What consequences will a Brexit have for EU employers?
By referendum held on June 23, 2016, a majority of the UK voters voted against continuation of UK’s membership of the EU. It is therefore relevant for businesses that are active in the EU market to anticipate the consequences of a termination of the UK’s membership. An important question is what legal impact a ‘Brexit’ will have for EU employers.
The Leave vote of June 23, 2016, in itself does not constitute a termination of the UK’s EU membership. This requires a notification of the UK to the European Council that it intends to withdraw from the EU (art. 50 Treaty on European Union). At the time of publication of this article the UK has not yet given such a notice. If the UK were to officially notify the European Council of its intention to withdraw, the EU and the UK will negotiate a withdrawal agreement taking into account the framework for the UK’s future relationship with the EU. The UK’s EU membership will in principle terminate 2 years after the date of notification, though the UK and EU may agree upon an earlier or later termination date.
Legal consequences for free movement of workers
If the UK were to withdraw form the EU, the EU treaties (Treaty on European Union and Treaty on the Functioning of the European Union) will cease to apply to the UK. Consequently, the UK shall not be bound by, for example, the freedom of movement of workers. The UK may decide to limit the access to and stay in the UK for workers of all or specific EU Member States. This may have legal consequences for employers that wish to second EU citizens to the UK (expatriates).
UK laws based on EU employment laws may be amended or entirely revoked
Keep in mind that many EU laws (directives) have been implemented into national legislation. For example, the UK’s Transfer of Undertakings (Protection of Employment) Regulations 2006. The UK may decide to amend or revoke these laws after a Brexit. This may impact national legislation based on the following EU directives:
– Directive 2006/54/EC (on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation (recast))
– Directive 2000/43/EC (implementing the principle of equal treatment between persons irrespective of racial or ethnic origin)
– Directive 2000/78/EC (establishing a general framework for equal treatment in employment and occupation)
– Directive 89/391/EEC (on the introduction of measures to encourage improvements in the safety and health of workers at work; the “Framework Directive”)
– Directives based on the Framework Directive, inter alia: Directive 89/654/EEC (workplace requirements), Directive 90/270/EEC (display screen equipment), Directive 98/24/EC (chemical agents), Directive 91/383/EEC (fixed-duration or temporary employment relationship), Directive 92/85/EEC (pregnant workers), Directive 94/33/EC (young workers)
– Directive 2003/88/EC (concerning certain aspects of the organization of working time; including the statutory minimum holiday)
– Directive 96/34/EC (on the framework agreement on parental leave concluded by UNICE, CEEP and the ETUC)
Specific areas regarding employment agreements
– Directive 91/533/EEC (on an employer’s obligation to inform employees of the conditions applicable to the contract or employment relationship)
– Directive 97/81/EC (concerning the Framework Agreement on part-time work concluded by UNICE, CEEP and the ETU; including the prohibition of discrimination against part-time workers)
– Directive 1999/70/EC (concerning the framework agreement on fixed-term work concluded by ETUC, UNICE and CEEP)
– Directive 2008/104/EC (on temporary agency work)
– Directive 98/59/EC (on the approximation of the laws of the Member States relating to collective redundancies)
– Directive 2008/94/EC (on the protection of employees in the event of the insolvency of their employer)
– Directive 2001/23/EC (on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses)
– Directive 2009/38/EC (on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees)
– Directive 2001/86/EC (supplementing the Statute for a European company with regard to the involvement of employees)
Jurisdiction and applicable law
Whether a court within the EU has jurisdiction in civil law matters is in principle determined on the basis of European law. After a Brexit, UK courts may establish their jurisdiction in civil law matters on the basis the UK’s own jurisdiction laws. The same applies to determining the applicable law in civil law matters. Furthermore, decisions of courts of EU Member States may not be enforceable in the UK as they are now, since this is also regulated by European law. The UK may decide to amend or revoke its national laws based on the European Posting of Workers Directive (which includes rules on determining the applicable law in cross-border secondment). This may bring about issues in cross-border employment and litigation.
Court of Justice
Decisions of the European Court of Justice adopted before the Brexit may still be relevant for UK courts, especially decisions in which the Court of Justice interprets and applies European law that has been implemented into UK national law (see earlier paragraph on EU directives). Also, UK case law that considers and applies decisions of the Court of Justice may still have the status of legal precedent. UK courts will not be able to request a preliminary ruling from the Court of Justice anymore nor will it be possible to appeal decisions of UK courts before the Court of Justice.
It is not possible to predict at this time how the process will be going forward and if and when a ‘Brexit’ will take place. Employers are advised to stay updated on the developments regarding the UK’s possible withdrawal from the EU.
Do you have a specific question regarding EU employment law and the legal impact of a possible Brexit? We are happy to address any questions or concerns.