21 November 2018
Five Ways That Brexit Could Impact on Jobs
Following the publication of the draft Withdrawal Agreement, we consider five ways that leaving the EU could affect individuals at work:
- Brexit uncertainty could cause redundancies
Investors and employers alike do not relish uncertainty. The draft withdrawal agreement provides a roadmap between now and the end of the transition period (December 2020), but offers little clarity about the way forward after this date, for example on whether the EU and UK will trade freely.
This uncertainty can impact on UK businesses. EU corporations may be less likely to invest in the UK. Loss of contracts would mean less work and fewer people being needed to do the work available, which could result in redundancies.
Reduced investment can also impact on employers’ cash flows which can require them to restructure. This again could involve job cuts, branch closures and redundancies.
- Relocation of jobs
To try to mitigate the impact of Brexit uncertainty, some employers may look to relocate jobs away from the UK to cities within the EU. A number of companies have already moved their EU Headquarters away from the UK to elsewhere within the EU, in anticipation of Brexit.
The risk of facing potential relocation may be higher for those working in financial services. The Outline Declaration on the future of the EU-UK relationship was published on the same day as the draft withdrawal agreement. This confirmed that the UK’s financial sector’s relationship with the EU going forward will be based on equivalence; the UK will lose ‘passporting’ rights i.e. the ability to sell financial services across the EU bloc after Brexit. Over a third of the UK’s largest financial services employers have said they plan to relocate some jobs away from the UK due to Brexit; it is estimated over 10,000 jobs could be affected.
Can you be compelled to relocate? Many employment contracts include mobility clauses. This type of clause says an employee can be relocated to a different work location at an employer’s request; these clauses vary in scope, for example whether relocation overseas is mentioned specifically.
In practice, whether an employer can rely on a clause like this in your contract to relocate you and your family, depends on whether it is reasonable to do so. Reasonableness is assessed by looking at your own personal circumstances, including how your employer consulted with you, the impact relocation would have on you and your family and the ties you have to your current location.
In practice, this means that the vast majority of individuals facing potential relocation outside of the UK to an EU country should be offered redundancy as an alternative.
- Loss of right to work in the UK/EU
Over 3 million EU citizens live in the UK. Over 1 million UK nationals live elsewhere in the EU. The draft withdrawal agreement says that these individuals (and their family members) will have the right to continue to live and work where they are for the rest of their lives. This also applies to anyone who moves to the UK/EU before the end of the transition period (December 2020).
These individuals may, however, be required to apply for a residence document to ensure they benefit from the withdrawal agreement once the transition period ends. The detail of this is still to be confirmed.
The picture is less clear after December 2020 for individuals who do not move before that date. UK citizens are likely to lose their right to automatically be able to live and work in EU countries and vice versa.
This may reduce the opportunities available for UK individuals to work on a temporary or permanent basis elsewhere in the EU.
It is also likely to lead to fewer EU citizens applying to work in the UK; which could reduce competition for UK nationals in the job market. For some employers, however, including the NHS and employers across the construction, catering and care sectors, fewer job applications could lead to unfilled posts due, for example, to skills shortages.
- Rise in discriminatory treatment of job applications from EU nationals
With the road ahead remaining murky after December 2020, UK employers could be deterred from recruiting and/or retaining EU citizens going forward.
The draft withdrawal agreement makes it clear that treating EU job applicants or current employees less favourably remains discrimination under the current law.
If an employer treats an individual less favourably as a result of being an EU, rather than UK, citizen, this is the basis for a race discrimination claim.
In practice, this may not prevent a less favourably approach being taken; discrimination can be hard to prove.
If you think you are being singled out because of your nationality, please contact us.
- Erosion of EU-based employment rights
Many of the fundamental rights UK employees enjoy derive from EU legislation: from our right to paid holiday, protection from discrimination and the right to take parental leave.
Withdrawal from the EU does, in theory, allow the UK Government to reduce and/or remove rights enjoyed by UK employees. However, nothing would change immediately. Any proposals would have to be considered by the UK Parliament.
Commentators have previously suggested that potential targets by the UK Government for change could include: scrapping the working week maximum of 48 hours, setting a cap for discrimination compensation and diluting the protection from discrimination afforded to agency workers.
The draft Brexit Withdrawal agreement says that the UK is required to provide a level playing field for various policy areas, including employment. At this stage it is unclear what this means in practice. This could restrict the UK’s ability to depart from EU legislation even after Brexit.
There are many uncertainties facing employees and the labour market. Unfortunately those uncertainties will remain for the foreseeable future whilst negotiations over our future relationship with the EU continues. In this situation, it is even more important for employees to understand their existing employment rights fully so they are as prepared as possible for any future change to their employment relationship triggered by the ever evolving legal and political climate we currently face.