By Rebecca Zahn
The British referendum on the country’s continued membership of the EU has dominated the political and media landscape both in the UK and abroad for the last few months. There has been a plethora of academic commentary on the possible consequences of a British exit (‘Brexit’). On 23 June, based on a turnout of 72%, 52% of the electorate voted for Leave, while 48% supported Remain. This narrow majority disguises dramatic differences between different regions: Scotland, Northern Ireland and large parts of London voted to Remain whereas substantial sections of Wales and most of England voted to Leave.
In the run-up to referendum day, workers’ rights were invoked repeatedly by both sides of the campaign as either a reason to back or oppose Brexit. Leave campaigners, such as Patrick Minford, Professor of Economics at Cardiff Business School, argued that the UK needed to reset its relationship with the EU to ‘jettison excessive protection and over-regulation, notably in the labour market’. Domestic employment laws originating from the EU legislature, such as the much vilified Working Time Directive, have often been described as a burden on business, inflexible, uncompetitive and inefficient. On the other hand, Remain campaigners such as Frances O’Grady, General Secretary of the British Trades Union Congress (TUC), warned repeatedly that ‘working people have a huge stake in the referendum because workers’ rights are on the line’ and the link between the UK’s membership of the EU and better protection of workers’ rights featured heavily in campaign material opposing Brexit.
The link between workers’ rights and support for the EU amongst the British labour movement is not new and dates back to the 1980s when the TUC – faced with a domestic Conservative government hostile to trade unions and following Jacques Delors’ speech advocating a social dimension to European integration – withdrew its support for the UK’s withdrawal from the (then) EEC and instead adopted a positive approach to UK membership. During successive Conservative governments between 1979 and 1997, social legislation originating from the EU was seen as the only positive development for trade unions in British labour law. Unlike in the 1975 referendum, the vast majority of British trade unions backed the Remain side in this campaign.
Now that we know the result, what are the consequences of Brexit for workers’ rights in the UK?
Much depends on the future relationship between the EU and the UK. Potential options include a combination of free trade agreements with individual EU member states; bilateral deals with the EU; or membership of the European Economic Area and/or the European Free Trade Association. In any case, the New Settlement agreed between the UK and the European Union in February 2016 will now not come into force. The joint statement issued by EU leaders and the Netherlands Presidency also makes it clear that the referendum’s outcome does not, on its own, change the UK’s current relationship with the EU. The UK continues to be a Member State and must continue to fulfil its obligations as such. In the short-term, therefore, it seems unlikely that much will change in regard to protection of workers’ rights.
The EU has an impact on workers in a number of different ways. First, Article 45 TFEU guarantees the free movement of workers. Second, European employment laws underpin key aspects of UK employment law. A full list of laws can be found elsewhere.
In order to leave the EU, the UK must invoke the procedure stipulated in Article 50 TEU. The British Prime Minister, David Cameron – who resigned following announcement of the referendum result – has confirmed that it will be up to the next Prime Minister to negotiate the UK’s exit from the EU. However, a successor is unlikely to be appointed before the autumn with a general election possibly taking place shortly thereafter. Until a formal withdrawal is negotiated, EU laws on employment rights and on the free movement of workers will therefore continue to apply. There have been calls for the UK to act immediately in order to stop the free movement of workers; however such an act would be contrary to EU and international law and may well prompt a retaliatory response from other EU Member States. The repeated calls for a period of calm by all senior British politicians make this scenario unlikely.
The outcome of the negotiations over Brexit is, for obvious reasons, difficult to predict. Should the UK negotiate the ‘Norway option’, which would involve membership of the European Economic Area, then most EU laws on workers’ rights would continue to apply. This includes the free movement of workers. In addition, any future laws adopted by the EU in the field of employment law may apply to the UK. Finally, the case law of both the EFTA Court and the Court of Justice of the European Union would be of relevance.
Should the UK choose to leave the EU completely, it is of course up to a future UK Government to decide whether to repeal, adjust or preserve existing EU-derived employment rights. In any case, however, leaving the EU would entail the amendment and possible repeal of the European Communities Act 1972 (the national legal basis of the UK’s membership of the EU). This would have consequences for the majority of EU employment laws which have been implemented into UK law by virtue of secondary legislation made under the framework of the 1972 Act. An example can be found in the Working Time Regulations which implement the Working Time Directive. Repeal of the Act would leave the status of these regulations unclear. It is likely, however, that a bridging solution would be found until the Government decided which EU-derived employment laws it wanted to keep, repeal or amend.
Based on long-standing opposition of some past UK Governments to certain EU social rights, one independent legal opinion commissioned by the TUC in the run-up to the referendum vote, identified a number of EU-derived employment laws which would be especially vulnerable to repeal and/or amendment. These include laws on information and consultation on collective redundancies; rules on working time; some of the EU-derived health and safety regulations; parts of the regulations which protect workers in the event of a transfer of undertaking; legislation protecting agency workers and other ‘atypical’ workers; and, some elements of discrimination law to which businesses object most strongly such as liability for equal pay. Particularly the working time rules and the agency workers’ regulations have been a ‘persistent thorn in the side’ of successive UK Governments and some form of amendment or repeal is probable.
However, arguments have also been made which question the extent to which a future Government will actually repeal existing rights once given the chance, especially as the UK’s labour market is already one of the least regulated in the EU. According to the OECD’s employment protection index, the UK comes in at 31 out of 34 rich countries. The main causes of concern for employers and trade unions when it comes to workers’ rights do not have a direct EU origin. Employers complain about the new higher minimum wage (the so-called ‘living wage’); the ‘apprenticeship levy’ (a payroll tax for large companies); restrictions on skilled migrant workers; and the requirement for large companies to publish their gender pay gaps. At a legislative level, trade unions are concerned about the introduction of the Trade Union Act 2016 which places severe restrictions on the right to take industrial action. All of these developments stem from UK Governments rather than from the EU legislature.
Finally, in the event of a large-scale repeal of EU-derived employment rights, UK common law upon which British employment law is based, may well offer a glimmer of hope. Judges have shown themselves as remarkably adept at recognising not only economic and social conditions but also legal constructs which are prejudicial to workers, and have expanded the common law when necessary in order to protect workers’ rights. It is to be hoped that judges will continue to find ways to uphold those rights which have become part of UK employment law.
In sum, the long-term consequences of the Brexit vote for workers’ rights will remain unclear for some time to come. At the same time, the economic fall-out of the referendum result is already beginning to manifest itself: the British currency dropped to its lowest levels since 1985; the Bank of England has earmarked an emergency fund to potentially stabilise the economy; and global markets have dropped sharply. It is likely therefore that the greatest immediate impact of Brexit may not be on employment law but on the labour market itself.