October 17, 2016

Brexit and the Conservative Party conference - so, where are we now?

The first Conservative Party conference since the June Referendum and the appointment of new Prime Minister Theresa May has provided the first glimpses of what the workplace landscape may look like in future.

The first announcement of note is the proposal of the Great Repeal Bill. This will apply from the point the UK leaves the EU and its effect will be twofold: repealing the European Communities Act 1972 (the effect of which is to make EU law supreme over domestic law); and, consequently, to make all existing legislation currently derived from EU law freestanding as domestic law.  In other words, where an existing provision is currently reliant on EU law (and which will cease upon Brexit), that right becomes a freestanding domestic right enacted by Parliament. 

In many respects this is a holding measure, transposing all existing EU derived rights into national law until a decision is made in time whether to retain, amend or abolish them as Parliament (or maybe, as some commentators have speculated, the Government) will then be free to do.

It would appear that the Bill will preserve the European case law interpreting existing EU derived legislation – so UK courts will most likely be required to treat decisions on EU laws by the European Court of Justice pre-Brexit as binding, and pre-Brexit UK court decisions incorporating the European Court's reasoning will remain binding on lower courts and tribunals. This will give businesses and workers certainty for the foreseeable future, with the same rules and laws applying after Brexit as they did before.   

In suggesting this approach, the Prime Minister appears to have put paid to the suggestion that Brexit alone will mean the wholesale end of EU derived workplace rights.  Although in some respects it may be seen as "kicking the can down the road", she is holding the immediate line while removing the immediate ability to raise concerns about the loss of workplace rights, and retaining the ability to review them in due course.   

However, the broader tone coming from the new Prime Minister in relation to workers' rights is very different from that under David Cameron. From her initial speech outside No. 10, Mrs May identified helping "working class families" as her priority and went on to mention specifically job security, gender pay, mental health and class inequality in the professions as key concerns.

But her actions since then have, in my opinion, shown this is more than just words.  She has appointed Matthew Taylor, the former head of the No. 10 Policy Unit under Tony Blair to carry out a review of workers' rights, potentially in my view with a focus on the growing legions of self-employed (and particularly those working in the gig-economy), those on zero hours contracts, issues around work-life balance as well as class inequality. In addition, she has announced that the Government will review putting workers on boards as part of enhanced corporate governance measures aimed at reviewing executive pay with detailed proposals to follow later this year.  

While the product of these reviews will only be seen in time, it appears in my view that there is a direction of travel towards enhanced workers' rights and greater worker representation. So while the Brexit decision may permit the Government to repeal EU based workplace rights, it seems far from clear that it will actually choose to do so.

However, despite the mood music towards enhanced workers' rights, the tune in relation to immigration is different.  Although Home Secretary Amber Rudd announced that businesses would have to publish how many non-EU workers they employ, the Government has since backtracked on this. That said, according to Brexit secretary David Davis, the post-Brexit right of EU nationals to remain and work in the UK is under review and is likely to form a key part of the UK's exit negotiations. While few actually expect EU nationals living and working here to be forced to leave, the very uncertainty around this may well cause EU nationals to reject job offers from UK employers. Empirically we are also seeing increasing numbers of EU nationals applying to become naturalised citizens rather than risking having to leave the UK. 

So what does all this mean for employers?

In the immediate short term nothing changes and the legal landscape is exactly the same as it was on 23 June.  However as the new Government beds in we can expect to see more substantive and detailed policy announcements starting from the autumn statement on 23 November in which the Chancellor is expected to focus on the economy, so watch this space.

In her closing speech to the conference, Mrs May promised to "protect" jobs and "repair" markets where they do not work properly (mentioning, notably, that she would ensure that "people are properly protected at work" and that workers' right would be "protected and enhanced" by the Government) and so clearly signalling in my view a significantly more interventionist approach in future. From what has been a relatively benign and stable workplace landscape for employers over the past few years, it seems clear to me that is going to start to change.

So what can we expect?

Admittedly this involves some guess work but here are my top five suggestions of things that may be introduced:

  • A restriction on paying dividends to shareholders when a company sponsored final salary scheme is in deficit
  • Further enhanced flexible working rights
  • Additional rights for "workers" and possibly some employment/workers' rights for the self-employed
  • Positive action to tackle class inequality
  • Additional workplace support and rights for those with mental health issues