UK: Brexit - practical steps for employers now

The post below was first published on our Employment blog

Following the Leave vote last week, employers are faced with a period of considerable uncertainty. The leaving process is put in train by giving a notice under Article 50 of the Treaty on the European Union, and this currently seems to be unlikely before the Autumn.  Even after that, until the UK actually leaves the EU, EU law continues to apply in the UK.  The extent to which new EU migrants are prevented from coming to work in the UK, and how much EU-derived employment law is retained, will be determined by UK law applicable when the UK leaves the EU and may not be finally settled until terms have been negotiated for our ongoing relationship with the EU, a process that could take several years and may not be completed when we leave the EU. Only as policies and negotiating positions become clear will employers be able to firm up their own responses.  So what to do in the meantime?

Keeping abreast of developments will be key, to try and get a feel for the likely direction of travel and the consequent implications for HR.  Our ebulletin here discusses what happens next, as well as outlining some practical steps.  Our Brexit hub explores the implications across a range of sectors and practice areas and includes a link to our more detailed (pre-vote) webinar on the possible employment and immigration law scenarios depending on the terms negotiated.

The key practical points now, in terms of employee issues, are:

• Communicate with employees, particularly those who might be affected by changes in immigration law, provide reassurance that they will be kept informed as the position becomes clearer and consider if any current employees can apply for British (or other EU) citizenship or permanent residence now.  The position on EU citizens already exercising their freedom of movement in the UK and of UK citizens working or living in the EU should be settled in the leaving negotiations.  It seems likely that transitional arrangements will be put in place to ensure EU migrants currently working here, and UK citizens working in the EU, can continue to do so. It is thought that both the EU and the UK will wish to act fairly in relation to this group of citizens. (The final position on new EU migrants may well be different, depending on the negotiations.)
• Audit the immigration status of any EU migrant workforce and the workforces of the businesses in supply chains.  Consider what steps might be necessary to recruit from the UK market if your business relies heavily on unskilled labour from the EU.
• Review employment plans including for recruitment and secondment of employees.  Ensure you are included in strategic discussions concerning the possible impact of Brexit, in particular relocations, offshorings, restructurings, redundancies.
• Familiarise yourself with your procedures and ensure they are up to date.  Get up to speed on information and consultation obligations under collective bargaining agreements, TUPE (and remember TUPE can apply to offshorings), collective redundancies rules, or works councils agreements.
• Particular consideration will be needed when drafting contracts for long-term outsourcings, given the possibility that the scope of TUPE could theoretically be very different by the end of the contract.
• If you are currently going through an information and consultation process, this may need to address concerns about the impact of Brexit.
• Continue to prepare for implementation of the General Data Protection Regulation which is directly effective from 25 May 2018 and therefore within the 2 year period for negotiation on terms of exit from the EU.  On exit, the Regulation would no longer apply but it seems likely that new domestic legislation would be implemented to replicate the Regulation or something similar (perhaps the current Data Protection Act would be re-enacted with adjustments).  Compliance with high standards of data protection law will continue to be important for ongoing European trade and to ensure that the UK meets adequacy standards in order to be allowed to have personal data from Europe transfer to the UK. The ICO has announced details of what guidance on the Regulation employers can expect and when; it has also published its response to the Brexit vote here.
• The EU Trade Secrets Directive must be implemented by 9 June 2018.  Again this is likely to be before the terms of exit are agreed and, therefore, technically the UK should implement the Directive.  However, given the amount of legislation the Government will likely be implementing due to Brexit, it is possible the Directive may not be implemented at that point. In the future the Government may wish to implement in order to protect inward investment from EU countries.
• If you have European Works Council arrangements, these should be audited.  Depending on the terms of the continuing relationship with the EU and the government of the day's approach, EWCs may no longer be mandatory in the UK, or an EWC agreement governed by UK law may no longer be compliant with the EWC Directive.  You may need to consider how to deal with UK employees and, if central management is UK-based, develop a contingency plan for relocating the base for EWC purposes.
• In due course, review standard documentation to check whether it will still work once we have left the EU, eg, provisions such as confidentiality/IP clauses or restrictive covenants expressed to apply within the EU.  Determine any effect on benefit schemes.
• Be aware that, given the Brexit workload for government, there could be delays to national initiatives such as gender pay gap reporting (planned for October 2016), the extension of shared parental leave to grandparents (a consultation expected in May 2016 was shelved until after the vote), and reform of tribunal fees/structure. On the latter, the House of Commons Justice Committee has published the results of its inquiry into court and tribunal fees, recommending a substantial reduction in employment tribunal fees and strongly criticising the government's failure to publish its post-implementation review. The judicial review challenge to the introduction of tribunal fees has been listed to be heard by the Supreme Court on 7-8 December 2016.