Brace for impact: what does a hard Brexit mean for employees?

A reporter for The New York Times recently remarked that, to the American onlooker, watching Brexit was a very similar experience to watching ‘Lost’, that seemingly never-ending TV series from the 2000s. Following confused plane crash survivors on a desert island, it mystified viewers with its complex plot devices, endless characters, and perplexing cliff-hangers at the end of each episode.

Unlike ‘Lost’, however, Brexit will not end with a cliff-hanger. Rather, many commentators suggest it is likely to end with a “no-deal cliff-edge”. At 11pm on 29 March 2019, if a withdrawal agreement has not been signed, the UK will automatically leave the European Union. All EU rules and regulations will cease to apply and existing arrangements with the EU governing customs, trade, travel and citizens’ rights will end.  This possibility looks more likely than ever, as MPs have recently, and for the second time, heavily rejected the Government’s negotiated withdrawal agreement.

In this article, we try to answer the questions about a no-deal Brexit which loom large in the minds of employees: will my job be safe? Will I lose any rights? Will I be free to work between the EU and the UK?

Job security

Many employers fear economic damage if there is no withdrawal agreement. With no negotiated transition period and no trade deal with the EU, from 30 March 2019, UK exporters would face the same customs checks and tariffs as non-EU countries (and vice versa for EU exporters). According to a recent survey from the Institute of Directors, nearly one in three UK businesses are either planning to or already have moved part of their operations abroad as the odds of a no-deal Brexit increase. Echoing these findings, Tom Enders, CEO of aviation giant Airbus, predicted that the company would be forced to make “potentially very harmful decisions” about its UK operation.

Employees can take some comfort from low unemployment and recent economic growth, though redundancies may be inevitable in certain sectors. Business models built on frictionless access to EU labour and supplies, like Airbus, will have to handle trade tariffs, customs checks and new immigration procedures. If Airbus were to pull its UK operation, the impact on the UK aerospace industry would be seismic, where it directly employs 14,000 people and supports 110,000 jobs through its supply chain.

If you are put at risk of redundancy, you should seek legal advice from an employment solicitor to check your employment rights.

Employment rights

One area where employees can relax slightly is in relation to their employment rights. Many of these are longstanding and domestic in their origin, such as protection from unfair dismissal, redundancy pay, and the National Minimum Wage. These will not be directly impacted by Brexit.

In addition, the European Union (Withdrawal) Act 2018 effectively copies and pastes EU-derived laws into UK law. A significant portion of the UK's employment law comes from the EU, including discrimination rights, family leave, collective consultation obligations, rules around the transfer of undertakings and working time laws. The Withdrawal Act ensures that, when we wake up on 30 March 2019, there won’t be any holes in the rights and standards currently enjoyed by UK employees. However, this does not stop these rights being watered down in the future.

In theory, a future government could repeal all EU-derived employment rights. However, politically, this is unlikely to be a vote-winner. Employees and employers alike have become accustomed to rights like paid holiday and leave for working parents. In many areas, UK law goes further than the EU requires, such as providing 52 weeks’ maternity leave rather than the EU minimum of 14 weeks. Instead, any future policy changes are likely to be subtle, such as extending the 48-hour working week or removing the rule that travelling time counts as working time.

Immigration

There are currently large numbers of UK nationals living and working in other EU countries and many EU nationals living and working in the UK.  In a no-deal Brexit, EU nationals would no longer have an automatic right to live and work in the UK from 30 March 2019 (and vice versa).

Only EU nationals residing in the UK by 29 March 2019 would be guaranteed the right to stay permanently. Under the government’s settlement scheme, these individuals would have until 31 December 2020 to submit applications to live and work indefinitely in the UK. 

In comparison, EU nationals arriving after 29 March 2019 would be subjected to new and stricter immigration laws. A recent government policy paper outlines an immigration transition period between 30 March 2019 and 31 December 2020. During this time, EU citizens could enter, live, work and study in the UK as they do now for up to three months. They could also apply to extend this stay to 36 months (subject to identity, criminality and security checks). However, EU nationals who wish to stay beyond this period, and those arriving from 1 January 2021 onwards, will need to pass a new skills-based immigration system, due to be implemented in 2021. Please note that this policy paper is not binding, as accompanying legislation has not yet been passed by parliament.

What if there’s a deal?

The withdrawal agreement has now been heavily rejected twice by Parliament. If an amended withdrawal agreement is eventually agreed, the transition period within ensures that current arrangements for customs, trade, travel and citizens’ rights will continue until at least 31 December 2020. There would also be more time for EU workers to settle in the UK, as the settlement scheme would be open to EU nationals arriving in the UK by 31 December 2020. Alternatively, the UK and the EU may agree to postpone the leave date of 29 March 2019 to allow further negotiations.

While this would give employers additional time to prepare their organisations for life outside the EU, many of the warnings above about new immigration systems, economic concerns and employment rights will still apply once any transition period or postponement has expired.

We don’t know what will come from the ongoing negotiations with the EU. However, one thing is clear: unless an agreement is reached or the date for Brexit is postponed, we will reach the “cliff-edge” and the UK will automatically leave the EU on 29 March 2019. Employers and employees must be ready.

For more information visit our dedicated Brexit section or call on 0161 941 4000 to speak to one of our Lawyers.