Last night the Financial Times reported that the Government is planning a post-Brexit overhaul of the labour market that would involve ‘ripping up’ workers’ rights ‘enshrined in EU law’. Specifically:
The main areas of focus are on ending the 48-hour working week, tweaking the rules around rest breaks at work and not including overtime pay when calculating some holiday pay entitlements, said people familiar with the plans.
Before we get carried away, we should remember what stage these proposals are at. We are overdue an Employment Bill and officials in BEIS are clearly working out some proposals to put to Ministers. It seems that they have been trying to gauge reaction in the business community to some of the possible changes – presumably that is where the FT is getting its information. There is no formal government proposal as yet.
However I have written before about the particular significance that some Tory MPs attach to the Working Time Regulations. Essentially they feel that the EU duped them by pretending that the Working Time Directive was a health and safety measure when in reality it was about (the horror!) improving employment rights. We don’t need to revisit that debate, except to acknowledge that if the next Employment Bill did include a measure ‘ending the 48 hour week’ there would be lots of Conservative MPs who would be enthusiastic about that.
But is such a change even possible? Didn’t the Government, in its deal with the EU, sign up to ‘level playing field provisions’ preventing them from reducing employment rights in this way?
Well, up to a point.
In fact, when it comes to employment law the EU-UK Trade Agreement is not very prescriptive. It specifically acknowledges that both parties are free to set their own policies and priorities when it comes to employment law. Then, at Article 6.2, it says this:
3. A Party shall not weaken or reduce, in a manner affecting trade or investment between the parties, its labour and social levels of protection below the levels in place at the end of the transition period, including by failing to effectively enforce its law and standards.
So a change in employment law is only prohibited if affects ‘trade or investment’. A change that doesn’t clear that bar is perfectly fine – even if it would not have been possible while we were actually bound by EU law.
Even if you take the view that a particular reform would affect trade, this doesn’t affect the legality of the measure in the way that we were used to when the UK was subject to EU law. To cause an issue, the change would have to be serious enough that the EU Member States thought it was worthwhile to invoke the dispute resolution mechanisms set out in the Treaty. What is more, when it comes to labour rights, that mechanism is limited to consultations involving an independent panel of experts (see Article 6.4) There is no recourse to the arbitration tribunal.
As it happens, I think the wholesale repeal of the Working Time Regulations probably would be a big enough step to cause difficulties with the EU. I don’t think that is a realistic option. But excluding overtime from the calculation of holiday pay strikes me as just the sort of change we can expect. And I really don’t see the EU kicking up a fuss if the record-keeping requirements in the Working Time Regulations are dispensed with. As far as I can tell, they are largely ignored anyway.
The Government has been swift to deny that it is planning to undermine workers’ rights. Business Minister Kwasi Kwartang Tweeted in response to the FT article denying any intention of rowing back on workers’ rights.
Well, of course, he would say that. When Labour was in power it always insisted that any improvements to workers’ rights were not a burden on businesses but were designed to help them be more competitive. I’m sure any change introduced by the Conservatives will employ the same sort of sleight of hand. Overall, the reforms will be pitched as improving the freedom for both sides to organise work in the way that suits them best. And it might well be that any rowing back of EU employment rights will be set off against improvements elsewhere. The Conservative manifesto promised more leave for carers and redundancy protection for new parents. It’s perfectly possible that the Employment Bill, when it comes, will be seen as a net improvement in workers’ rights.
But we have to acknowledge that we are in a different system now. Changes to employment law can no longer be legally challenged on the basis that they are not consistent with a Directive. This gives the Government quite a lot of scope to make important changes to employment law that will be significant for us here in the UK, but not dramatic enough to trigger a dispute with the EU. What we will see when the Employment Bill is eventually published is how far the Government is willing to test the boundaries of the trade deal.
(Oh and as it happens, I am holding a webinar on 21 January looking at the prospects for employment law in 2021. I’ll be looking at the impact of Brexit, the Government’s outstanding employment law commitments and some of the key cases coming before the Supreme Court – you can buy tickets here)
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Like Sarah O’Connor in the FT, I stuck my neck out on this issue in the past. I see no reason to resile from my view that things like paid holiday are pretty safe. But, as you hint, the overdue Employment Bill looks pretty lefty as it stands (FW by default, extra neonatal leave, stronger redundancy protection for pregnant women & new mothers, a single enforcement body), and if I was a BEIS minister I’d probably be looking for a few employer-friendly crumbs to throw into the Bill to keep the (many) dinosaurs on the Tory backbenches happy. Not to mention the employer lobby groups. Interestingly, it surely must be the latter who leaked this to the FT, which would suggest they are not quite satisfied with what’s on offer. So far.