UK employment rights in a no-deal Brexit

Introduction

What might a no-deal Brexit mean for UK employment rights? What could employers do now to prepare? And what might the future hold in a no-deal scenario?

Prime Minister Boris Johnson is clear that he would be prepared to leave the European Union without a deal if necessary and the current legislation commits the United Kingdom to leaving the European Union at 11:00pm on 31 October 2019. Thus, it seems like a good time to revisit the employment law implications of a no-deal Brexit.

What can employers do now to prepare for a no-deal scenario?

European works councils

Employers must have pre-designated their new representative agent if their European works council is currently located in the United Kingdom. If the European works council is (or will become) located in another EU country, employers must decide what to do about their existing UK representatives after Brexit (for further details please see “European Commission confirms its views on European works councils and a no-deal Brexit“). Employers that are currently negotiating a European works council agreement or have a European works council operating under the default subsidiary requirements should consider relocating their arrangements now if they have not done so already.

Data protection

If a no-deal Brexit approaches, employers may need to take steps to protect data flows from the United Kingdom to the European Union.

Impact on business

There are certain legal requirements that employers should contemplate if they are considering restructuring or relocating after Brexit. The key point is that employers may need to consult on the business case for closure before any decision to close a business is taken. Employees should also be offered the opportunity to move with the business if it is relocating, subject to them meeting any relevant language, immigration or qualification requirements.

Following a no-deal Brexit – what would it mean?

Employment law

In the event of a no-deal Brexit, the European Union (Withdrawal) Act 2018 will convert all EU employment law as it stands before Brexit into UK law. The Employment Rights (Amendment) (EU Exit) Regulations 2019 will make some small technical changes and introduce new provisions intended to preserve UK-located European works councils (although it has been argued that the European works council arrangements do not actually work) but, apart from the changes made by those regulations, employment law will remain the same in the immediate term (for further details please see “Will Brexit frustrate your European works council?“).

Business travel to EEA and Switzerland

The rules for British citizens travelling to Ireland will not change and they will be allowed to undertake any activity without restriction. After Brexit, British citizens travelling to the other EEA countries or Switzerland will be exempt from visa requirements for up to 90 days in a 180-day period. This is for visits only, including for attending business meetings. However, British citizens will be unable to undertake paid work, so employees must understand the scope of the proposed activities on each trip and obtain any required work permissions if these go beyond the activities allowed for visitors. It will also be important to calculate the time spent in the Schengen area on a rolling basis to ensure that the 90-day maximum stay is not exceeded. British citizens will also need to have a passport which is valid for at least six months from the time that they enter the European Union. Note that some British passports are issued for more than 10 years in total but only the first 10 years of validity can be counted towards this six-month requirement. The government has produced a calculator that people can use to check if they have enough time left on their passport to cover a visit.

Business travel to United Kingdom

If the British government proceeds with its original plan to bring in new primary legislation to end the free movement of EEA and Swiss nationals to the United Kingdom, there is likely to be a short period after a no-deal Brexit in which free movement will still apply. However, recent press reports suggest that the government may seek to end free movement using secondary legislation. It is likely this will ultimately prove to be unfeasible. However, if the government is successful in using secondary legislation, it could mean that free movement will end on exit day. After this, Irish nationals will continue to undertake business travel to the United Kingdom without restriction due to the common travel area arrangements. The arrangements for EEA or Swiss citizens arriving in the United Kingdom between the date that free movement ends and 31 December 2020 are currently unknown. The government previously announced that they would be able to enter visa-free for up to three months and would be allowed to undertake any activities without restriction; however, this plan has now been scrapped and its replacement is yet to be announced.

What would a no-deal future look like?

In the longer term, there are lots of potential employment implications for which employers should prepare.

Possible divergence from ECJ case law

Pre-Brexit decisions of the European Court of Justice (ECJ) will remain binding on most UK tribunals and courts, but need not be followed by the Supreme Court. New ECJ decisions will not be binding on any court or tribunal, although they could be considered if relevant. Overall, the UK courts are likely to continue to respect most ECJ rulings, as long as UK and EU legislation remain the same.

No new directives

The United Kingdom would not be required to adopt the Transparent and Predictable Working Conditions Directive, the Work Life Balance Directive, the Whistleblower Directive or any future EU directives. However, the United Kingdom:

  • has already committed to implementing some aspects of the Transparent and Predictable Working Conditions Directive;
  • is one of the few EU countries to already have whistleblower protection; and
  • already provides some of the rights established under the new Work Life Balance Directive.

Thus, while differences in employment law could open relatively soon, they will be quite small.

Longer-term changes to employment law

Larger gaps will open if the UK government dismantles EU-derived employment laws after Brexit. Theresa May was always emphatic that her government would look to enhance workers’ rights after Brexit, not reduce them. However, other prime ministers may take a different stance.

Boris Johnson is reported to be keen to renounce the Working Time Directive. He gave evidence to a select committee that it has proved too expensive to implement in the United Kingdom and it would be surprising, given the strength of his previous statements, if his government made no changes to EU-derived working time laws. However, it is hard to imagine any modern UK government ending all rights to paid holiday. Instead, the United Kingdom can reasonably expect the scrapping of EU rules on working time limits and record-keeping requirements, but the retention of some rights to paid holiday (possibly paid at the rate of basic pay only). Similarly, some rights provided by the Agency Workers Directive could be abolished (eg, the right to pay parity after 12 weeks), but limited agency worker rights are likely to remain.

In the longer term, if a Conservative government remains in power, the country might also expect to see collective redundancy consultation being abolished or made less onerous and the restrictions on changing terms after a Transfer of Undertakings (Protection of Employment) (TUPE) being lifted (although TUPE is unlikely to be scrapped). Previous governments have explored whether discrimination awards could be capped (eg, at one or two years’ pay) but this was problematic under EU law. Capping discrimination awards is unlikely in the short term, not least because of the #metoo movement, but it could come back on the table later.

Ultimately, the United Kingdom faces the same challenges as any other modern economy: how to regulate the increasing volume of platform and contingent working and respond to the impact of demographic and technological change on the workplace. The United Kingdom’s withdrawal from the European Union will mean that the United Kingdom will need to find its own regulatory solutions to these challenges.

Discrimination rights

UK law prohibits workplace discrimination on grounds of nationality and national origin. In the (hopefully unlikely) event of any EU citizen experiencing abuse or harassment in the workplace, employers must be ready to respond under their anti-harassment policies. Employers may want to check that they already cover nationality as well as race.

Interestingly, UK equality legislation goes further than the EU minimum requirements in explicitly preventing nationality discrimination in the workplace. This is one of a number of instances where UK law actually provides more rights than the EU minimum and illustrates that, although the United Kingdom may dismantle some EU-derived employment rights following a no-deal Brexit, there are still likely to be areas of employment law where it goes further than the European Union.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide

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Employment Law the facts…

Employment law regulates the relationship between employers and their employees. It covers every aspect of employment from the hiring process through to the exit process, ensuring every individual is treated fairly.

Employment law is potentially full of pitfalls. Getting it right means keeping up with developments and really thinking about your policies before carefully implementing them. Getting it wrong can be extremely expensive.

There are seven areas of employment law likely to affect you. Here are the main things to be aware of in each area.

1) Recruitment

If you recruit the right people, you’ll have fewer problems to deal with later. We all make instant judgments about people and may even decide about a candidate’s suitability before they’ve said a word. Train interviewers to be aware of, and avoid, unconscious bias: ask standardised questions to give each candidate an equal chance. You must also check they have the right to work in the UK. Use probationary periods effectively and have regular reviews, if there are early signs the employee is likely to be unsuitable you can usually dismiss without risk.

2) Hours, leave and pay

You must adhere to the Working Time Regulations regarding working hours, rest breaks and paid annual leave. Ensure employees are paid at least the minimum wage, with everyone receiving a wage slip, and you must operate PAYE for tax and National Insurance contributions.

3) Employee rights

All employees should receive a statement setting out the main terms and conditions of their employment. Plus, certain ‘rights’ will be implied. There must be a relationship of ‘trust and confidence’ between employer and employees; a reasonable amount of privacy, the right to belong (or not) to a trade union, and the entitlement to ‘blow the whistle’ on employer wrongdoing; employers must provide a secure, safe and healthy working environment, and most employees are entitled to keep their jobs if the business changes hands. Everyone has the right to ask for (but not necessarily get) flexible working after being with an employer for 26 weeks.

4) Discrimination

Underpinned by the Equality Act 2010, it’s crucial that employers get this right as they are legally responsible for discrimination and harassment by their staff. Discrimination can be direct (e.g. not employing somebody because they are gay) or indirect (applying a policy equally to everyone that disadvantages one group, e.g. irregular shifts for women who may be carers). Harassment is often dismissed as ‘just banter’, but it’s not the intention that’s the issue, it’s how it was perceived. To prevent discrimination or harassment, employers need a workplace policy, should train their staff about what is and isn’t acceptable, and take prompt action against anyone who oversteps the mark. .

5) Disciplinary and grievance

You need to have disciplinary and grievance procedures that follow the ACAS Code of Practice in place. If you’re going to dismiss someone, you’ll need a good reason and it must not be unlawful or unfair (genuine redundancy can be grounds for dismissal). You don’t necessarily have to go through the rigmarole of a series of verbal and written warnings – you can go straight to a final written warning or dismissal in serious cases.

6) Sickness

Tackling illness in the workplace can be tricky – particularly if the employee has a disability and is protected under discrimination legislation. We’ve all come across an employee who seems to have a sickness bug on Monday mornings (short, intermittent illness) or those who are off for over a month (long-term sickness). All employees should be asked to attend a back-to- work interview after any period of illness: the key thing here is, where necessary, to offer adjustments that ease people gently back into work. Not all illnesses incapacitate a person so much that they need to stay in bed, or remain at home – this is particularly true of conditions such as stress or depression.

7) Working parents

When an employee is expecting a baby or is a new parent, they have extra rights at work. An employee and their partner could be entitled to: paid time off for ante-natal care, maternity leave and pay, paternity leave and pay, shared parental leave and pay, adoption leave and pay, and unpaid time off to care for a child. These rights apply to same-sex relationships as well as opposite-sex relationships. Employees can also have a few days’ ‘unexpected emergency leave’ for domestic emergencies

Original piece written by Irwin Mitchel

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The exemption from disclosure for confidential employment references….

The General Data Protection Regulation (GDPR) and the Data Protection Act 2018 (DPA), which implemented many of its provisions, are now over a year old.  The aim of the GDPR was to increase the protection of individuals’ personal data.  Employees are better informed than ever of their data protection rights, with employers receiving an increased number of subject access requests from their employees.

Interesting, however, under the DPA, individuals are not entitled access to a confidential employment reference written about them; neither from the author of the reference i.e. the ex-employer, nor from the recipient of the reference i.e. the new or prospective employer.  In order for ex-employers to refuse disclosure (should they wish to do so), the reference should clearly state that it is confidential, intended for the attention of the recipient only and that the author does not give permission for it to be disclosed to the subject.

Under the previous Data Protection Act 1998, the exemption relating to confidential references applied only where the employee made the request to the employer that provided the reference. The employee could therefore access the reference by making a request to the employer that received the reference instead. This provision (which was considered an anomaly) was removed by the DPA.

The author of a reference owes a duty of care to both the subject of the reference and the reference recipient.  Caselaw has established that where a reference is given, the reference must in substance be true, accurate and fair, and must not give a misleading impression.  Most job offers are conditional upon receipt of satisfactory employment references.  Clearly, an unfavourable reference can harm an individual’s future employment prospects and result in the prospective employer withdrawing an offer or dismissing an employee during their probationary period. This means that the balance in the employer’s favour may be disproportionate in cases where a reference is open to challenge due to being factually incorrect, or generally giving a misleading impression. Of course, where the individual is not permitted access to a reference, they are unable to challenge its contents.  Where the individual has evidence that the ex-employer had provided a negligent reference, they could bring a claim in the county court and request that the court orders disclosure of the reference.

This statutory exemption could mean that the UK is in breach of Article 8 of the European Convention of Human Rights in respect of an individual’s qualified right to a private life, as it is questionable whether the exemption which permits the reference to be withheld is proportionate to the individual’s right to fairness and transparency regarding their personal data. It is possible that at some point, the UK courts will receive a challenge to the legislation on this basis.  However, as the law currently stands, employers can continue to rely on this exemption, which means that any request for access to personal data contained in an employment reference which is clearly stated to be confidential, is exempt from disclosure.

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Latest market news: High demand for staff but low candidate Availability

 Key points from the March Survey:

  • Permanent placements continue to rise;
  • Growth of demand for staff remains high, but candidate availability drops lower;
  • Starting salaries increase to greatest extent for five months.

Growth in permanent placements…

Although the rate of expansion has softened from February’s three-year record high, the growth in permanent placements remains sharp. Permanent placements vacancies continue to rise at a slightly faster pace than that for temporary job roles.

Candidate availability...

The availability of permanent workers has fallen for the fifty-seventh consecutive month in March. Key permanent staff skills reported in short supply includes in particular Accountants, Engineers, HGV Drivers and Web Developers.

Pay pressures…

The rate of inflation in salaries for newly-placed permanent staff has accelerated for the second month running in March. Evidence suggested that the higher salaries are attributed to strong demand for staff alongside competition for scarce numbers of candidates with the required skills for the roles. Data published by the Office for National Statistics shows improved earnings growth in its latest report. Alongside a softer increase in living costs, this suggests that the pressure on real wages may be coming to an end.

Commentary:

Permanent placements are growing month on month as demand for staff remains high. More people are entering employment, but it doesn’t make up for the shortfall of candidates for many roles, from cyber security and aerospace through to sewing machinists and drivers.

As a result, employers are increasing starting pay to draw candidates away from current roles into new positions. 

Candidates planning to move jobs have a strong chance of getting a pay rise. With inflation outstripping pay growth for over a year now, high pay offers will be tempting, as the pressure on starting salaries still isn’t translating into pay rises for staff who stay put. Employers need to look at other means to keep staff, such as creating a good workplace culture and offering progression opportunities.

 

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Permanent placements rise to greatest extent since August

Key Points from the November Survey:

  • Permanent placements rise at a quicker pace;
  • Availability of candidates continues to decline sharply;
  • High demand for staff leads to further increases in pay;
  • The unemployment rate remains low.

Staff Appointments Rise Further…

The growth in permanent placements has reached a three-month high across the UK. The rise has been attributed to an increased demand for staff and company expansion plans.

The number of permanent placements in the South, conversely, is increasing at a slower rate.

Vacancies…

Staff vacancies have continued to rise sharply. The rate of growth since October, however, has slackened slightly.

Across all sectors, the number of permanent staff vacancies has increased. In descending order, the sectors with the greatest number are:

  • Accounting/Finance;
  • IT and Computing;
  • Engineering;
  • Executive/Professional.

Staff Availability…

Across the UK the availability of candidates to fill permanent roles has continued to decline. The South has recorded the steepest decline in permanent labour supply. The key permanents staff skills reported to be in short supply include:

  • Accounting/Finance:
    • Audit, Estimators, Insurance, Paraplanners, Payroll.
  • Blue Collar:
    • HGV and LGV Drivers, Production and Distribution.
  • Construction:
    • Construction, conveyancing, Quantity Surveyors.
  • Engineering:
    • Aerospace, Engineers, Technicians.

Pay Pressures…

The average starting salaries for permanents jobs has continued to increase, resulting in a growth which has lasted for just over five-and-a-half years. The increase is salary has been attributed to low candidate availability combined with a strong demand for staff. The quickest rate of inflation has been recorded in the North.

Unemployment…

The unemployment rate and claimant count for the UK remains historically low.

The unemployment rate stands at the lowest level it has been since 1975. It is virtually identical for both men and women.

In October, approximately 806,000 people claimed out-of-work benefits. Although a rise by around 24,000 people compared to last year, the claimant count has remained close to its lowest level recorded in the early 1970s.

 

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Legal News – Damages for breach of restrictive covenant

Employment law pic 2

In Morris-Garner v One Step, the defendants were the founding director of a company and her partner.  The company had been founded in 2002, but in 2006, in secret, the defendants incorporated another company. They then resigned from their positions with the original company and agreed to non-compete and non-solicit restrictive covenants.  The new company began trading in 2007, an​d in 2012 the original company sued for breach of the restrictive covenants.

The starting point with any restrictive covenant is that they are unenforceable as they restrain the employee’s right to trade.  However, if they are drafted no more widely than necessary for the purpose of protecting the employer’s trade secrets and confidential information, connections with clients or stability of the workforce, they may be enforceable.  The more senior the employee, the more likely are the courts to consider the covenant reasonable. We were reminded in March this year of courts’ unwillingness to enforce such terms (Bartholomews Agri Food v Michael Thornton); an interesting feature of that case was that even if the restrictive covenant had been reasonable when the employee resigned and started working for a competitor, it had been totally unreasonable when agreed 18 years previously at the start of his employment as a trainee in the field.  An action point from that is that the employer would be wise to review its contracts occasionally.
In Morris-Garner v One Step, the first defendant didn’t even argue in the High Court that the covenant was unenforceable.  Her partner did, claiming she was a mere employee – the court gave that short shrift, as it was clear that the reason for the agreement was that she was the first defendant’s civil partner and later her business partner.
The reason why this case is interesting, and useful for employers, is the remedy awarded by the court.  It would have been inherently difficult to identify any particular loss suffered by the company on account of the breaches of the restrictive covenants, so the court awarded what is called (after the principal case on the matter) “Wrotham Park damages”: the amount which the company might reasonably have demanded for releasing the defendants from the restrictive covenants before they began in competition.  Wrotham Park damages had been seen as a highly exceptional remedy.  This case has blown away that exceptionality requirement.
Employers should take care with restrictive covenant, especially in the drafting.  But as this case shows, employers need not forget about them entirely, and if breached there may be useful remedies.
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Hidden Talent

Many small businesses who struggle to recruit the skills they need could source from an often overlooked source of talented employees…those with a disability..

In numbers

6 Million.

The number of people of working age in the UK who are disabled or have a health condition, according to the government’s Disability Confident campaign.

83%

The proportion of disabled people who acquire their disability while at work (disability confident)

520,000

The number of vacancies that small businesses can’t fill because of a lack of relevant skills (Centre for Economic and Business Research)

Source: www.businessdisabilityforum.org.uk

 

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Changes in Law: Pensions & Gender Pay

There are some big changes in employment law in 2016, and companies need to be prepared

Employment law is constantly evolving, as new rules and regulations come into force, and as such it’s imperative employers are informed and prepared. 2016 will see a number of important changes of which all employers should be aware

Pensions

Pensions2

State pensions are set to be radically overhauled in April with the introduction of a new single-tier pension, which replaces the five separate elements of the current state provision.

But the government’s drive to simplify the system means employers will face increased national insurance costs because of the removal of the option to “contract out” of the additional state pension.

Recent research suggests the majority of UK employers have yet to consider the effect this will have on their own occupational pension schemes.

A survey by HR consultants Mercer found 70 per cent of employers with defined contribution (DC) schemes and 57% with defined benefit (DB) schemes have not decided how to deal with the increased costs.

It warned those with DB schemes could see payroll costs increase by up to 3 per cent, and those with DC schemes could find large numbers of their employees are unable to retire.

The message is clear – employers must decide how to deal with these changes as soon as possible or risk finding themselves in a sticky situation in the spring.

Gender Pay

PayGender

Although the UK’s gender pay gap is narrowing, progress is slow, and the government wants to speed up the process.

So from 2016 large businesses – those with more than 250 employees – will have to publish a report on their gender pay gap.

The legislation for this is already in the 2010 Equality Act , but has yet to be enacted.

The government consulted on the proposal earlier this year but has not yet set out exactly what data companies will have to present, or how.

Nevertheless companies should start addressing the issue now, before the new rules are introduced, so they can lessen the risk of reputational damage.

After all, firms with an unequal pay system could face negative publicity, which will affect their ability to attract and retain employees.

This in turn risks significant financial damage resulting from potential employee claims for equal pay, possibly going back over six years to the 2010 act.

Employers would be wise to audit their pay practices now to make sure men and women in their organisation are fairly rewarded.

If a gender pay gap is identified, it would be a good idea to launch an action plan to address it.

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Financial services rules broaden approach to whistleblowing

Whistleblowing

The new rules on encouraging staff to ‘blow the whistle’ in financial services firms are a significant development for whistleblowing in general. Firms must promote whistleblowing internally, and nominate a ‘whistleblowing champion’ by 7 March 2016 who will oversee the implementation of whistleblowing policies and procedures which must be in place by 7 September 2016.

The changes stem from proposals last October by the Financial Conduct Authority (FCA) and the Bank of England’s Prudential Regulation Authority (PRA). These bodies want to ensure firms formalise their arrangements for people who want to voice concerns about wrongdoing. Organisations affected by the new rules include banks, building societies and credit unions, PRA-designated investment firms, insurance and reinsurance firms.

The companies will have to inform UK-based staff about the new arrangements and their legal rights as a whistleblower. The whistleblowing policies will have to cover all types of disclosure, rather than limit these to the current categories covered under the Employment Rights Act 1996 (these are criminal offences, breach of legal obligations, miscarriages of justice, health and safety issues, damage to the environment and the deliberate concealing of any of these).

The changes will affect the drafting of employment contracts and settlement agreements. HR managers preparing these documents must ensure they do not include wording that discourages whistleblowing. Many workers are unaware that under current whistleblowing law they cannot sign away their legal right to report wrongdoing or that agreements that try to prevent them from doing this will be invalid. The legislation has not stopped some confidentiality clauses in employment contracts and settlement agreements seeking to deter workers from reporting concerns. Under the new rules these agreements will have to include a clear statement that the individual is not prevented from reporting wrongdoing under whistleblowing law, including to the FCA or the PRA.

To prepare for the new regime, financial services’ firms must appoint a senior manager, who is a non-executive directive, to have overall responsibility for the organisation’s whistleblowing policies and procedures and the protection of those using them. They will need to review existing policies and update them to ensure compliance.

Training may also be required as the range of concerns that will be reportable is much broader than under current whistleblowing law. Managers are likely to require specific training to recognise whistleblowing and protect whistleblowers. A firm’s fitness and propriety will certainly be called into question by the FCA where there is evidence of retaliation against a whistleblower.

With thanks to the CIPD for the information contained in this blog

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