UK would be likely to need certain lower skilled workers so Tier 3 may be opened for this purpose. The current immigration cap would also need to be increased significantly to deal with the needs of UK employers. Sponsor Licences If the current points based immigration system is expanded this is likely to lead to an increased number of employers having to apply for Sponsor Licences. This is also likely to lead to increased costs, administration and complexity for employers in getting to grips with the new rules. Employers who want to have a Sponsor Licence will have to satisfy certain immigration compliance requirements and pay for a visa going forward. They are also likely to be more restrictions in terms of who they can recruit. Looking forward, it may become more critical than ever for employers to retain their Sponsor Licences as the number of sponsored workers may be vastly increased if the principal of freedom of movement does not continue. It is not yet clear when we will know more about what the new immigration position will look like. We will update you when that becomes clearer. Immediate issues regarding EU workers An immediate issue for some UK employers is dealing with the concerns and uncertainty of EU workers who are already living in the UK or who are due to come to the UK shortly. We have been told that Article 50 of the Lisbon Treaty (which will initiate the UK s withdrawal from the EU) is unlikely to be triggered until the Autumn meaning formal negotiations are unlikely to begin for several months. Negotiations may take some time to progress thereafter and may take 2 years (or longer) to be finalised. Calls for emergency legislation to be passed to give certainty to EU workers about their right to remain in the UK have been given short shrift so far by the Government. Therefore it appears that EU workers already in the UK will have to wait for some time to have clarity about their situation. Although UK employers can seek to give some assurances to these workers, it is not possible to provide complete assurances beyond that which the Government will confirm. We would expect that for those EU workers already in the UK, some protection of their positon will be negotiated to allow them to stay. However, it seems likely that the Government will want any agreement that is reached to be reciprocal (in that the UK will seek to negotiate certain protections for UK citizens working in the EU). We do not yet know what approach other member states may take in such negotiations. We also do not know at present what cut off date may become relevant if EU workers are given certain rights and protections. It is likely that the UK would want to avoid an influx of workers from the EU and therefore a cut off date prior to the UK s exit from the EU seems likely. Elaine McIlroy (elaine.mcilroy@weightmans.com) is a Partner in the Employment, Pensions and Immigration Team and is based in Glasgow. If you have any concerns regarding your business immigration arrangements post-brexit please do not hesitate to get in touch with Elaine or speak to your usual Weightmans contact.

7 Discrimination Brexit, theoretically at least, allows a Government to consider removing or modifying equality legislation currently in force in the UK. Wholesale repeal looks unlikely, especially given the UK s strong record of legislating against discrimination. Alternatively it is possible that the Government may consider making changes in discrete areas such as, the current protection afforded to agency workers or the remedies currently available under UK law by introducing a cap in relation to discrimination compensation. A pioneer of discrimination law At this point, it is worth having a short history lesson to explain how the UK has arrived at its current position in terms of discrimination legislation. Before the New Labour government of 1997, which implemented the EU Social Charter (more on this later), the UK had four pieces of discrimination legislation, namely: the Equal Pay Act 1970; the Sex Discrimination Act 1975; the Race Relations Act 1976; and the Disability Discrimination Act The UK was very much the pioneer in the EU when it came to discrimination legislation as it had legislation on race and disability discrimination well before the rest of the EU. The Maastricht Treaty and the EU Social Charter In 1991, the then twelve EU member states signed the Maastricht treaty. Prior to this treaty, the EU was solely concerned with having a single market. However, as a result of this treaty, it added two new areas justice and home affairs and a common foreign and security policy - and the so-called three pillars of the EU were established. Since then a fourth pillar, the controversial freedom of movement of people has been added. During the Maastricht treaty negotiations our then Prime Minister, John Major, famously (well for those of us of a certain age) negotiated the so called opt-out which meant that the UK was not required to introduce legislation dealing with the integration of employment and social issues under the so called Social Charter (which included a requirement for member states to comply with various employment related matters). However, in 1997, the New Labour Government decided to opt-in to the Social Charter. As a consequence, the UK was required to implement into UK law the Working Time Directive and regulations preventing discrimination against part-time workers and fixed term employees. More recently it also meant that the Government had to implement the Agency Workers Directive, which made it unlawful to discriminate against agency workers. The Equal Treatment Directive 2000 Prior to this Directive coming into force, the EU only had legislation covering sex discrimination and equal pay. This Directive also made it unlawful to discriminate because of sex, race, disability, religious or philosophical belief, sexual orientation and age ( the protected characteristics ). As a consequence, between 2003 and 2006, the UK introduced domestic regulations outlawing discrimination because of religious or philosophical belief, sexual orientation and age. The Equality Act 2010 There were so many different pieces of discrimination legislation in force in the UK, each with slightly differing wording (which also raised doubts about whether the UK had properly implemented the Equal Treatment Directive), it was felt legislation on the protected characteristics needed to be in one place. As a consequence, the Equality Act was passed.

8 Comment Nigel Farage stated last year to Trevor Phillips (the former Equality and Human Rights Commission chief) that we are colour-blind apparently playing down the importance of discrimination law (especially race discrimination law) in the UK. He went on to say that concern about race discrimination would probably have been valid 40 years ago but that is no longer the case. However, despite these remarks, there is unlikely to be any real appetite to repeal the Equality Act. The upsurge of race-related incidents in the immediate aftermath of the leave vote certainly suggests that the UK is not in a position to do away with discrimination law. A repeal of the Equality Act 2010 would be highly controversial and unlikely to have much, if any, cross party political support. In these very fast moving times however, who knows if this will remain the case! A cap on compensation? However, the Government may seek to introduce a cap on the amount of compensation in discrimination cases. The removal of a cap in discrimination cases dates back to the 1990s and a decision of the European Court of Justice Marshall v Southampton and South West Hampshire AHA where the ECJ held: Compensation had to be adequate in that it had to enable the loss and damage actually sustained as a result of a discriminatory dismissal to be made good in full in accordance with applicable national rules.. There have been mutterings from some in the Conservative Party for some time that they would like to impose a cap in discrimination cases, but were prevented from doing so by the ECJ. Such comments are probably fuelled by headlines showing some claimants being awarded multi-million pound pay-outs. However, these headlines are atypical. Average compensation awards made by Employment Tribunals in discrimination cases in 2014 ranged from 1,080 (religious discrimination claims) up to 23,478 (sex discrimination claims). In the broad scheme of things these are relatively modest amounts. Repeal of the Agency Workers Regulations? Brexit, once implemented, could mean that the UK would no longer have to comply with the Social Charter and so could, in theory, choose to dispense with regulations protecting atypical workers (see Louise Singh s article on what happens to employment law generally for more detail). The regulations making it unlawful to discriminate against part time workers and fixed term workers have proved to be relatively uncontroversial. There is therefore probably not much political appetite to change or repeal them. However, the same cannot be said about the Agency Workers Regulations. The CBI was not in favour of their introduction, stating 12 months later that one year on from the introduction of the regulations, the business verdict is that they are a drag on job creation. Accordingly, it is conceivable that these regulations could be in the firing line for repeal (or non-reimplementation) by a Government that wants to portray itself as pro-business. Conclusion As with all things Brexit, we have nothing concrete to work with at present. Once implemented, Brexit will give the Government scope to make changes to discrimination law.

9 Whether the Government will want to make such changes will be dependent upon political will for change. I suspect if there are any changes, they will not be anytime soon, not least because this Government is likely to have bigger fish to fry. Paul McFarlane, (paul.mcfarlane@weightmans.com) is a Partner in Weightmans LLP, Employment, Immigration and Pensions team based in its London office. He is also chair of the Employment Lawyers Association s Legislative & Policy Committee. If you have any questions please get in touch with Paul or speak to your usual Weightmans contact.

10 Working time, annual leave and holiday pay Various strands of our legislative framework are derived from EU Directives including, for example, the current statutory entitlement to paid annual leave. In this article we focus on this area and other issues relating to working time, and consider which employment rights, many of which are now viewed by Trade Unions and workers as fundamental, might be subject to change post-brexit. Annual leave The Working Time Regulations 1998 provide for 5.6 weeks annual leave entitlement, 1.6 weeks in excess of the four weeks paid annual leave derived from the EU Working Time Directive. Given the UK s gold-plating of the Directive, this aspect of the Working Time Regulations is unlikely to change, but that is not the end of the matter. Perhaps more likely are changes to the calculation of holiday pay, and also the treatment of accrual of annual leave, both of which have been and remain sources of frustration for employers, employees and lawyers alike. Following decided cases determined in Europe, which must currently be followed by our own judiciary, workers have the right to continue to accrue annual leave whilst on long-term sick leave. Similarly holiday pay must be calculated, in certain circumstances, with reference to any commission and overtime being included, rather than just basic pay. We look at each of these issues in more detail below. Holiday pay As previously stated, European legislation, in the form of the Directive, entitles employees to a minimum of four weeks per year paid holiday. However whilst the Directive states that leave should be paid, it does not specify the rate at which it should be paid. Under the UK Regulations, a worker is entitled to a week s pay for a week s leave, a seemingly simple basis which has proved anything but straightforward. In summary Bear Scotland Ltd and others v Fulton and others held that holiday pay calculated under the Directive (i.e. the four weeks) must be based on normal remuneration which in certain circumstances can include overtime. Further, Lock v British Gas held that commission payments need to be included in the calculation of holiday pay (when considered in the EAT, at the time of writing it is just being heard in the Court of Appeal). Both of these decisions were influenced by the European Court of Justice and were generally unwelcome to employers. Following Brexit, the Government is, in our view, likely to consider revisiting this issue and to seek to simplify the calculation of holiday pay. However, this is of course easier said than done and the recent authorities, if nothing else, emphasise the myriad of ways that workers receive pay. So, perhaps the simplistic adoption of a basic pay reference point may be unfair to many. What may be considered is the adoption of some form of 12 week average formula applying across the board, rather than employers having to consider which payments should or should not be included in their calculations. It is also possible that the UK Courts and Tribunals may get there first. If there is no obligation to apply the UK Regulations in accordance with European law post-brexit, some of the more employee-friendly interpretations of the UK Regulations and how they must operate will be vulnerable to challenge (Louise Singh s article on how employment law will work contains a more detailed explanation of the Brexit options for employment law, including a look at technically what happens post-brexit to statutory instruments introduced following EU Directives).

11 Annual leave and sick leave The purpose behind the Directive is to enable a worker to enjoy a period of relaxation and leisure, which is regarded as more difficult if one is absent due to sickness. In Stringer and others v HM Revenue & Customs, the European Court of Justice held that a worker on sick leave accrues annual leave under the Directive, despite not being at work even on a long-term basis, and that it is for member states to decide whether a worker can (not must ) take their annual leave during a period of sick leave. Further, at the end of a leave year, a worker on sick leave who has not taken annual leave because of sick leave must be allowed to carry it over and take it at a later date. When Stringer returned to the House of Lords after the ECJ decision, it held that European statutory holiday entitlement (i.e. four weeks) accrues during periods of sick leave, payments in lieu of untaken statutory holiday on termination are unaffected by sickness absence and the Working Time Regulations should be interpreted as allowing workers to take paid statutory holiday during periods of long-term sick leave (but cannot compel them to do so). In Pereda v Madrid Movilidad SA, the ECJ held that, where a worker's pre-arranged annual leave coincides with a period of sick leave, the worker must have the option to designate an alternative period for the exercise of the right to annual leave under the Directive, even if this falls after the end of the relevant leave year (i.e. carry-over of statutory holiday to the next leave year in certain circumstances). Similarly, the ECJ has held that a worker who becomes unfit for work during a period of statutory holiday must, under the Directive, be entitled to reschedule the period of planned leave that coincides with the period of unfitness for work (Asociación Nacional de Grandes Empresas de Distribución (ANGED) v Federación de Asociaciones Sindicales (FASGA) and others). Free of the constraints of the EU, Parliament or the Courts/Tribunals might wish to revisit the above issues and revert to a more simplified approach that limits the ability to accrue annual leave during periods of long-term sickness absence, as our own Court of Appeal previously set out in Commissioners of Inland Revenue v Ainsworth, that if a worker has no entitlement to take annual leave under regulation 13 because they are absent on sick leave, they are not entitled to payment on termination of employment under regulation Hour average working week Most workers average working time (including all overtime and time spent working for others) is restricted and must not exceed an average of 48 hours per week, although this limit can be opted-out of if the employer has "obtained the worker's agreement in writing" to perform work in excess of the limit. The Government may wish to remove the statutory cap of a 48-hour average working week which some employers view as too restrictive and inhibitive. Some commentators suggest that this is a foregone conclusion. However, in our view given the ability to opt-out which already exists, following Brexit, removal of the statutory maximum is less likely to be high on the Parliamentary agenda. Summary It is important to note that any rolling-back of workers rights must be considered in the context of the current, and future, political climate. For obvious reasons, any changes which would be unpopular with a large proportion of the voting public are unlikely to be pursued before a 2020 general election, and so it is probably safe to say that the current position (and the frustrations that go along with parts of it) is likely to remain for some time. However, it seems likely that we may see an attempt to ease the burden on employers in respect of holiday pay, annual leave and working time issues in the long-term by Government (that is if the UK Courts don t get there first).

12 Ben Daniel is a Partner in the Leeds Employment Pensions and Immigration Team and specialises in advising employers on complex issues relating to working time. If you would like further details about any of the issues discussed in this article please get in touch with Ben or speak to your usual Weightmans contact.

13 Family friendly working and parental leave Whilst a great deal of the UK s employment law has been derived from EU provisions for employment protection and equality in the workplace, it is incorrect to believe that the UK has been reluctant to buy into Directives, as the UK s family friendly laws and especially those on maternity and paternity leave, have in many ways extended beyond EU requirements. The UK s approach to family friendly policy over the last decade may be best summed up by the then Prime Minister Tony Blair s speech on childcare reforms (November 2004): A month ago I set out our aspiration to reform the welfare state to fit the needs of today's hard-working families. And I said that one of the most pressing new challenges is to support parents as they bring up young families and as they balance home life and work. Our approach is to give all families more help, whatever their choices, whether they work full time, part time or stay at home with their young children. Parental leave In the UK, the Work and Families Act 2006 extended maternity leave to 52 weeks, which is way in excess of the 14 weeks prescribed by European law. Additionally, it was the UK that determined to offer nine months of paid statutory maternity leave. The UK has improved provision for fathers in that new fathers (including adoptive parents) have the right to two weeks paid time off on the birth of a child. Additionally, with the introduction of Shared Parental Leave in 2015, the UK took a lead in looking after the interest of working parents. Flexible working Another area, in which the UK and not the EU has been proactive, is in promoting the right to work flexibly. The Employment Act 2002 introduced the right to request flexible working for those with parental or caring responsibilities and this was extended in 2014 to all employees with over 26 weeks service. This has enabled many to achieve an improved work life balance in terms of their caring responsibilities and enjoying leisure activities. The new extended right does not just benefit parents or younger employees but also enables older employees to balance their working lives. Whilst some may harbour concerns that UK maternity and paternity leave rights may erode post-brexit, it is unlikely that exit from the EU will result in the repeal of the many laws that protect parents. The right to Shared Parental leave was supported by both the coalition Government at the time and the Labour opposition. The same applies to the extended rights to request flexible working. Given the broad support for such measures, it is unlikely that that the political mind set will fundamentally change. It would also appear unlikely that larger employers would want to abandon existing family friendly policies. A commitment to family friendly policies may be seen as a good method of recruitment and retention. It is recognised and accepted that pay alone is not enough to keep employees motivated. However, one possibility post-brexit is the introduction of exemptions around family leave rights for small employers. Brexit is likely to mean unchartered trading conditions and a challenging period of uncertainty. Small businesses may potentially seek amendments to legislation, including family friendly measures, to ensure they remain resilient. Andrew Forrest (andrew.forrest@weightmans.com) National Head of HR Rely based in the Birmingham Employment, Pensions and Immigration Team and is national head of HR Rely, our fixed fee legal help and support service for

14 employers. If you have any questions please do not hesitate to contact Andrew or speak to your usual Weightmans contact. Brexit: what will happen to UK Employment Law? A significant proportion of the UK's employment law derives from the EU, including discrimination rights, collective consultation obligations, transfer of undertaking regulations, family leave, working time regulations and duties to agency workers. In theory, if there is a vote to leave, the UK Government could repeal all of this. However, in reality the Government is unlikely to take this step and it is far more probable that EU law will continue to exercise a significant influence on UK law even after a Brexit. Pre-existing rights Some EU employment laws merely subsumed protections that were already provided by existing UK law. It is not likely that the Government would want to reduce these protections. For example the Equal Pay Act 1970 which requires that men and women should receive equal pay for equal work, was enacted before the UK joined the European Economic Community. There is something of a chicken and egg argument here, as this legislation was enacted in anticipation of joining the EEC, but as the Act pre-dates membership it is unlikely to be vulnerable following Brexit. Similarly, as London Partner Paul McFarlane explains in his article this month, UK race and disability discrimination laws preceded EU anti-discrimination obligations. No pre-existing right Even if there is no pre-existing UK right, would the Government want to repeal employment protection? Much employment law, such as family leave, discrimination rights and even the right to paid holiday is regarded by both employers and employees as beneficial. Indeed, as Andrew Forrest explains this month, UK family leave rights go further than the EU requires. Equality rules in particular are now woven into the social fabric of working life in the UK. For example, the public sector equality duty comes from domestic law in England, Wales and Scotland, and requires public authorities to have due regard to the need to eliminate unlawful discrimination, advance equality of opportunity and foster good relations. It applied first in respect of race. The duty was then applied in respect of disability and then sex, and now applies to all protected characteristics except marriage and civil partnership. The process of extraction Extricating the UK from the influence of EU legislation following Brexit could prove to be a time-consuming task. Thankfully, it is not the case that all UK legislation derived from EU law will simply disappear in a puff of smoke. Depending on the manner in which EU law has been given effect, different actions will be required by the Government to retain or repeal employment legislation post-brexit. Acts of Parliament There are a number of significant aspects of EU employment legislation which have been implemented through primary domestic legislation (an Act of Parliament) in the UK. These include redundancy consultation requirements, equal pay requirements (see above) and equal treatment requirements (contained in the Equality Act 2010).

15 On the UK s exit from the EU, such primary legislation would remain in force unless repealed by the Government. An active decision to scrap the legislation would be required. Statutory Instruments However, a raft of other UK employment legislation has been introduced by secondary legislation, such as statutory instruments. Many statutory instruments are based on Acts of the UK Parliament. However, the power to make statutory instruments which directly implement many EU employment rules derives from the European Communities Act 1972 (the legislation which incorporates the provisions of EU Treaties into UK law). Legislation made by statutory instrument under that Act includes the Working Time Regulations and the Agency Worker Regulations. When the UK has exited the EU, the default position is likely to be that any statutory instruments made under the European Communities Act will automatically fall away (as it is likely that, as part of the exit process, all or part of the Act will be repealed). When Brexit occurs, the Government will need to consider carefully whether the secondary legislation should be retained. It is possible that a new Act could retain all such statutory instruments in force as an easy quick fix, which would avoid creating a legal vacuum and buy time to review such provisions. This involves an active decision to legislate. However, if a quick fix approach is not adopted, an active decision to specifically retain each individual item of secondary legislation would be required. This makes it less likely that such legislation will be kept on the statute books. The Trouble with TUPE In his article Michael Ryley separately explores what the Government is likely to do about TUPE. However, the fall back position for TUPE is unclear as the two complicated concepts above cross-over. The latest 2006 version of TUPE is based on both the European Communities Act and a power in the Employment Relations Act which enabled the Regulations to introduce the provisions which go beyond the minimum requirements of European law (such as those governing a service provision change). Theoretically the gold-plated UK law enabled elements might be contended to survive even if the EU elements are effectively automatically revoked but, as that seems nonsensical, we may just have to wait and see how it is proposed that the conundrum will be resolved. Differences in Scotland? The Scotland Act 1998 transferred to Scottish Ministers the power to make secondary legislation under the European Communities Act 1972, in relation to devolved matters. The Scottish Ministers would need to decide whether they wish to retain any such secondary legislation in the event that the European Communities Act is repealed. It would therefore be possible, following Brexit, for uneven protection to exist in different parts of the United Kingdom. What about EU case-law? Currently, the UK courts must interpret EU-derived law in accordance with ECJ decisions (and a body of UK case law has built up that applies these ECJ decisions).

16 However, on leaving the EU, the ECJ will no longer have jurisdiction over the UK courts and its future decisions will not be binding. It is unclear to what extent UK courts will continue to follow past ECJ decisions. It seems likely that the UK Courts will follow previously established precedents in order to preserve legal certainty. It is also possible that UK courts will continue to treat ECJ decisions (even future ones) as persuasive, even if not binding. This may however create a fertile ground for novel legal argument and therefore an additional degree of uncertainty for employers. The approach adopted will have a huge impact on the future direction of UK employment law because, as Leeds Partner Ben Daniel explains this month, some areas of UK employment law such as working time, annual leave and holiday pay rely heavily on a string of past EU case-law. What about future EU laws? UK exit from the EU may mean that any future equality and human rights protections coming from the EU are not binding in UK law. However this is not necessarily the case. This will depend upon the manner in which the UK continues to trade with the EU. It is likely that, prior to leaving the EU, the UK will negotiate a trade agreement with the EU. The existing models for trade agreements with the EU require an EU trading partner to comply with EU law (at least in the areas covered by the trade agreement). Therefore, leaving the EU and conducting trade through a new trading agreement, may require the UK to maintain comparable levels of employment protection to the rest of the EU. More details In this issue of HR Focus subject area experts from our Employment, Pensions and Immigration Team look at key aspects of employment law and consider the possible Post-Brexit future of each. As our writers conclude, changes to TUPE, discrimination, working time and annual leave, are entirely possible. However to summarise some other areas where there may be an impact: The Agency Worker Regulations would appear to be one of the areas of employment law which is ripe for being revoked on Brexit (as Paul McFarlane confirms in his article on discrimination), if the manner of the UK s arrangements with the EU in the future allow. The rules are not well liked in the UK and there is unlikely to be a business lobby for retention; Whilst fair dismissal for redundancy is a very UK specific context, the rules governing collective consultation on redundancy are EU based. It is entirely possible that a UK government might revoke or further reduce the collective consultation obligations on Brexit (if the manner of Brexit allows); and At present there are EU based regulations in place that, subject to certain conditions being met, allow UK resident employees who are sent to work in another country within the European Economic Area to continue paying UK NICs (so as to safeguard their pension and benefit rights) whilst also exempting them from having to pay contributions in the host state. The terms of the UK s withdrawal from the EU could potentially result in such provisions no longer applying which could in turn increase the costs of seconding UK employees to other EU member states (and vice versa) due to the need to account for overseas employer social security contributions. Louise Singh (louise.singh@weightmans.com) is a Professional Support Lawyer supporting the national Employment, Pensions and Immigration Team and is based in Liverpool.

17 The problem of Brexit harassment. Since Brexit we have seen a worrying increase in reports of race-related harassment occurring. It may be that this is a by-product of more conversations about Brexit or immigration in factories and workplaces. Whatever the cause, employers need to be aware of the risks arising from such harassment and, where possible, should try to address the risks. Race-related comments made which are deliberately intended to offend are likely to be unlawful harassment. Comments such as innocently intended observations or shop floor banter, which weren t intended to offend but still do so, are also harassment. Unlawful harassment requires that someone must be offended or feel their dignity at work is adversely effected, however many claims we see arise from the person who overhears something that was not intended for them to hear. What the Equality Act says is that unlawful racial harassment occurs where one employee engages in unwanted conduct related to race, nationality or national origin, and the conduct has the purpose or effect of violating another employee s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment. Any conversation between employees which is immigration related carries a degree of risk for any employer. Comments about immigrants can be race related and certainly have the ability to offend. What carries a greater risk are comments directed at an employee precisely because of their race, nationality or national origin. So referendum related observations, such as You won t be able to work here soon, directed at an employee born in Eastern Europe (for example) are race-related and it is entirely possible that it will cause offence. The context in which comments are made can be important. Whether it is reasonable for the conduct to have that effect, is part of the legal test. An academic discussion in the factory about the merits of Brexit may be unlikely to reasonably offend, whereas badly expressed comments on immigrants or jokes directed at an employee because of their nationality, will be unlawful harassment. This is a serious issue. For unlawful racial harassment occurring at work, the employer is liable for an employee s conduct and the victim has a valid claim against the company. Damages are also uncapped (albeit still mainly based on loss). So what can you do about it? We have seen reports of some employers banning Brexit related conversations at work altogether. This does seem an extreme over-reaction and may carry its own legal risk if enforced (albeit at least the message is clear). In most manufacturing environments the appropriate approach will be to take the opportunity at a toolbox talk or other briefing, to remind employees about their responsibilities. Think before you speak is a good message. It is worth emphasising the Brexit connection and that race discrimination covers European nationality, as well as nationalities/ethnic origins which may more traditionally be considered to give rise to a discriminatory risk. At its strongest a robust programme of diversity training can equip your employees with the knowledge to avert incidents occurring and can also give you a legal defence even if such comments are made. The most important thing to do is to address any potential issues swiftly and effectively. Doing so will ensure a site where workers feel included and supported. How exactly any such incidents are best addressed will depend upon what is said and to whom, and often what the victim wants will be key. Organisations certainly do not need to dismiss everyone who expresses a view on immigration whilst working. However do not just ignore potentially offensive comments, deal with them and stop them re-occurring.

18 Phil Allen is a Partner in the Employment Pensions and Immigration Team and is based in Manchester. If this article raises any issues for your business or you require any support in dealing with Brexitrelated harassment or equal opportunities and diversity training, please do not hesitate to contact Phil or speak to your usual Weightmans contact. A version of this article was first published in Manufacturing Global on 12 July View the article in its original context online here. This update does not attempt to provide a full analysis of those matters with which it deals and is provided for general information purposes only and is not intended to constitute legal advice and should not be treated as a substitute for legal advice. Weightmans accepts no responsibility for any loss that may arise from reliance on the information in this update. The copyright in this update is owned by Weightmans LLP. Data Protection Act Pursuant to the Data Protection Act 1998, your name may be retained on our marketing database. The database enables us to select contacts to receive a variety of marketing materials including our legal update service, newsletters and invites to seminars and events. It details your name, address, telephone, fax, , website, mailing requirements and other comments if any. Please ensure you update our marketing team with any changes. You have the right to correct any data that relates to you. You should contact James Holman, our Data Protection Officer in writing, at 100 Old Hall Street Liverpool L3 9QJ.