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01 August 2018
A momentous milestone in the history of Brexit occurred on 26 June 2018 with the EU Withdrawal Bill receiving royal assent and becoming the EU (Withdrawal) Act 2018.
As a result of the act, it is now law that the United Kingdom will leave the European Union at 11:00pm on 29 March 2019, with the European Communities Act 1972 being repealed. Only fresh legislation could delay or overturn the United Kingdom's departure.
What does this mean from an employment law perspective? This update highlights some of the key takeaways.
EU domestic legislation
Under Section 2 of the EU (Withdrawal) Act, EU-derived domestic legislation continues to have effect in domestic law on and after the so-called 'exit day' (ie, 29 March 2019). Therefore, the likes of the Transfer of Undertakings (Protection of Employment) Regulations and the Working Time Regulations will remain as before.
Under Section 3 of the act, direct EU legislation that is operative immediately before exit day will remain part of domestic law on and after that date. This confirms, for example, that employers will still need to comply with the EU General Data Protection Regulation.
Principle of EU supremacy
Section 5 of the act abolishes the principle of supremacy of EU law insofar as it applies to any law passed on or after exit day. However, the principle will continue to apply "so far as relevant to the interpretation, disapplication or quashing of any enactment or rule of law passed or made before exit day". This means that where there is an inconsistency between an EU directive and UK domestic legislation implementing that directive, employers can still argue that it should be resolved in favour of the directive.
However, the new act gets more complicated. Although the supremacy of EU law principle is abolished, it can continue to apply "to a modification made on or after exit day of any enactment or rule of law passed or made before exit day if the application of the principle is consistent with the intention of the modification". This suggests that if, for example, the UK rules on collective redundancies in the Trade Union and Labour Relations (Consolidation) Act are amended post-Brexit, the revised provisions should arguably be interpreted in line with the EU Collective Redundancies Directive. This is provided that applying the principle of supremacy would be "consistent with the intention of the modification" – whatever that means.
Fundamental human rights
Under Section 5, the EU Charter of Fundamental Rights will not be part of UK law from exit day. Therefore, arguments over whether Tony Blair's government secured an opt-out from the charter in 2007 become redundant. However, "fundamental rights or principles which exist irrespective of the Charter" are retained – the upshot being that employers can still bring human rights arguments based on other sources, including the European Convention on Human Rights and common law.
Section 6 of the act enacts the key Brexit objective of escaping the jurisdiction of the European Court of Justice (ECJ). UK courts and tribunals will not be bound by any principles laid down or any decisions made by the ECJ on or after exit day, and cannot refer any matters to it. However, this provision is then qualified by a series of further, complex provisions.
For example, although not bound by jurisdiction, UK courts and tribunals may have regard to any action of the ECJ (and the European Union) on or after exit day "so far as it is relevant to any matter before the court or tribunal". In other words, if the ECJ issues a decision after exit day which is potentially relevant to determining a dispute on discrimination or agency workers, employers can still direct the tribunal or court towards it. The word "relevant" replaced the word "appropriate", which appeared in an earlier draft, supposedly to avoid the courts and tribunals having to make policy decisions on whether to follow EU law; however, "may have regard to" still suggests an element of choice.
Right of action
Under Schedule 3, there is to be no right of action in domestic law on or after exit day based on a failure to comply with any of the general principles of EU law. In the employment context, this will affect causes of action based on the general principles of equal treatment and non-discrimination embodied in the EU Treaty. Schedule 4 abolishes any right in domestic law to damages in accordance with the so-called 'Francovich rule'. In other words, UK citizens will no longer have the right to argue that the government has caused them loss by failing to implement EU law effectively.
The EU (Withdrawal) Act provides the legislative basis for a so-called 'hard Brexit' – if no further laws are passed, it determines where UK employers will end up. But what happens if a withdrawal agreement is reached with the European Union? In this scenario, regulations could be made to amend the act, including opting back into the jurisdiction of the ECJ – at least in some respects – until the end of a transitional period ending on 31 December 2020. If there is agreement with the European Union that – under Article 50(3) of the EU Treaty — exit day should be changed from 29 March 2019, ministers will have the power to lay regulations before Parliament that would vary this.
Much will depend on the government's proposals on trade and customs relations with the European Union, which are due to be set out in more detail in the coming weeks. However, employers can expect many twists and turns yet, as Brexit is a drama that is set to go to the wire, whether businesses like it or not.
For further information on this topic please contact Colin Leckey at Lewis Silkin by telephone (+44 20 7074 8000) or email (email@example.com). The Lewis Silkin website can be accessed at www.lewissilkin.com.
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