Brexit – Now That It’s a Reality, What Happens Next for UK Employment Law?
A couple of weeks ago, when I wrote a blog post commenting on the potential UK employment law consequence of a vote to leave the EU, the “smart” money was still on a vote to remain. The actual result on Friday morning came as a shock to most people on both sides of the debate. The political and economic consequences of last Thursday’s referendum result have been enormous and continue to play out hour-by-hour. For their part, employment lawyers in the UK are also facing up to the reality that the vote will have significant consequences to their area of practice.
As I had noted previously, not much will change in the short term with respect to the employment laws currently on the books. Not only will it take at least two years for the UK to leave the EU, but most employment laws have been implemented through domestic UK legislation. Those laws will not change unless and until the government of the day repeals or amends them. But the political fallout from the referendum, which has deeply divided both main parties in the UK (the Conservatives and Labour), means that it is now very difficult to predict what the political landscape might look like — not only in the short term, but also over the next five to ten years. It is the future political direction of the country that will have perhaps the greatest impact on the UK’s employment laws — with the Conservatives traditionally being champions of the free market and deregulation, while Labour has been heavily committed to employee and union rights. The political map has been torn up, and we will need to wait and see which party (and, consequently, which political philosophy) will be in power at the point at which a UK government finally turns its focus to a review of the UK’s employment laws after the separation from the EU occurs.
In the short term, the economic turmoil has forced many companies to starting planning for contingencies, particularly with respect to their UK-based employees. What before was theoretical is now reality. Will layoffs be necessary? Will staff need to be transferred out of the UK? How will this impact the immigration status of non-UK nationals? Will regulatory issues (such as those for banks or other financial institutions) require operations and employees to be moved to EU countries? These questions will be particularly important for international businesses that had set up operations in the UK as a base from which to provide products or services throughout the EU generally. Many employers are holding their breath and waiting for the dust to settle. Although the employment laws are not about the change in the near future, employment lawyers will certainly be busy helping their clients navigate through some rough times ahead.
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.