Brexit is unlikely to have a significant impact on UK employment rights in the short term but the longer term picture remains unclear. The key immediate impact for employers will be in relation to visas and immigration for EU nationals. Below we highlight some of the key employment, immigration and incentives issues for employers.
While many UK employment rights derive from EU law, most, if not all of these, have been enshrined in UK legislation so remain unchanged following Brexit. Following the end of the transition period, there are some changes for UK nationals working for employers in the EU that become insolvent and also for businesses that have pan-European works councils (employee representative bodies). However, all other employment rights remain unchanged. There has been no indication from the Government as to what changes, if any, it may seek to make to employment law in the future, now that the Brexit transition period has ended. The Trade and Cooperation Agreement (TCA) signed by the UK and EU in December 2020 contains a number of provisions which may constrain the UK's scope to make such changes (see what does the UK-EU Brexit deal say about employment law for details) and the Government has consistently promised that Brexit would not lead to a significant dilution of employment rights. Whilst radical change seems unlikely, there is perhaps some scope for more incremental changes to be made. These could occur through Government legislating to make minor changes – but they could also come through the courts, particularly now that the Court of Appeal has been given the power to diverge from retained EU case law.
Immigration is the key area of impact for many employers. The end of the Brexit transition period saw the end of freedom of movement for EU nationals and their family members in the UK. A new immigration regime now applies and new arrivals from the EU after 1 January 2021 now need a work visa in order to work in the UK. In practice, this means the employer will likely need an immigration sponsor licence to employ EU (as well as non-EU) nationals. Under transitional arrangements, all EU nationals working in the UK as at 31 December 2020 (and their family members) are required to apply under the Government’s new EU Settlement Scheme in order to be able to continue living and working in the UK. Such EU nationals will have until 30 June 2021 to apply under the Scheme.
Employee Share Offers
Any company wishing to offer shares to its employees needs to check that it can do so without having to prepare and publish a prospectus. Fortunately, several jurisdictions have useful exemptions from this time-consuming and expensive process. Until the end of the transition period, the EU prospectus regime applied in the UK. In the unusual event that an appropriate exemption could not be found, once a prospectus had been published in a member state it could be passported throughout the EU. As the UK and EU have not reached an agreement on prospectus rules, the UK is a now a third country for the purposes of the EU prospectus regime and passporting between the UK and EU member states is not permitted. In most cases, however, an employee share offer should fall within an exemption from both the UK and EU prospectus requirements.
National Insurance contributions
Under the new UK/EU Protocol on Social Security Co-ordination, each EU Member State had until 1 February to decide whether or not they wanted to adopt the rules for detached workers (which effectively replicate the previous rules for posted workers). The EU has notified the UK that all Member States have expressed their wish to opt-in to apply the detached worker rules. This means that workers moving temporarily between the UK and the EU will continue to pay social security contributions in their home state, and receive necessary healthcare treatment in the country where workers are temporarily posted. It is still possible for EU Member States to opt-out at any time, however, they must give the UK notice and any postings that began before the opt-out will be protected. For more information please see the gov.uk pages about going to work in the EU and coming to work in the UK: