Brexit and European Court Case Law on Transfers: EU Retained Case Law: How Will It Work?

There has been much debate about the status of existing case law on derived EU employment rights in relation to Brexit and we have seen comments about a ‘bonfire’ of employment rights post-transition. In this article, Dr John McMullen discusses two aspects of EU-derived employment rights: the status of pre-Brexit jurisprudence of the European Court of Justice; and the status of EU-derived legislation applicable in the UK prior to Brexit.

In relation to Brexit and employment law now that the transition period has ended, John writes:

We have seen near hysterical headlines in the pages of the Press and online media, such as:

“UK workers' rights at risk in plans to rip up EU labour market” (FT)

“Business secretary denies plans to rip-up workers’ rights (Personnel Today)

The reality is more nuanced, and a more scientific approach is needed.

STAGE ONE: European Retained law

On 29 March 2017, following the outcome of the 2016 UK Referendum on whether to remain in or to leave the European Union, and the European Union (Notification of Withdrawal) Act 2017, the UK government gave notice to leave the EU under art 50(2) of the Treaty on European Union.

The two-year notice period was extended by agreement three times until 31 January 2020. The Draft Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community highlighting the progress made (coloured version) in the negotiation round with the UK of 16–19 March 2018 (the ‘May agreement’) was replaced by the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community (19 October 2019) (the ‘Johnson agreement’).

During the 2019 hung Parliament it was not possible to achieve parliamentary approval to this. But the outcome of the December 2019 General Election, and a large Conservative working majority, meant approval was inevitable. The European Union (Withdrawal Agreement) Act 2020 (EU(WA)A 2020) received Royal Assent on 23 January 2020. The Withdrawal Agreement was ratified by the UK on the same day, by the EU on 30 January, and entered into force on 31 January.

The primary function of the European Union (Withdrawal) Act 2018 (EU(W)A 2018) (as modified by the EU(WA)A 2020) is to convert existing EU law, including the EU Acquired Rights Directive, into UK law. This means transposition of the acquis Communautaire, which comprises both EU primary law and ECJ case law.

Section 2(1) of the Act says: ‘EU-derived domestic legislation, as it has effect in domestic law immediately before exit day, continues to have effect in domestic law on and after exit day’. The meaning of EU-derived law will be determined in the UK courts by reference to ECJ case law as it exists on the date of the implementation period (IP) completion date (see below). Such historic ECJ case law will be given the same binding, or precedent, status as decisions of the Supreme Court. Or so it was first drafted.

Departing from Retained EU Jurisprudence

However, the 2018 Act must be read alongside the amendments made by the EU(WA)A 2020. The latter provides for the possibility, for a limited time, by way of enabling regulations, of other courts and tribunals departing from retained EU case law. These regulations would have to particularise the extent to which, or circumstances in which, a court or tribunal ‘is not to be bound by retained EU case law’, and for laying down the test’ which would apply ‘in deciding whether to depart from any retained EU case law’, including the 'considerations’ that are ‘relevant to’ any court applying the ‘test’ for when to depart from such case law.

There are two savings. Firstly, specified senior judges must have been consulted before any such regulations are made and, secondly, no regulation can be made after the end of the IP completion date (see generally EW(W)A 2018 s 6(5A)–(5D)).

A Government Consultation on Departure from EU retained case law by UK Courts and tribunals was published on 2 July 2020 and ended on 13 August 2020. In the end, the Government's response (published on 15 October 2020) to this consultation on extending the right to depart from retained EU law beyond the Supreme Court has been to extend the power to depart from retained EU law beyond the Supreme Court to the Court of Appeal and equivalent courts, but no further.

ECJ Case Law from 2021 and Beyond

The persuasiveness of ECJ case law decided after the end of the Implementation Period is presently unclear, but it is likely to be taken into account, especially if it clarifies or explains historic ECJ decisions. Section 6(2) of the EU(W)A 2018 provides for this.

Finally, the original European Union (Withdrawal Agreement) Bill had some non-regression clauses (i.e. new UK laws would not be less favourable than present laws, e.g. TUPE, derived from European Law provisions about workers' rights). Clause 34 would have inserted a new s 18A and Sch 5A into the European Union (Withdrawal) Act 2018 to implement these. However, these were removed in a later Bill. It is suggested these may re-appear in a future Employment Bill; but we shall see. Your author is sceptical.

The reasoning was this:

“The Government agrees that extending the power to additional courts will alleviate the pressures on the UK Supreme Court. The President of the UK Supreme Court acknowledges that “a proportion of the cases… would still be likely to come to the UKSC on appeal, but the number would be likely to be much lower than if the UKSC were the only avenue available.

“The Government is particularly mindful of the impact on case volumes and timeliness in the UK Supreme Court who will have to balance these new additional cases alongside the existing work before the Court. The UK Supreme Court has 12 justices who, in addition to sitting in the UK Supreme Court, also sit in the Judicial Committee of the Privy Council. We consider that, if the power were not extended to additional courts, the UK Supreme Court could become a bottleneck to the timely resolution of such cases due to an increase in demand. This delay in the resolution of cases could in itself result in legal uncertainty as parties to the proceedings, and those with an interest in those proceedings, have to wait longer for a final decision that would provide a certain way forward.”

There was no majority of consultees in favour of this. Thus:

“Do you consider that the power to depart from retained EU case law should be extended to other courts and tribunals beyond the UK Supreme Court and High Court of Justiciary?”

Answer:

“Yes 20: 27% No 42: 56%”

This is, in our view, a retrograde and a bad decision. But it could have been much worse.

In its defence the paper states:

“We have… considered that we are in an unprecedented and novel situation as no Member State has ever left the EU before. The issues around retained EU law and the departure from retained EU case law is therefore a complex area of law and the Government is mindful of the inevitable risk of divergence between the UK jurisdictions. The impacts of this potential divergence are mitigated by restricting the power to the Court of Appeal level because it would bind itself and courts below as well as judgments of this level of court being persuasive across the UK’s three legal systems. We have noted points made in the consultation responses that such matters may be better considered by a panel of judges at Court of Appeal level who will collectively consider the Response to consultation on the departure from retained EU case law by UK courts and tribunals issues to reach a conclusion, rather than a single judge of first instance at High Court level and agree that consideration at the appellate level is preferable. The Government has therefore concluded that the power to depart from retained EU law should be extended as per Option 1 in the consultation – namely the Court of Appeal and equivalent courts across the UK.”

The European Union (Withdrawal) Act 2018 (Relevant Court) (Retained EU Case Law) Regulations 2020 2020 No. 1525 say (reg 5) that, “In deciding whether to depart from any retained EU case law by virtue of section 6(4)(ba) of the 2018 Act and these Regulations, a relevant court must apply the same test as the Supreme Court would apply in deciding whether to depart from the case law of the Supreme Court.” This test was laid down by a House of Lords Practice Direction in 1986 and we set it out here:

“JUDICIAL PRECEDENT

26 July 1966—BY THE LORD CHANCELLOR (LORD GARDINER)

  'Before judgments are delivered today, I wish to make the following statement on behalf of myself and the Lords of Appeal in Ordinary:

  "Their Lordships regard the use of precedent as an indispensable foundation upon which to decide what is the law and its application to individual cases. It provides at least some degree of certainty upon which individuals can rely in the conduct of their affairs, as well as a basis for orderly development of legal rules.

  "Their Lordships nevertheless recognise that too rigid adherence to precedent may lead to injustice in a particular case and also unduly restrict the proper development of the law. They propose therefore to modify their present practice and, while treating former decisions of this House as normally binding, to depart from a previous decision when it appears right to do so.

  "In this connection they will bear in mind the danger of disturbing retrospectively the basis on which contracts, settlements of property and fiscal arrangements have been entered into and also the especial need for certainty as to the criminal law.

  "This announcement is not intended to affect the use of precedent elsewhere than in this House."

STAGE TWO: Will there be a Bonfire of Employment Rights?

The consequences of the UK’s withdrawal from the EU for workers’ rights for the future are highlighted by many commentators. However, the Political Declaration negotiated between the Johnson Government and the in the EU trade deal on Labour rights and Non-Regression may provide limited protection:

The Government summary of the Agreement includes, “…reciprocal commitments not to reduce the level of protection for workers or fail to enforce employment rights in a manner that has an effect on trade.

“The provisions are clear that both Parties have the freedom and ability to make their own decisions on how they regulate this [rule] that retained EU law will not have a special place on the UK’s statute books.

“This Chapter is not subject to the Agreement’s main dispute resolution mechanism but will instead be governed by a bespoke Panel of Experts procedure".

Some sceptics argue, however, that this may not be strong enough to protect all rights fully (see Nicola Countouris, Professor Keith Ewing and Lord Hendy QC: How the Brexit deal threatens your rights at work: What the Brexit deal says on workers' rights and the government's intention to weaken them (IER; January 2021). 

Reached within days of the end of the Transition period, it will be noted that this can be viewed as no more than a botched compromise, generating the scare stories in the press referred to earlier.

Finally, whilst parliament cannot now be bound (within reason) by external laws in future, agreements on and assurances about existing EU-derived employment rights would make anything but limited amendments difficult for the foreseeable future. And remember, this government was elected with the help of the so-called “Red Wall”, who would stand most to lose by deregulation of Employment Rights. In our view TUPE rights are not in the cross hairs. On the other hand, Working Time and holiday rights are a different matter.

Forthcoming Event | TUPE Masterclass

TUPE experts from Jones Cassidy Brett and Carson McDowell explore with Dr. John McMullen how HR and other managers involved in the tendering process can influence a transfer situation – before, during and after a relevant transfer – to your advantage.

Our experts seek to demystify this difficult area of law for employers throughout the UK by providing exclusive practical checklists of value to those who may seek to put services out to tender or who may be interested in providing services caught by TUPE laws.

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