Brexit: Changes to workers' rights?

The UK has passed the EU-UK Trade and Co-operation Agreement ("TCA"). As part of this agreement, the UK has agreed to uphold its existing labour and social protections, and beyond that to strive to increase labour and social levels of protection. On the face of it, this seems to suggest that no significant changes are imminent. However, even in the last few weeks there has been discussion of a post-Brexit review of workers' rights. Although the Business Secretary, in the face of sharp criticism, confirmed on 28 January 2021 that this review will no longer go ahead it begs the question as to if and when the government will look to make changes.

What is the UK government doing?

On 14 January 2021, the Financial Times published an article claiming that the government was considering proposals to remove the 48-hour maximum working week, change rules about breaks at work and remove overtime pay. The Business Secretary, Kwasi Kwarteng, was forced to confirm that his department was reviewing how EU employment rights protections could be changed after Brexit, before ultimately abandoning the review.

Whilst Mr Kwarteng initially commented that the review included consideration of the Working Time Directive, he has since commented that: "We will not row back on the 48-hour weekly working limit derived from the working time directive, we will not reduce the UK annual leave entitlement, which is already much more generous than the EU minimum standard, we will not row back on legal rights to breaks at work."

In the face of public outcry it seems that a review of labour rights has been taken off the agenda for the time being. Alongside public pressure, it is worth noting that if this does reappear in due course, under the TCA the UK has committed not to weaken or reduce the labour protections in place as at 31 December 2020. There are express dispute resolution provisions (which provide for reference to a panel of experts) in the event of a dispute.

In light of the above it will be interesting to see what form the anticipated UK Employment Bill takes. The Employment Bill, which was announced in December 2019 brings together several measures arising out of the government's Good Work Plan and is expected to be published in 2021. It is anticipated that the Bill will introduce (among others) a new labour market enforcement agency, a default expectation of flexible working, extended redundancy protection for those taking maternity leave, adoption or shared parental leave and unpaid leave for carers.

What about the domestic courts?

Perhaps the first divergences from the EU will come from the courts, rather than the government. The Court of Appeal and Supreme Court have the right to depart from EU case law "where it appears right to do so". The Supreme Court may have the opportunity to change the direction of travel sooner than might have been anticipated with the appeal of East of England Ambulance Service NHS Trust v Flowers being heard by the Supreme Court on 22 June 2021. The EAT and Court of Appeal (pre-Brexit) both held that voluntary overtime which extends over a sufficient period of time on a regular and/or recurring basis should be considered "normal" pay for the purposes of statutory holiday pay calculations under the Working Time Directive. However, the calculation of holiday pay has long been an area of complexity and controversy and it is possible that the Supreme Court will take this opportunity to change the direction of travel in this area.

What's in the pipeline for the EU?

Labour and social issues may not reach the top of the post-pandemic EU agenda as countries focus on vaccination programmes and economic recovery, however there are a number of EU directives in the pipeline. There is no longer an obligation on the UK to implement any of these directives, but if the UK decides not to do so and this results in a significant divergence on employment rights in a way that "materially affects trade or investment", the European Union can trigger the rebalancing provisions (including potentially the imposition of tariffs). It is currently unclear what sorts of amendments to employment rights might be considered to affect trade and investment. Changes to working time or agency worker laws could likely give the UK a competitive advantage, whereas amendments to specific holiday rules are unlikely to affect trade in the same way.

There are three new EU employment directives due to be implemented in 2021 and 2022, which were adopted by EU Council in 2018/2019:

• The EU Whistleblowing Directive (2019/1937/EU) (due to be implemented by December 2021). Although some of the provisions envisaged by this directive are covered by the UK's existing whistleblowing legislation, the directive has a wider scope than the UK regime. It protects self-employed people, shareholders and board members (including non-executives), as well as facilitators, individuals connected to the whistle-blower in a work-context, such as colleagues and relatives, and legal entities associated with the whistle-blower. It also requires employers to give feedback to whistleblowers.

• The EU Transparent and Predictable Working Conditions Directive (2019/1152/EU) (due to be implemented by August 2022). The UK has already implemented one of the directive's key requirements by extending the right to a written statement to all workers, not just employees and has promised to introduce the right to request a more stable and predictable contract in the Employment Bill. However, to align fully, the United Kingdom would need to make some further changes, such as: banning long probationary periods; providing for reasonable notice of shifts and compensation for short-notice shift cancellation; and taking measures to prevent abuse of on-demand contracts.

• The EU Work-Life Balance for Parents and Carers Directive (2019/1158/EU) (due to be implemented by August 2022). The UK is proposing to introduce carers' leave in the forthcoming Employment Bill and already goes further than the EU directive with regard to flexible working rights. To align fully, the UK would need to make some further changes including removing the service requirement for paternity leave and making shared parental leave operate so that it can be exercised independently by partners.

In addition, to the above, the EU Commission has published a proposed EU Minimum Wage Directive and a directive to introduce binding pay transparency measures may be in the pipeline. These directives may not necessarily trigger any changes to domestic legislation, or at least not any significant ones. The UK already has minimum wage laws and a (pre-COVID-19) policy commitment for the national living wage to rise to two-thirds of median earnings by 2024. The UK already has gender pay gap reporting requirements which are due for review by 2022, and ethnicity pay reporting is on the table.

To read other articles in our series of client insights on Brexit - People issues, please see useful articles on our Brexit Feature page.