UK: Post-Brexit UK employment law reform
As part of the Brexit arrangements, most EU law in force in the UK on 31 December 2020 was preserved as EU retained law and continued to be interpreted in accordance with EU principles, which has priority over inconsistent domestic law. The Act ensures that specified pieces of retained EU law will be repealed at the end of 2023, but this does not include any key employment laws. However, from January 2024 the Act will bring an end to the supremacy of EU law, abolish directly effective rights and remove EU interpretative principles from UK law.
The UK government has powers under the Act to revoke, re-state or amend certain legislation derived from EU law, and to pass regulations to codify any principles of interpretation or case law that it considers desirable to retain in domestic law. These powers last until 23 June 2026 (the tenth anniversary of the referendum).
Under the Act, the higher domestic courts such as the Supreme Court and Court of Appeal will have wider discretion than previously to depart from case law based on EU principles (such as domestic holiday pay cases) and retained EU case law.
There is a new reference procedure which enables lower courts or tribunals to refer points of law on retained case law which they consider are of general public importance to the higher courts. There is a also a new procedure for UK or devolved law officers to refer points of law to higher courts after proceedings in the lower courts have concluded, and to intervene in proceedings where a higher court is considering arguments around departing from retained case law.
Key Action Points for Human Resources and In-house Counsel
UK employment laws are heavily affected by retained EU law. As a result, the Act will have a significant effect on UK employment law by changing the way that EU-derived law (such as the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) and the Working Time Regulations) is interpreted in the UK.
In addition, the Act will undermine existing case law by creating doubt about the scope, meaning and application of key EU-derived employment rights. The Act will therefore create uncertainty for UK businesses and could lead to more employment related claims as from January 2024.
Some minor post Brexit changes have already been proposed in the government’s recent “Smarter Regulation” policy paper (including reducing record-keeping burdens and simplifying holiday pay entitlements under the Working Time Regulations, and lifting certain requirements under the TUPE for smaller employers). But there are still many EU derived laws which will be uncertain unless the government takes steps to make further changes.
One practical example is the “rolling 90 day period” for collective redundancy consultation purposes (as ruled by the European Court in UQ v Marclean in December 2020) which is directly at odds with the Trade Union and Labour Relations (Consolidation) Act 1992.
Businesses should keep a close watch on government announcements for any plans to exercise its powers under the Act.