The Brexit trade deal between the EU and the UK commits both sides to a level playing field in relation to employment law rights. Both sides have some flexibility to reduce or weaken the level of rights in place on 31 December 2020, provided the change does not affect trade or investment between the EU and the UK. The deal contains a commitment that both parties will continue to strive to increase employment law rights.
The level playing field commitment covers several key areas, namely:
- fundamental rights at work;
- occupational health and safety standards;
- fair working conditions and employment standards;
- information and consultation rights at company level; and
- restructuring of undertakings.
There are separate commitments in the road transport section of the Trade and Cooperation Agreement (TCA) requiring both parties to comply with working time rules (including rest breaks and periods) for drivers transporting goods between the UK and the EU.
The TCA prohibits either the UK or the EU reducing or weakening the level of rights in place on 31 December 2020, but only in a manner that affects trade or investment between the UK and the EU. This means that the UK government cannot significantly overhaul UK employment law (where it stems from retained EU law). However, it leaves scope for some of the more minor changes on which employment lawyers have speculated in recent years.
Our December newsletter included a look at how employment law might develop in the UK after Brexit. Top of the “to be reviewed” list, following agreement of the TCA, might be changes to the calculation of holiday pay. It is difficult to see how such a change might affect trade or investment between the UK and the EU. Removing the 48-hour limit on average weekly working time, for example, might be more likely to have such an impact. Under the procedures agreed to resolve any disputes, the party concerned about an impact on trade or investment must base its assessment on reliable evidence, not “conjecture or remote possibility”.
The TCA includes a requirement for both the UK and the EU to maintain a system for effective domestic enforcement of employment rights. This includes an effective system of labour inspections, and available court actions and effective remedies, including interim relief. The UK’s plan to set up a single labour market enforcement body may be crucial to ensure the UK does not fall foul of these requirements. Weakening or reducing the level of rights in place (i.e. a breach of the level playing field requirements) would include a failure to enforce the law and standards effectively, subject to the requirement to show it affects trade or investment. However, the TCA recognises that both the UK and the EU retain the right to exercise reasonable discretion on how to allocate labour enforcement resources.
The European Court of Justice will not play a role in enforcing the level playing field provisions. Instead, the TCA contains a mechanism for a panel of experts to consider any dispute, after a 90-day consultation period, during which the parties try to resolve matters. Ultimately, if (say) the UK implements changes to employment law that materially impact trade or investment, the EU may implement “rebalancing measures”, including tariffs. As a result, we expect the UK government will (at least initially) take a cautious and gradual approach to any employment law changes.