What is the impact of the EU-UK trade deal on employment law?

20 Jan 2021 By Melanie Lane and Eric Gilligan

Melanie Lane and Eric Gilligan discuss the key areas of legislation that could change as the UK breaks away from EU regulations

The trade deal (TCA) that the UK reached with the EU in December has some impact on employment law, particularly regarding future employment rights and the development of UK legislation

Commitment on workers’ rights

The TCA incorporates “level playing field provisions” intended to avoid either side gaining unfair competitive advantage by undercutting the other’s employment standards. This ‘non-regression principle’ applies to:

  • fundamental rights at work;
  • occupational health and safety standards;
  • fair working conditions and employment standards;
  • information and consultation rights at company level; and
  • restructuring of undertakings.

The TCA also explicitly states that each party shall ”continue to strive to increase their respective labour and social levels of protection” – although this does not involve a commitment to align UK employment law with developing EU law as the EU had originally proposed.

Enforcement of employment rights

In addition, the TCA sets out the commitment on both the parties to effectively enforce employment rights. Both parties will:

  • have an effective system of labour inspections relating to working conditions and the protection of workers;
  • ensure that judicial proceedings are available for violations of labour law; and
  • provide for appropriate and effective remedies, including interim relief, as well as proportionate and dissuasive sanctions.

It has been suggested that these provisions may prevent the UK from reintroducing employment tribunal fees and introducing a cap on compensation for discrimination. 

‘Interim relief’ refers to the ability of a court or tribunal to order an employer to carry on paying a dismissed employee before their case is finally determined and is currently only available in the UK in limited situations. Whether this will result in wider availability of this remedy is not yet clear. 

Significantly, the TCA contains a separate commitment from the UK to continue to respect the rights set out in the European Convention on Human Rights.

‘Rebalancing’ provisions

If the UK in the future proceeds to diverge from EU employment rights with a material impact on trade and investment between the UK and the EU, the deal contains ‘rebalancing’ provisions. This means that, in the absence of agreement between the UK and the EU, the matter will be referred to a dispute resolution process, which involves a panel of experts. There is also scope to impose tariffs and to review and potentially suspend trade-related parts of the TCA. 

Will we see changes in UK employment law?

The UK is, in principle, now free to depart both from existing EU-derived provisions incorporated in UK law by way of ‘retained EU law’ under the EU (Withdrawal) Act 2018 and from any future EU law developments. 

In the short term, little is expected to change in relation to UK employment law, but there is the real possibility that we will see some smaller changes in the future. For example, some of the more controversial aspects of employment law that have developed from European case law could be changed, such as holiday pay calculations. However, radical developments such as a complete repeal of the Working Time Regulations seem less likely.

Nevertheless, there has been a great deal of speculation about which areas of employment law may be subject to change. Areas regularly identified include amendments to the Transfer of Undertakings Regulations relating to post-transfer harmonisation of terms and conditions of employment, or reform of the Agency Workers Regulations. 

It remains to be seen how the government will develop UK employment law, but any deregulation campaign would not only run into potential sanctions under the TCA, but also appear to be inconsistent with the ‘levelling up’ agenda.

Data sharing from the EEA to the UK

The TCA contains a section on the “interim provision for transmission of personal data to the United Kingdom”, outlining a temporary arrangement that has been agreed in relation to EEA data flowing into the UK. This temporary arrangement allows data to flow in accordance with previous arrangements for at least a further four months, which may be extended to six months. 

Practical steps around Brexit planning

For HR teams, Brexit has, to date, involved a great deal of work around immigration, issues around sponsorship, workforce planning and right-to-work checks. The actions required from a purely employment law perspective are limited but developments are keenly awaited. 

Melanie Lane is a partner and Eric Gilligan of counsel at CMS

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