June 23, 2016
The result of yesterday’s EU referendum vote will dominate the UK’s political scene for months now and the outcomes will be followed with particular interest by business owners, who currently have to adhere to a range of employment laws that either originate from the EU itself or have been developed within the context of our membership of the organisation. Therefore, a vote for Brexit today could fundamentally change the way businesses operate in the UK. This is particularly true given that a large amount of the UK’s employment law has its roots in Brussels. Article 153 of The Lisbon Treaty set the precedent for this. It allowed the EU to create a base level of legislation that applies to all facets of the workplace. This includes working hours, workers’ rights, and health and safety. Individual nations are free to supplement this with their own legislation. For example, the minimum wage is an example of employment legislation that is independent of the EU.
Why are EU employment laws controversial?
The business community is split on the issue. Some openly accept EU regulation, seeing it as necessary for participation in a common market. Others argue that the protection of workers’ rights is ultimately beneficial for both labour and employers.
However, there is a large strand of the business community that sees EU employment laws as superfluous and detrimental to commerce. There are also many who cite the principle of sovereignty, asserting that the UK should be free to shape its own employment laws.
The government has tended to agree with the critics. David Cameron’s government has consistently aimed to make labour laws more flexible, and has attempted to win exemptions from some EU employment regulations.
This liberalising trend seems set to continue. If the UK does leave the EU, it could give the critics the impetus to reform our employment laws.
What legislation could come under threat?
- Working Time Rights: This decrees that workers cannot be required to work more than 48 hours a week. The legislation has always been unpopular with the UK government and business interests. Indeed, it was the UK who originally forced through a voluntary opt-out. A Brexit would likely see attempts to scrap it altogether.
- Health and Safety: UK businesses are obliged to follow rules in areas such as fire and explosions, and working from height. However, the health and safety laws have been attacked for being unnecessary and cumbersome. On top of this, there is a feeling that many EU member states simply circumvent these regulations; as this infographic from health and safety consultants Arinite shows, implementation varies widely across the continent, with the UK amongst the most stringent in following the laws. Critics argue that this puts the UK at a competitive disadvantage. The clamour to ditch some health and safety regulation will be strong.
- Sick leave: EU employees are entitled to a certain amount of paid sick leave. This is seen as costly for business, and may well be reduced.
- The Agency Workers Regulations 2010: This gives temporary workers the same rights as full time workers after having worked for a certain period of time. It has been a thorn in the side of the government, who have aimed to make labour more flexible. Business owners have also complained about added costs and confusion associated with the legislation. Therefore, the Agency Workers Regulations would be in great danger in the case of a Brexit.
How easy would it be to repeal EU employment laws?
Changes to EU employment laws will not be easy or instantaneous. Even if the UK does vote to leave, there will be a two-year transitionary period in which all EU laws will still apply.
The outlook after this depends on what kind of settlement the UK reaches with Europe. It is plausible that the UK would remain in the European Economic Area, whilst divorcing itself politically from the EU. Iceland, Liechtenstein, Norway, and Switzerland are examples of this, under the European Free Trade Association (EFTA). However, it must be remembered that these nations are still required to comply with the majority of EU employment laws. Leaving the EU is no guarantee of leaving its regulation.
Alternatively, the UK could shun the EEA altogether, pursuing a range of bilateral trade agreements. This would give the country the opportunity to make more radical reforms.
What if the UK votes for Remain?
Ironically, changes could still happen even if the UK rejects Brexit. Angela Markel, the most prominent figure in the EU, is broadly supportive of free market policies. She has been relatively sympathetic to calls to reduce employment laws.
A Remain vote could gain the British government more leverage in negotiations. Treaty changes may well follow.