Brexit

2016-06-27 Jennifer Renney posted:

The UK’s decision to leave the EU has taken many by surprise. It is important to note that the decision will offer advantages as well as challenges to all businesses. At Renney and Co Employment Solicitors, we offer advice on how to reduce the legal risks facing employers in the coming months and years, as well as advice on how to take advantage of future opportunities.

We now enter a period of uncertainty as the government looks at what is next in terms of trade, our economy and the regulations that impact business. We will see how this develops over the coming weeks and months.

The timetable for Brexit

The key point to note is that nothing immediately changes as a result of the referendum result. Indeed, the result does not formally commit the UK to any particular timetable or even to leave the EU at all. This gives the UK some flexibility in its negotiations with the rest of the EU.

In order to exit the EU, a notice will need to be served on the European Council in accordance with Article 50. Service of the notice will not lead to any immediate change, but will trigger a negotiating period with the remaining EU states on the terms on which the UK will exit the EU. This period will last until the agreed departure date, or for a maximum of two years from the notice if we have not reached agreement by then.

The Prime Minister has made it clear that he will remain in Government for up to three months and that he will not be the one to serve the notice on the European Council. The Government may wish to delay service of the notice in order to give it longer to negotiate exit terms, but the EU may not be willing to start negotiations until the notice has been served. The EU cannot force the UK to serve the notice.

From a legal perspective, the most significant aspects of an exit agreement are likely to be around the transitional arrangements and the extent to which rights acquired pre-Brexit are preserved.

Life outside the EU: the options

Exactly what life outside the EU will look like for the UK is unclear. There is the so-called Norwegian option, of continued access to the EU through membership of the EEA, but this was largely shunned by the Leave campaign. Any alternative model, be it based on the position currently enjoyed by Switzerland, Turkey or Canada, would be likely to take several years to agree.

It is important to note that the exit agreement would be negotiated separately from any agreement with the EU about our future relationship. Indeed, a number of European officials have been quoted as saying that the two agreements should not be linked. The period of uncertainty over the UK's long-term relationship with the EU, not to mention the rest of the world, could therefore extend significantly beyond the 2-3 years it may take to agree the terms of the UK's exit.

Implications for UK law

There is currently a huge body of UK law that derives from EU law. Dismantling this, and even identifying and agreeing on which aspects should be dismantled, will be an immense task. It will not simply be a case of repealing the European Communities Act 1972, because the many regulations made under the ECA, both in Westminster and in the devolved administrations, will need to be retained until free-standing UK legislation can be implemented.

Once we leave the EU, we no longer have EU law hovering in the background. Not all UK employment law is based on EU law. Unfair dismissal for example has nothing to do with EU, nor the right of employees to statutory redundancy pay. However, the Working Time Regulations and TUPE are based on EU directives. A post-Brexit UK government could do away with both, if it had the political will to do so. A government seeking to please businesses might well have a look at some of these areas.

And then there is discrimination. Not all of it originally came because of the EU. Equal pay, sex and race discrimination laws were introduced in the UK without any pressure from EU legislation. However, the Equal Treatment Directive and the Lisbon Treaty present a superstructure that supports anti-discrimination laws and prevents UK courts or its Parliament from removing anything that EU law now guarantees.

Such guarantees might disappear once we leave the EU. In other words, a UK Government with the right political support could wipe all of that legislation away and start again, with no risks of the Court of Justice of the EU standing in its way. Whether a political party would do this with just over 3 years to go until the 2020 general election is debatable.

What should you do now?

With the uncertainty over the timing and the form of Brexit, precise legal steps are difficult to identify. However, we would recommend that, as a starting point, all businesses should try to identify the risks and opportunities associated with Brexit that they will face. These might include:

  • Short-term economic effects pre-Brexit, in the form of exchange rates and investment returns
  • The effect of economic uncertainty on long-term commitments
  • The loss of the four freedoms for UK businesses (goods, capital, services and people), in both directions, including the loss of the free movement of employees within the EEA
  • Existing long-term contracts that would be adversely impacted by Brexit.
  • Finally, you should also think how you can best provide reassurance to employees and demonstrate that you are on top of them, without hiding from the fact that there may well be significant challenges ahead.

How Renney and Co can help


We will of course be keeping a watchful eye on the whole Brexit situation, and will keep you updated with any confirmed developments or changes to employment legislation.

For advice and assistance, please contact us on 01225 632240 or at info@renneyandco.com.

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