Brexit by topic | Employment, Incentives & Remuneration |

Brexit: Employment Law / Employee Incentives

Overview

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.

Employment rights

While many UK employment rights derive from EU law, most, if not all of these, have been enshrined in UK legislation so will remain unchanged following Brexit. At the end of the transition period, there will be 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 will remain unchanged. In the longer term, there may be some scope for reform in some areas derived from EU law which are considered unnecessarily burdensome on employers. Possible candidates for reform might be the 48-hour limit on working time, the rules on the accrual and calculation of holiday pay and the rules which offer equal pay and working conditions for agency workers. However, the government has not given any indication at this stage that such reform is on the cards.

Immigration

Immigration is the key area of impact for many employers. Under EU law, EU nationals (and their family members) benefit from free movement rights, allowing them to work in any EU member state without a visa. During a transition period until 31 December 2020, these free movement rights will continue to apply in the UK. All EU nationals working in the UK as at 31 December 2020 (and their family members) will be required to apply under the government’s new EU Settlement Scheme in order to be able to continue living and working in the UK. EU nationals already here or who arrive by 31 December 2020 will have until 30 June 2021 to apply under the Scheme. A new immigration regime will then apply to new arrivals from the EU from 1 January 2021 which will give no preferential treatment to EU nationals, meaning that employers are likely to need a sponsor licence to employ non-UK nationals, including both EU and non-EU nationals.

Employee share offers

UK companies that operate employee share schemes within the EU are subject to an EEA regime that may require them to publish a prospectus. There are however a number of important exemptions from the prospectus requirement including one applicable to employee share schemes. In the event that a prospectus is required then once it has been published in one EEA member state, it can be relied on throughout the EEA (known as "passporting").  If the UK leaves the EU with a deal then it is likely that the EEA prospectus rules will continue to apply and it will be possible to passport any prospectus between the UK and the EEA. In the event of a no-deal Brexit, the UK will be a third country for the purposes of the EEA prospectus rules.

National Insurance Contributions

EU regulations currently ensure that internationally mobile individuals working within the EEA only pay social security contributions in one jurisdiction. Hopefully steps will be taken to ensure that an individual will only be subject to one social security regime when working in the EEA.

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