01/05/21 Employment Law Update


01/05/20 Employment Law Update

Brexit – The HR and Employment Law Implications

In this month’s employment law update we examine the HR and employment law implications of the UK’s withdrawal from the EU.


EU citizens can no longer move freely within the European Union, including to and from the UK. Instead, a Points Based System (PBS) has been introduced which treats -EU and non-EU citizens exactly the same and has the overall goal of attracting people that can positively impact the UK. The criteria for obtaining sufficient points to be eligible to enter and work in the UK can be complex, but, in simple terms, the PBS provides a route for skilled workers who have a job offer from an approved employer sponsor to take up employment in the UK.

The job that is offered will need to be at a required skill level, which is considered to be broadly equivalent to A-Level standard. Individuals will also need to be able to speak English to a certain standard and be paid at least the relevant salary threshold by the sponsor. Those that earn less than this figure, but more than £20,480 per annum, may still be able to apply under differing criteria such as having a job offer in an area of work deemed to be a shortage occupation, or if they have a PhD relevant to that specific role. There is now no general route for employers to recruit from outside the UK, at, or near to the minimum wage.

Employment of EU Nationals

The EU Settlement Scheme provides EU citizens and their families who are currently living and working in the UK with the opportunity to apply to the Home Office to be allowed to continue doing so after the UK’s withdrawal from the EU. The absolute deadline for applications under this scheme is 30 June 2021 and they are conditional upon applicants having been UK residents on 31 December 2020. To be eligible for settled status, applicants will usually need to have lived in the UK for at least 6 months in any 12-month period for 5 years in a row, and they will need to provide proof of this when applying. A National Insurance number can be given to allow an automated check to be performed based on tax records. If the check is successful, no further proof is required.

The applicant, if successful, will be able to remain in the UK, either with settled or pre-settled status, (if pre-settled, a further application is required in 5 years’ time). If the application is refused, the applicant still has the option of re-applying and can do so as many times as they wish.

Whilst there is no obligation on employers to advise individuals on this scheme, it would be prudent for them to do so in order to ensure that the EU workers they employ have the correct right to work documentation (significant fines or even custodial sentences can be imposed where this is not the case) and to reduce the risk of significant staff shortages where they don’t.

The impact on Employment Law

Existing EU-derived employment law, such as TUPE and the Working Time Regulations, will continue to be interpreted in line with corresponding EU law. However, the Court of Appeal (CA) and Supreme Court (SC) no longer need to follow existing pre-2021 decisions by the European Court of Justice (ECJ) and can depart from them if they consider it appropriate to do so. This freedom raises the possibility that certain ECJ decisions on calculating holiday pay that have proved problematic for UK employers could be overturned. With the SC due to consider a number of holiday pay cases in 2021, we will soon have a clearer idea of how willing the UK’s higher courts are to diverge from ECJ rulings.

Whilst the UK is now free to deviate from future EU laws, the EU will have the right to apply tariffs to the extent that they ensure that the UK doesn’t gain a competitive advantage over EU-based employers by working to less onerous employment standards (rebalancing), where there is definitive evidence that EU trade or investment has been negatively impacted. The result of this is that although the UK will, in theory, have the freedom to make wholesale changes to employment law, the scope of any such changes is likely to be quite limited.

There are three EU Directives that are due to be implemented over the next couple of years which, in practice, The UK has already adopted or plans to adopt. They are:

  1. Whistleblowing Directive (due December 2021): Although UK legislation already reflects much of the provisions contained in this directive, a decision will need to be made on whether it adopts the provisions that (1) oblige employers to give feedback to whistleblowers; and (2) protect a wider range of whistleblowers, including freelancers and shareholders.
  2. Transparent and Predictable Working Conditions Directive (due August 2022): The UK has already implemented one aspect of this directive (extending the right to a written statement beyond employees to all workers) and has pledged to introduce another (the right to request a more stable and predictable contract), but a decision still needs to made on further aspects, such as banning long probationary periods; providing reasonable notice of shifts, compensating for short-notice shift cancellation and taking measures to prevent abuse of on-demand contracts.
  3. Work-Life Balance for Parents and Carers Directive (due August 2022). Whilst the UK is proposing to introduce carers leave and already exceeds requirements under this directive as they relate to flexible working rights, a decision still needs to be made on removal of the service requirement for paternity leave and allowing shared parental leave to be exercised independently by partners.

If the UK decides not to fall into line with the requirements of these directives completely then it could trigger the rebalancing provisions contained in the agreement, but only in the event that there is definitive evidence that EU trade or investment has been negatively impacted by that decision.

So whilst the UK now has the ability to deviate from EU employment law, the agendas of both parties are not that far apart in this respect and so no seismic changes are expected to take place in the short-term. That said, the fact that UK higher courts can now overturn ECJ decisions means that there is scope for increased litigation in relation to points that were previously considered settled.

For further advice on any of the issues referred to above, please contact any of our team on 01942 727200, or email eml@employeemanagement.co.uk