Brexit Could Loosen U.K. Workplace Laws

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By Chris Opfer

The U.K.'s looming withdrawal from the European Union is raising questions about whether the British government will loosen employment laws to try to keep businesses from fleeing.

A top concern for U.K. employers is that workers from other European countries be able to keep their jobs in Great Britain following the withdrawal. The government may look to entice businesses to stay in the country by making it easier for them to use contract labor, scrapping protections for transferred employees, lifting work hour limits, and capping discrimination damages, attorneys told Bloomberg BNA.

“It might give the U.K. the appearance of being a more flexible employer to do away with some of these things,” Elizabeth Graves, a partner at Eversheds in London, told Bloomberg BNA. “The type of measures that they may want to look at in terms of labor climate include what type of protection employees have and how easy it is to dismiss them.”

Prime Minister Theresa May pledged to try to maintain all employment rights available under EU law after the Brexit. May could tweak that stance, Graves and others said, adding that whoever eventually follows May at 10 Downing St. won’t be bound by the same promise.

Brexit negotiations are on hold while the U.K.'s highest court decides whether May must consult Parliament on any related moves. Ryanair Holdings PLC and Lloyds Banking Group PLC are among the businesses that have suggested they may shift operations elsewhere in the EU over market access and other Brexit concerns.

No Quick Moves

Any Brexit-related shift in the legal landscape for British employers is likely to be slow in coming. Withdrawal negotiations could take years and many U.K. employment laws have been updated to track those in place under the European Union.

“I don’t see the government repealing rights, but perhaps limiting them,” Nicholas Robertson, a partner at Mayer Brown in London, told Bloomberg BNA. “Limiting certain claims might be a way of trying to show that they’re open for business.”

May’s government will have its hands full with resolving what to do about EU workers already in the U.K. They also have to consider financial services and other firms’ concerns about access to markets in EU countries.

Meanwhile, it’s still not clear how much appetite lawmakers will have for watering down labor protections.

“There isn’t going to be any bonfire of workers rights,” Michael Bronstein, a partner at Dentons in London, told Bloomberg BNA. “There’s no political reason for any political party to go backwards with respect to any of these rights.”

Transfer, Agency Rights

There are certain moves that could make the U.K. more attractive to businesses, however. These include potentially trimming protections for workers that automatically kick in when a business or operation is sold.

The U.K.'s transfer of undertakings protection of employment (TUPE) regulations generally require a business that obtains another business or operation to take the existing employees with them. Transferred employees are entitled to the same terms and conditions that were in place under their previous employer.

Graves said there’s previously been talk of scrapping or scaling back TUPE protections, which are also guaranteed by EU law. Such a change would be “very, very significant,” she said.

Similarly, some U.K. employers would like to see laws changed to make it easier for them to hire workers on a contract basis.

U.K. and EU laws currently require employers to make contract workers full-time employees after 12 weeks on the job. That means they’re entitled to the same terms and conditions as other workers and get the same rights against unfair dismissal.

The U.K. version of the agency worker law was enacted following a directive from the European Union. As a result, Robertson said some proponents of repealing the law may frame it as “freeing themselves from the dead hand of Brussels.”

Other changes that could get some attention include repealing a 48-hour workweek, which Graves said many employers are already navigating around via exemptions. She and Robertson also said there could be a push to cap money damages available in employment discrimination cases.

But that doesn’t mean they expect a race to the bottom, with European countries scrambling to eliminate workers’ rights.

“I think it’s a real issue, if Britain sees a competitive advantage in deregulating slightly compared to Europe,” Robertson said. “I don’t think it’s going to be a sudden thing. I also don’t think Europe is going to respond by cutting labor protections.”

To contact the reporter on this story: Chris Opfer in Washington at copfer@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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