What does Brexit mean for HR?
As a result of the referendum held in June 2016, the UK is currently in the process of negotiating its departure from the EU. The expected date at which the UK will cease to be a member is 29 March 2019, but it is likely that this will be followed by a transition period of around two years, in which most existing regulations will continue to apply as well as existing enforcement arrangements. At present, it would seem likely that new European regulations which are introduced during the transition period may well also apply in the UK, even though UK government representatives will not have participated in their creation. Contact me for support as the negotiations develop.
What happens after the transitional period is unclear and will be the subject of ongoing negotiations, but it is possible to envisage a number of possible future scenarios applying in the 2020s.
Scenario 1: No substantive trade deal is agreed In this scenario negotiations to agree on a close, future partnership between the UK and the EU fail and Brexit occurs without any agreement being made regarding employment regulation. Subsequent trade between the UK and the EU would take place under the World Trade Organisation (WTO) rules which say nothing about employment regulations. Parliament and, where relevant, the devolved administrations in Scotland, Wales and Northern Ireland would then be empowered to repeal or amend existing employment law which originates in the EU. Rulings of the European Court of Justice would no longer be binding on the UK courts and over time we could expect to see considerable divergence developing between EU employment law and that which applies in the UK. It is likely that the UK courts would continue to pay attention to ECJ rulings, but they would be considered advisory and there would be no obligation to follow them as is presently the case. In this scenario future, new EU employment law would not apply in the UK.
Scenario 2: A future trading relationship is agreed This is the government’s preferred outcome. It would mean that future trade between the UK and the EU is carried out according to a new set of rules that would be negotiated between now and the end of the transition period. Opinion is divided about how far employment regulation will form part of any such trade agreement. Existing trade deals between the EU and other countries, such as Canada, Japan, and South Korea, do not include any harmonisation of employment laws, the agreement merely being that both parties commit to observing International Labour Organisation (ILO) conventions. It is likely, however, that in order to secure a more comprehensive trade deal than those the EU currently has, the UK would need to agree to a considerably greater level of ongoing regulatory convergence. Otherwise, the UK would be in a position to gain what would be seen as an unfair competitive advantage over states that remain in the EU. Moreover, as government ministers have repeatedly stated their commitment to maintaining existing European employment law post-Brexit, writing such a commitment into any future trade agreement would not be politically problematic. Under this scenario new, future EU employment regulation would not automatically apply in the UK nor would future rulings of the ECJ be binding on the UK courts, but some form of agreement to mirror the European regulatory regime on a voluntary basis for a period might well form a part of the final deal.
Scenario 3: The UK remains in the single market Advocates of a so-called ‘soft Brexit’ are attracted by the proposition that the UK should leave the EU but remain integrated with it in certain areas including the single market (known as the ‘internal market’ in most EU countries). This is sometimes referred to as the ‘Norway option’ and would involve the UK continuing to trade openly and freely with the EU as it does at present. However, as is the case with Norway, it would also mean that all EU employment regulations would continue to apply in the UK post-Brexit, that new EU employment law would also apply and that the rulings of the ECJ would continue to be legally binding on the UK courts. There would be no UK representation on the ECJ and UK governments would have no say in the drafting of any new laws.