What does Brexit mean for employment tribunals?

Following Brexit, and the UK- EU Trade and Cooperation Agreement (December 30), the UK will no longer be bound to remain in step with EU employment law. Although the UK now has the possibility to depart from this, it is expected that the immediate impact is likely to be minimal.

The starting point

The transition period, which began on the 1st January 2020, came to an end on 31st December 2020. During this period, all EU law continued to apply in the UK. Then as a starting point, at the end of the transition period, all existing EU law was converted into UK domestic law. From there, Parliament can then decide what to keep, what to repeal and what to amend.

In terms of implementation, this means that UK domestic legislation that implements EU rights still needs to be interpreted in conformity with EU law. We are therefore likely to continue to see Employment Tribunal decisions which look to EU interpretation.

A level playing field

Nothing in the UK-EU Trade and Cooperation Agreement changes the rights of UK workers under employment law. However, the agreement sets out the principles which will govern the changes in UK-EU employment law in the future. This is that, following the end of the transition period, the UK is now not bound to follow European Court of Justice’s (ECJ) new decisions and that new EU Directives no longer have to be implemented.

One condition for the trade deal was that there would be a level playing field between the UK and the EU in terms of employment (amongst other areas), ensuring fair and open competition between the two parties. This is so that neither UK- or EU-based employers can undercut the other in terms of lower and cheaper employment standards, but only if this affects trade or investment. Although there is not a completely level playing field to start with, it is the employment standards that currently apply which will be used as a standard. This standard is then caveated; the undercutting is only barred if it affects trade or investment.

So, the UK can diverge from EU employment laws, but ‘rebalancing measures’ will be applied following an arbitration process, if the EU has proof that there has been a material impact on trade or investment.

This does restrict the UK in making major changes to its employment law. A good example would be if the UK were to remove working time regulations. UK employers would then be at a competitive advantage in relation to trade. The EU could then take action through arbitration. Smaller changes, however, may be possible, such as aspects of holiday rules.

Decisions of the ECJ

Many areas of UK law, such as those on working time, discrimination law and Transfer of Undertakings (Protection of Employment) Regulations (TUPE) have been affected by decisions taken by the ECJ. The European Union (Withdrawal) Act 2018 sets out that, after 31st December 2020, UK courts are not bound to follow any new judgments coming from that court. The UK Supreme Court must, however, follow ECJ decisions made before that date as if it were its own case law. There is also power in that Act for the UK Government to make regulations allowing lower courts and tribunals to
deviate from existing EU decisions.

This is a likely point of dispute in Employment Tribunal matters as courts may have regard to new decisions where relevant. It is, therefore, possible that one side may argue that the court should take into account a new decision in the ECJ and the other side will argue that the decision should be ignored. Where this happens, it is likely that Employment Tribunals will take a cautious approach as a failure to follow a potentially relevant ECJ judgment could make a judge’s decision appealable.

New EU Directives

The UK will not be required to implement new EU Directives.

What to expect

There will be little in the way of immediate changes across employment, notwithstanding that the UK now has the possibility to diverge from EU employment law. We do expect, however, that there will be new litigation over points that were previously settled, and employers should prepare themselves for this. However, it is unlikely that UK Employment Tribunals will be swift to overturn ECJ decisions.

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