Government Envisions ‘No Financial Impact’ on Employers in No-Deal Brexit

The Department for Business, Energy and Industrial Strategy has stated that it expects “no financial implications or impacts” to arise for businesses in the UK in the event of a no-deal Brexit.

In newly-released guidance, the government outlines the potential consequences of a no-deal Brexit for British employers, assuring that it will make as few changes as possible to the laws around workers’ rights and protections in the interest of upholding “legal certainty.”

The official guidance advises that UK employees currently working in EU countries should “make themselves aware” of the legislation that gives effect to EU employment law in their country of work, to “confirm whether they will be protected under the national guarantee fund established in that country” once Britain leaves the EU.

Meanwhile, British businesses and trade unions with European Works Council ties are urged to review their EWC agreements “in light of there no longer being reciprocal arrangements between the UK and the EU.”

The report maintains that a “scenario in which the UK leaves the EU without agreement remains unlikely,” due to the “mutual interests” of the UK and the EU in reaching a deal.

However, it goes on to state that the government has a “responsib[ility]” to prepare for “all eventualities.”

Major EU employment laws to remain in UK legislation

Currently, UK businesses are significantly affected by EU regulations on employment.

Legislation like the Working Time Regulations – which governs the law on annual leave, holiday pay and rest breaks – and the Equality Act 2010, which tackles discrimination in the workplace – give British effect to EU requirements regarding employer duties and workers’ rights.

After March 2019, authority over all English legislation currently dictated by the EU will return from the EU to UK Parliament, which may adjust employers’ legal obligations as it wishes.

All Parliamentary acts enacted to give national effect to EU directives will remain as good law unless they are amended or repealed by Parliament.

However, the government has stated that in the interest of “certainty,” it plans to make only “small amendments” to existing employment law where necessary to ensure that “regulations reflect the UK is no longer an EU country.”

In its report entitled ‘Workplace Rights if there’s no Brexit deal“, the government asserts that the Working Time Regulations will be transposed into British law regardless of whether or not a deal with the EU is reached.

The document also notes that UK law on employers’ duties and worker protections already exceed the minimum standards required by EU law.

Business lukewarm on no-deal papers

Responding to the government’s no-deal Brexit analysis, business groups have broadly welcomed the advice but urged greater detail.

Federation of Small Businesses chair Mike Cherry said: “A pro-business Brexit is one with a transition period – a vital lifeline that won’t be there in a no-deal scenario. The smallest firms will be the least able to cope with a cliff edge moment. It’s right to prepare for a no-deal outcome. That means following up these notices with guidance that every small business owner can understand”.

Adam Marshall, director general at the British Chambers of Commerce, said: “Ministers say they will take unilateral steps to keep trade moving freely, but must demonstrate what they will concretely do to limit the impact of delays, inspections and red tape”.

Josh Hardie, the deputy director-general at the CBI, added: “It’s right and responsible that the government have supplied information to businesses on issues from financial services passporting to food labelling, all of which will help lower the risks of the harshest outcomes from a ‘no deal’ Brexit. But without a similar response from the EU, many of these mitigating measures would be blunted.”

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