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Business & Finance Series: EU Referendum

Brexit Implications For Employees

Cass Business School's Professor of Human Resources, Chris Rowley comments on the possible implications for employees of a Leave or Remain vote.

by City Press Office (General enquiries)

"The deluge of increasingly extreme polar dichotomy arguments and claims regarding possible post-Brexit life also applies to the critical area of work and employment where the Remain and Leave camps have some of their greatest internal tensions and contradictions.

On the one side we have assertions that Brexit will allow a new blank page for laws and an escape from unnecessary and costly red tape, giving businesses greater freedoms and flexibility - and so competitive advantage. This ignores the argument that not all laws are EU-derived, all regulation bad or all numerical flexibility (the ability to adjust labour to meet fluctuations in demand) good. For instance this flexibility can encourage competition based on labour costs - and so a downward spiral of a ‘drive to the bottom’ in terms and conditions and a consequent lack of investment, value-added and quality processes and innovation – as even the government has now admitted by introducing its national living wage, low productivity is at least partly caused by poor pay.

From the other side come assertions that the EU has been the creator and bastion of worker protections preventing a rush to a totally free labour market, while hinting of a return to Dickensian exploitation with Brexit. This stance is now taken by the TUC, unions and the Labour Party leader, Jeremy Corbyn. This is an interesting reversal of the previous and historical position of unions and labour politicians from Hugh Gaitskell, Jim Callaghan and Austin Mitchell to Tony Benn to Michael Foot, who viewed the European project as a capitalist club before it metamorphosed into a more ‘Social Europe’. This stance also ignores the fact that not all law is EU-derived and membership has not saved the UK workforce from the blight of retrograde and draconian employment terms and conditions, such as in Amazon’s warehouse or Sports Direct allegedly not meeting the minimum wage. And now the growth of the so-called ‘gig’ economy let along the growing disparity in rewards between senior executives and ordinary employees and capricious capitalism practices and manoeuvres, as in cases such as the recent collapse of BHS. These have all resurfaced in the news in the last few days. As Vince Cable, the former long serving business secretary recently said, it would not be a ‘bonfire of EU red tape’ because the UK already has one of the least regulated labour markets in the world.

Both sides betray a lack of historical and contemporary grounding and analysis of both employee relations and politics. A more nuanced and balanced view is neded. One problem is that there is much counterfactual argument of causation – what would have happened anyway. Nevertheless we need to recall four simple matters about employment protection and rights:

  • the status of employment regulation as some existed pre-EU, some is not EU-driven and some is EU-derived;
  • much depends on the post-Brexit UK-EU relationship;
  • the power of social norms and expectations remain;
  • the importance of ‘Realpolitik’ is over-arching.

Firstly, employment regulations have a mixed heritage. Some protections were passed before EU membership. The UK introduced laws on race discrimination in 1965 and expanded this into the employment area in 1976. There were also laws on equal pay. The UK was an early adopter who helped drive EU equality policy. Some laws are not EU creations and are purely domestic in origin. These include unfair dismissal, minimum wages, unlawful pay deductions, industrial action and vocational training. Some regulations are EU-derived. Some of these have supplemented existing UK rights and some have been gold-plated by the UK.

Secondly, much would depend on the exact post-Brexit relationship with the EU. Negotiations would be lengthy and complex, and the status quo would be broadly expected to continue during that period. Indeed, retaining EU employment law may be part of any new deal.

Thirdly, many employment protections have become accepted and expected workplace norms, woven into the fabric of the employment relationship in a developed society. It is unrealistic to imagine that such established rights borne out of sense of doing-the-right-thing and fair play, would be diluted or removed. They also reflect good HR practice, and employers may not want to abandon existing family-friendly policies given their significance in recruitment, retention and image. Indeed, the government might not want to increase burdens, uncertainty and confusion on employers by making significant changes. The reality is that laws would be retained and there is unlikely to be a major shift as wholesale change would not only be unexpected by employees and employers, but would be politically unthinkable, impractical and not a priority for government and politicians.

Fourthly, politicians wishing re-election would surely see little political advantage in allowing employers to discriminate against people, removing shared parental leave and requests for flexible working, etc. The whole direction of movement for the UK has been to extend family-friendly laws under-pinned by social attitude changes. These make it politically unattractive to scale-back such laws in any meaningful way.

Like all the other areas in the Brexit debate, it is impossible to predict with any degree of certainty how UK employment may change. The most likely scenario is business-as-usual in the short term, as rules are unlikely to change dramatically in a sudden radical departure from the status quo. Even in the long term - and irrespective of the employment rights consequences of any new UK-EU relationship - so much employment regulation is now established as good practice that any attempt at unravelling it will not only be complex and slow, but be seen as regressive and counter-productive - and so undesirable for not only employees but also employers and politicians."

Note: The views expressed in this post are those of the author and not of City, University of London.

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