What should employers watch for after the EU leave vote?


On 23 June, the UK electorate voted to leave the European Union (EU).

Since the result of the referendum was announced, there has been much uncertainty and speculation about the impact of the Leave decision on employment legislation and rights, workplace pensions and other employee benefits.

With a minimum two-year wait on the cards as exiting procedures are triggered and finalised, there are several key areas that employers should keep an eye on concerning employee benefits.

Michael Leftley, head of employment group at Addleshaw Goddard, said: “The buzzword really is ‘don’t panic’. You’ve got to adopt a wait-and-see approach at the moment.”

One aspect of employment law that may be affected by the UK leaving the EU is the working time regulations, which are founded in EU legislation. The working time regulations guarantee a minimum level of paid holiday as a legal right. But although this legislation came from Europe, there is some uncertainty around the extent to which this will change post-Brexit. Martin Chitty, employment partner at Gowling WLG, said: “I don’t see that changing because what the UK has done is more generous than the EU legislation requires. But things around the edge of that, [such as] the cap on the working week at 48 hours, paid rest breaks, or how you calculate holiday pay; all that could be watered down or removed completely.”

He added that the Transfer of Undertaking (Protection of Employment (Tupe)) regulations could be a ‘high-risk’ item, alongside agency worker regulations and collective consultation procedures.

The UK has led the way in regards to discrimination protections based on sex or marriage, however, these have been enhanced by the EU with the inclusion of sexual orientation, gender reassignment, religion and belief. Chitty said: “I think we have progressed far enough as a society to accept that equality of treatment under all of those headings is right and proper; I don’t think there is a political will to wind the clock back. There is, in the immediate aftermath of Brexit, some evidence of groups pushing for the removal of some of the EU-based equality legislation.”

Pensions could also feel an impact. Glyn Ryland, partner at Gowling WLG, explained a big concern is the turmoil in the investment markets. “The biggest worry at the end of the day is that pension schemes only have enough money to pay their pensions if their investments do well and their investments only do well if British business is doing well,” he said.

He added that the EU requirement to equalise guaranteed minimum pensions for men and women in the private pension sector may not occur as a result of the Leave decision.

“I think you would be crazy as an organisation to be taking any kind of firm decisions at the moment. We all just need to look and see how things start to unfold, then we can all start planning for a future business world outside the EU,” said Leftley.