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 will remain unchanged following Brexit. 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 at least in the short term. 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 – such as 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, this will depend on whether there is the political appetite for reform by the government in power at the time.
Immigration is the key area of impact for many employers. Currently EU nationals (and their family members) benefit from free movement rights, allowing them to work in the UK without a visa. However, all EU nationals working in the UK as at the date of Brexit (and their family members) will be required to register under the government’s new EU Settlement Scheme in order to be to continue working in the UK. Transitional arrangements will apply for EU nationals arriving in the UK between the date of Brexit and 31 December 2020. A new immigration regime will then apply from 1 January 2021 which gives 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. Hopefully steps will be taken to ensure that UK companies are able to continue to offer shares to employees within the EEA without having to publish a prospectus. If equivalent exemptions are not available to UK companies then they will be in the same position as third country issuers and may need to re-consider how to structure their share incentives for EEA employees in a way that avoids the need to publish a full prospectus.
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.