Potential Issues for Employers After Brexit (With No Clear Answers Yet)

11 July 2016 Labor & Employment Law Perspectives Blog
Authors: Tamar N. Dolcourt

The voters in Great Britain caught the world off guard by voting to leave the European Union (EU) after over 40 years of membership. However, after the vote, the questions immediately started. Leaving the EU is governed by a treaty and terms of the “Brexit” will be negotiated between Great Britain and the EU in the next two years. Some of these terms are likely to have significant impacts on the British and European labor force, which employers will need to monitor and take steps to address.

One of the primary concerns many employers and employees have is whether the 2.1 million current EU citizens working in Great Britain will have to leave, and if so, when. Once Great Britain leaves the EU, the free movement of EU citizens, and their ability to work in that country, will no longer be assured. While the British government has not determined whether it would enter into a treaty with the EU to allow such free movement, there is precedent for such a treaty; Norway has a similar arrangement with the EU. However, there are significant political concerns with such a possible agreement because many analysts believe the people who voted to leave the EU did so due to concerns over immigration from the EU, particularly Eastern Europe. If EU citizens do have to leave Great Britain, there could be significant disruptions in the British labor force.

The reverse is also of concern to employers and employees. If EU citizens may no longer work freely in Great Britain, EU countries may correspondingly restrict British citizens from working within their borders. There are approximately 1.2 million British citizens currently working in other EU countries, so a similar labor force disruption could also impact the EU. In both cases, employers will need to be aware that their employees may be forced to leave the country in which they are working, and prepare contingency plans to deal with possible staffing shortages and the need to find replacement workers.

In addition to the movement of employees, certain labor and employment standards in Great Britain are actually EU laws. Once Great Britain leaves the EU, many of these laws will no longer apply, and Parliament would have to pass replacement laws, which may or may not substantially be the same as the EU laws, in order to generally preserve existing standards. Among the laws which would not apply in Great Britain after it leaves the EU are the Working Time Regulations, governing the maximum working hours in one week, minimum rest periods, and required annual leave, as well as the required recordkeeping for compliance with the regulations. Similarly, EU regulations regarding protections for agency workers (for example, temporary workers), which are seen to be unpopular with employers, may also be removed or substantially amended by Parliament. Employers will, therefore, need to be aware of any changes in employment laws which may impact their businesses going forward.

At this time, it is uncertain how the labor and employment legal landscape will change once Great Britain leaves the EU, but it is important for employers to be aware of the potential for dramatic change and prepare for the unexpected.

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