After Brexit where next for UK employment rights?

Jason Heyes - Associate Fellow of SPERI & Professor of Employment Relations, University of Sheffield

There were good reasons to be concerned.  Over the past 30 years both Conservative and Labour governments have regarded employment rights as potentially damaging to the UK’s economic performance and have sought to preserve the ‘flexibility’ of the labour market.  Consecutive Conservative Party general election manifestos have promised to ‘repatriate’ powers over employment rights from Brussels to the UK, claiming that EU directives impose unreasonable costs on business and damage competitiveness.  In the run up to his EU membership negotiations in late 2015 it was anticipated that David Cameron would demand the UK be granted opt-outs from directives relating to working time and temporary agency workers.  In the end these demands, which would have required substantial treaty changes, were never made, but no-one should doubt the genuine desire of many Conservative politicians to end EU influence over UK employment legislation.

So what might happen next?  As with everything related to Brexit, much will depend on the nature of the UK’s future relationship with the EU.  It is widely assumed that the UK government will seek to maintain access to the single market, but unless there is a substantial change in EU policy, access will be contingent on the UK continuing to adhere to EU social policy directives.  Given that the directives are intended to prevent countries from gaining competitive advantages through ‘social dumping’, it is extremely unlikely that the UK could be part of the single market while having the freedom to completely ignore EU social policy.

Other scenarios, such as a UK-EU Free Trade Agreement (the so-called ‘Canada option’), would leave the UK with more freedom to make changes to employment rights and mean that future rulings of the European Court of Justice (ECJ) would not be binding on the UK.  What might we expect to see then?

EU directives currently underpin UK employment laws that:

• provide workers with entitlements to paid holidays and rest breaks;

• protect the rights of workers who are facing redundancy or are being transferred to a new employer (e.g. in the event of a takeover);

• require that temporary agency workers and workers with part-time and fixed-term contracts have the same basic employment entitlements (pro-rata in the case of part-time workers) as workers with regular contracts;

• require that workers be treated equally regardless of sex, race, sexual orientation, age, religion, belief or disability;

• guarantee maternity rights;

• provide parents with a right to take unpaid leave;

• and provide workers with rights to information and consultation, if they work in a business with 50 or more employees.

With responsibility for employment law entirely in the hands of the UK government, any of these rights could, in theory, be eroded or removed.  In practice, the extent of change is likely to depend on which political party is in power, how pragmatic the government chooses to be, whether employers lobby for changes in particular areas of labour law and the strength of opposition to any proposed changes.

But for sake of simplicity, let us consider what the programme of a new Conservative government may look like.  A liberalisation of employment regulations would almost certainly occur.  Since 2010 the Conservatives have eroded rights in areas not subject to direct EU influence – notably in relation to trade union rights and minimum service periods for unfair dismissal claims.  They have also substantially weakened enforcement mechanisms by introducing a fees regime for Employment Tribunals, which has resulted in a substantial reduction in the number of cases brought before tribunals.

While this might be regarded as evidence that the Conservatives would embark on a wholescale rolling back of rights, pragmatism might incline them to confine future changes to particular areas of employment law.  There would be no obvious advantage in removing rights to unpaid parental leave which, like those relating to maternity leave, are already superior to those required by the EU and are not overwhelmingly opposed by employers.  Similarly, most employers are not clamouring for the repeal of Equality Act, which provides workers with a right to be treated equally, and it is doubtful any government would perceive permitting employers to discriminate against large sections of society to be a vote winning reform.  While some dilution of the rules (e.g. in relation to age discrimination) might occur, a bonfire of rights relating to equal treatment seems unlikely.  A more likely change would be the introduction of a cap on compensation for successful claims of discrimination, which might lead to more widespread  discrimination even if rights to equal treatment were unaltered (particularly given the recently erected barriers to justice in the Employment Tribunal system).

A likely candidate for substantial reform is the law relating to working time.  The Working Time Regulations, always a source of irritation for many Conservative politicians, set limits to working time and provide statutory entitlements to paid holidays and rest periods.  UK workers can already opt-out of regulations that limit average weekly working time to 48 hours, but the cap could be completely removed and the influence of ECJ rulings that have increased the scope of working time (and thus employers’ labour costs) could be ended via a change in the law.  It is also likely that the Agency Workers Regulations would be in the firing line.  These regulations, which give agency workers the same basic employment conditions as equivalent directly employed workers after 12 weeks working for a company, are unpopular with employers (particularly those in the recruitment and temporary agency industry) and the Conservative party (the Agency Workers Directive was also opposed by the last Labour government).

It is also possible that exemptions for small businesses would be increased.  Businesses with fewer than 50 employees are already exempt from the Information and Consultation Regulations and from certain pieces of domestic legislation (e.g. the law relating to statutory trade union recognition does not apply to firms with fewer than 21 employees).  Given a freer rein, it is conceivable that the Conservatives could look to increase thresholds and thus extend exemptions for small businesses, which tend to be among the most vocal opponents of employment rights.

So piecemeal change seems more likely than a bonfire of rights.  However, even piecemeal changes (such as a cap on discrimination awards) can have substantial impacts.  It is also worth bearing in mind that the erosion of rights under the Thatcher and Major governments proceeded incrementally (there were no bonfires) and no one could have predicted the substantial changes in industrial relations and trade union rights that occurred between 1979 and 1997.  If a post-Brexit Conservative government is minded to pursue radical reforms, it seems unlikely that the Labour Party and the trade union movement would be able to mount a successful defence.  Much will depend, therefore, on whether it is pragmatism or ideology that exerts the dominant influence on government policy.