The Brexit trade deal and employment rights

EU employment law as at 31 December retained

It had already been decided, quite separately from the trade negotiations, that the UK would complete its separation from the EU’s legal system when it left the single market on 31 December 2020.  To avoid gaping holes being left in our domestic law, the UK Government has legislated to retain its domestic legislation that derives from EU law, and to copy and paste all directly effective EU law into domestic law, as it stood at the point of departure.

Clearly there are some major exceptions: for example the UK has decided not to replicate freedom of movement, or anything similar, in its domestic law.  Instead, the UK has decided to adopt a new immigration system that from 1 January 2021 applies to EU and non-EU nationals alike (see our briefing here for more information).

Additionally, numerous relatively minor modifications were required to make this body of law work effectively from 2021 onwards: hence the volume of Brexit-related statutory instruments that have been arriving in a steady stream over the past two years or so.

All this means that the UK and the EU go forward into 2021 from almost exactly the same starting point in many areas of law, including employment law as it applies across the EU and the UK.  It is worth adding however, that there are many areas of domestic employment law beyond the current reach of EU directives.  These include basic employment protection legislation such as unfair dismissal, most contractual remedies and the National Minimum Wage.

Trade Agreement includes non-regression commitment on employment rights

Had we left the EU without a trade deal there would – in theory at least – have been no constraints on the UK’s ability to repeal or amend its EU-derived employment law (subject some exceptions in relation to Northern Ireland under the Northern Ireland Protocol).  That’s because the Government ultimately decided to exclude provisions entrenching current levels of employment protection in its Brexit legislation.  Some largely procedural safeguards had been proposed by Theresa May’s Government.  These were dropped by Boris Johnson’s administration, though it has made various non-binding assurances that UK employment rights will not be diluted as a result of Brexit.

However, in the trade talks, employment rights formed an important component of the “level playing field” negotiations.  In essence, the EU wanted to prevent the UK from diluting its employment rights in order to secure a competitive advantage.  The final Trade Agreement now includes a commitment by both sides as follows:

“A Party shall not weaken or reduce, in a manner affecting trade or investment between the Parties, its labour and social levels of protection below the levels in place at the end of the transition period, including by failing to effectively enforce its law and standards.”

“Labour and social levels of protection” are defined in the Agreement as comprising “fundamental” rights at work; occupational health and safety standards; fair working conditions and employment standards; information and consultation rights at company level; and restructuring of undertakings.  The Agreement makes it clear that on the EU side, these rights are those that are applicable in, and common to, all Member States.

It will be seen that this reciprocal non-regression commitment is not absolute.  It will be engaged only if the regression is done in a manner “affecting trade or investment between the Parties”.  It is not currently clear how widely this provision will be interpreted.  This will be at least partly dependent how the UK/EU relationship develops in the coming years.  However it would presumably exclude consolidation, clarification or minor substantive changes in any event.

The second point is that these level-playing field provisions stop short of a continuing commitment on either side to mirror improvements to employment rights adopted by the other.  All they do is set the minimum floor at the level which prevailed at the date of the Agreement.  That means that even if the UK Government takes no action itself to amend retained EU law, employment law protection on either side of the Channel will begin to diverge if the EU brings in new employment measures which are not replicated in the UK.

No dilution of UK employment rights expected: quite the reverse

Realistically, even if there was not the commitment in the Trade Deal, it seems unlikely that the UK would have wished to reduce employment rights in a way which would affect trade or investment, at least in the foreseeable future.  

In fact, recent employment law changes have seen an enhancement of rights for workers, for example with the introduction of parental bereavement leave.  In terms of future policy, the Queen’s Speech in 2019 referred to an Employment Bill being published before the end of 2020, but the pandemic means that has not happened.  At the time it was announced, the Government envisaged that it would provide for:

• the creation of a single enforcement body to promote and enforce some core employment rights
• the right to work flexibly as default for all employment contracts
• 12 weeks’ neonatal leave and pay
• carers’ leave
• the right for workers with variable hours to request a more predictable contract

In the future, the UK does not have to continue to align its employment law with the EU (though there are some exceptions in relation to Northern Ireland). EU member states have a deadline within which they are required to ‘transpose’ EU Directives. This will no longer apply to the UK, so it can choose whether it wishes to mirror any improvements to EU-wide employment rights or not.  However, even in this respect the degree of divergence is likely to be relatively modest at the outset.  For example the Whistleblowing Directive is the next EU employment directive in the pipeline, and is due to be implemented across the EU by the end of 2021.  Unlike some EU member states, the UK has had whistleblowing legislation in place for many years. So, while fully mirroring the rights conferred by Directive would require some changes to UK law, they would involve relatively limited adjustments rather than wholesale change.