What are the implications of Brexit for Northern Ireland’s employers?

Posted in : First Tuesday Q&A NI on 2 August 2016
Arthur Cox
Arthur Cox
Issues covered:

What does Brexit mean for the status of our employment laws?

The extent to which our employment laws will be affected will be largely dependent upon the economic relationship /trade arrangement to be agreed between the UK and the remaining 27 member states of the EU.

It is likely, however, that the UK will remain bound by many of the key principles of EU employment law, as EU countries would not look favourably upon entering into a trade agreement with a country which permitted its businesses to undercut them by employing workers on less regulated (and therefore less expensive) terms.

The Secretary of State for Exiting the EU, David Davis, has given a strong indication that existing employment law would not radically change once the UK leave the EU. Therefore, it is likely that EU law will continue to significantly influence the UK’s employment law regime even after the UK departs the EU, with only minimal changes anticipated. 

Can we expect any immediate changes to our employment laws?

It is unlikely that there will be any changes in the short-term. The UK will continue to be an EU Member State until it formally exits the EU. Although there is presently much uncertainty around that exit, it is likely to be a long process that will only begin when the UK formally gives notice to the EU of its intention to leave.

Theresa May, Prime Minister, has indicated that negotiations will not begin this year. Given that any notice will trigger a two-year window for the UK to negotiate withdrawal and trade agreements, all current EU-derived employment laws are likely to remain in place for at least two years.

Which areas of employment law (if any) are most susceptible to change?

It is suggested that the key contenders for reform following any withdrawal from the EU include holidays / working time and TUPE.

Although the right to statutory paid holiday is now well established domestically, there are certain aspects of holiday pay which are deeply unpopular with UK employers. The influence of the Court of Justice of the European Union (CJEU) in the decision in Lock v British Gas Trading Ltd which held that an employee’s holiday pay, which had been calculated solely on his basic salary, ought to have included commission payments also.This, in turn, opened the door for thousands of workers, whose total pay is heavily reliant on commission or other supplements such as certain overtime payments, to claim such as part of their holiday pay. This decision and decisions relating to the right to accrue holiday whilst on long term sick leave have left many questions unanswered and increased costs for employers.

In light of this, it would be no surprise if the UK Government used the opportunity of exiting the EU to provide much-needed clarity in these areas, and a potential retreat from decisions of the CJEU.

TUPE could also be a prime target for reform - there has been much discussion on how TUPE might be affected by Brexit given that the Transfer of Undertakings (Protection of Employment) Regulations 2006 actually derive from the EU Acquired Rights Directive. Against this, however, it should be noted that in 2006 the UK Government introduced the wholly domestic concept of “service provision change” to apply to contracting-out, contracting-in and a change of service provider (this was implemented in Northern Ireland via the Service Provision Change (Protection of Employment) Regulations (Northern Ireland) 2006). Therefore, having extended the scope of TUPE domestically through choice rather than compulsion, it is difficult to envisage the Government implementing any significant changes in respect of TUPE. 

However, if changes were to come in this area, it may be that the Government would seek to amend the information and consultation requirements of the TUPE procedure; as well as perhaps providing employers with more flexibility to harmonise terms and conditions of employment. It will be noted that amendments and a relaxation of TUPE laws were introduced in Great Britain back in 2014 but that, as yet, those changes have not been replicated in Northern Ireland. Perhaps, without the restraint of the EU, the UK Government will go further to implement changes to make the TUPE process and procedures more employer-friendly, whilst ultimately retaining the fundamental principles.

Our business is based in Northern Ireland but we employ a large number of EU migrants. What would be your advice going forward?

It is important at this stage to offer assurance to any EU nationals within your current workforce. No changes are anticipated in respect of immigration law until the UK leaves the EU (which may be at least two years away, although there is still some uncertainty on this point). This means that EU employees can remain lawfully living and working in the UK for the time-being.

The position following the UK’s formal exit from the EU is, however, less clear. If EU nationals in the UK do not retain the automatic right to live and work in the UK post-Brexit, they may instead be subject to some form of points-based system (PBS) for immigration, such as that which currently exists in the UK for non-EU nationals. Whilst a PBS would not provide the long-term certainty that EU treaty rights provide, it may nevertheless be worth conducting a high-level analysis of how a PBS might apply to existing workforces.

In terms of going forward and in the absence as yet of any real certainty, we recommend undertaking an audit of your current workforce to ensure you know who your EEA national employees are, together with any UK workers based in other EEA countries. Identify all new EEA recruits for ease of communication in the future. If possible, communicate some reassurance to your EU workforce that there are no immediate changes and any change is unlikely for the next two years. You may offer support to those of your workers who have accrued rights of residence in the UK (i.e. EU nationals who have exercised treaty tights in the UK for a period of at least five years). Many employers are already assisting with applications for indefinite leave to remain and/or British citizenship (for those who have six years residence in the UK).

In light of Brexit, should we consider amending our Recruitment Policy in respect of EEA citizens?

The status of EEA nationals in a post-Brexit UK is indeed uncertain at this stage. However, assuming changes are made to the principle of free movement, it is worth emphasising that such changes are, at this point, a considerable way off. Given the current level of uncertainty, it would not be advisable to introduce any significant amendments to recruitment policies at this stage. The introduction of such steps now would be somewhat premature and, importantly, potentially unlawfully discriminatory.

We would typically recommend that offer letters and contracts of employment contain a “right to work” clause and it may, therefore, be worthwhile checking whether such a clause is contained in your offer letters / contracts of employment at present.

Will Brexit affect Data Protection?

The EU’s Data Protection Directive governs the framework for the collection, use, and transfer of individually identifiable personal information of employees. There are, however, differences in how EU Member States implement the Directive. This has resulted in legal uncertainty and inconsistencies. In an attempt to rectify the situation, the EU put forward the General Data Protection Regulations 2016 (GDPR). These Regulations were due to be implemented in the UK by May 2018 (likely before any Brexit).

Once the UK formally exits the EU, however, it will not be required to bring its own data protection laws into line with the GDPR. However, the UK will still need to comply with cross-border data protection laws if it wishes to keep its EU trading partners. It is also likely to be in the UK’s interest to facilitate transfers of personal data from the EU to the UK.

We currently have workers from the Republic of Ireland who work at our UK sites. Will there be any implications for these arrangements?

The Common Travel Area (CTA) arrangements between the UK and the Republic of Ireland date back to 1922, and so pre-date either the UK or the Republic of Ireland joining the EU. The CTA is an informal travel arrangement that means that no passport controls are in operation for Irish and UK citizens travelling between the two countries. Theresa May recently alluded to the continuance of this common travel area on a recent visit to Stormont. Ms. May also emphasised that there was no desire to return to the “borders of the past”.

However, there will doubtless be difficulties ahead due to the fact that the Republic of Ireland and Northern Ireland will at some stage share an EU/Non-EU border. Businesses in both jurisdictions are understandably concerned about the potential impact. One possible solution identified has been an open border between NI and ROI with borders at the ports and airports between Northern Ireland and the rest of the UK. However, this has been met with resistance from the First Minister. Ultimately, whatever agreement is reached between the UK and ROI, it is likely that it would have to be agreed by the whole of the EU.

Much will depend on the UK negotiations with the EU. In the short term, unfortunately, it seems that we are faced with much uncertainty which is likely to create significant difficulties for employers and their planning/decision making. 

Back to Q&A's This article is correct at 02/08/2016

The information in this article is provided as part of Legal-Island's Employment Law Hub. We regret we are not able to respond to requests for specific legal or HR queries and recommend that professional advice is obtained before relying on information supplied anywhere within this article.

Arthur Cox
Arthur Cox

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