The EU-UK Trade and Co-operation Agreement (TCA): what does it mean for UK employment law?

United Kingdom

The trade deal (referred to as the TCA) which the UK reached with regard to the EU late in December last year has some impact on employment law, particularly with regard to future employment rights and the development of UK employment law. In this Law-now we highlight the key issues including the commitment to maintain workers’ rights, the potential scope for divergence and international personal data transfers.

Commitment on workers’ rights

The TCA incorporates “level playing field provisions” intended to avoid either side gaining unfair competitive advantage by undercutting (among other things) the other’s employment standards. This involves reciprocal obligations “not to reduce the level of protection for workers or fail to enforce employment rights in a manner that has an effect on trade” and  is referred to as the “non-regression” principle. It applies specifically to the following areas:

(a) fundamental rights at work;

(b) occupational health and safety standards;

(c) fair working conditions and employment standards;

(d) information and consultation rights at company level; and

(e) restructuring of undertakings.

The TCA also explicitly provides that each party shall  “continue to strive to increase their  respective  labour and social levels of protection” - although this does not involve a commitment to align UK employment law with developing EU law as the EU had originally proposed, and falls short even of the limited commitments of Theresa May’s previous government in relation to keeping pace with EU employment protection.

There are separate obligations in the road transport section of the TCA to comply with rules on working time, rest periods, breaks and tachographs for drivers transporting goods between the UK and the EU.

Enforcement of employment rights

Another point to note within this chapter of the TCA is the reference to the enforcement of employment rights, and a commitment that the parties will effectively enforce these rights. In the UK there are a range of different bodies that enforce employment rights including the Equality and Human Rights commission and HMRC. The UK has already said it will introduce a Single Labour Market Enforcement Body, although progress has been slow. In relation to enforcement the deal involves a commitment that both parties will:

  • have an effective system of labour inspections relating to working conditions and the protection of workers;

  • ensure that judicial proceedings are available for violations of labour law; and

  • provide for appropriate and effective remedies, including interim relief, as well as proportionate and dissuasive sanctions.

It has been suggested that these provisions may prevent the UK from reintroducing employment tribunal fees and introducing a cap on compensation for discrimination – both of which have been previously mooted. The specific reference to interim relief may also result in changes. Interim relief refers to the ability of a court or tribunal to order an employer to carry on paying a dismissed employee before their case is finally determined and is currently only available in the UK in very specific situations such as dismissal for whistleblowing , for trade union membership or  activities or in relation to certain activities as an employee representative including in respect of  health and safety. Whether this will result in an extension of the situations in which interim relief may be claimed remains to be seen. The issue has recently been in the spotlight in the case of Steer v Stormshore, where the EAT decided that the lack of an interim relief remedy for discrimination claims was not contrary to EU law but may be unlawful under the UK’s independent obligations under the European Convention on Human Rights (ECHR). The TCA contains a separate commitment from the UK to continue to respect the rights and legal principles set out in the ECHR.

“Rebalancing” provisions

If the UK nevertheless in the future proceeded significantly to diverge from EU employment rights with a material impact on trade and investment between the UK and the EU, then the deal contains “rebalancing” provisions which mean that, in the absence of agreement between the UK and the EU, the matter will be referred to a dispute resolution process which involves a panel of experts. There is also scope to impose tariffs and to review and potentially suspend trade-related parts of the TCA, although measures must be restricted in scope and proportionate to remedy the situation. Any alleged impact needs to be based on “reliable evidence and not merely on conjecture or remote possibility.”

Will we see changes in UK employment law?

The UK is, in principle, now free to depart both from existing EU derived provisions incorporated in UK law by way of “retained EU law” under the EU (Withdrawal) Act 2018 and from any future EU law developments -  although the EU may apply the rebalancing provisions if there is reliable evidence of a material impact on trade or investment.

In the short term, very little is expected to change in relation to UK employment law, but there is the real possibility that we will see some possibly smaller changes in the future. For example, some of the more controversial aspects of employment law which have developed from European case law could be changed, such as holiday pay calculations. However, radical developments such as a complete repeal of the Working Time Regulations, seem less likely.

Nevertheless, ever since the Brexit referendum, there has been a great deal of speculation about which areas of employment law may be subject to change. Areas regularly identified include changing compensation for discrimination by introducing a cap and amendments to TUPE relating to post-transfer harmonisation of terms and conditions. The recently ennobled Conservative and influential ex-MEP Daniel Hannan called in an article on 6 January for the abolition of the Temporary Workers Directive which underpins the Agency Workers Regulations. It remains to be seen how the current Conservative government will develop UK employment law, but any deregulation campaign would not only run into potential sanctions under the TCA but also appear to inconsistent with the asserted “levelling up” agenda.

Data sharing from the EEA to the UK

The TCA contains a section on the “interim provision for transmission of personal data to the United Kingdom”, outlining a temporary arrangement which has been agreed in relation to EEA data flowing into the UK. For a specified period the UK will not be considered a third country. This temporary arrangement allows data to flow in accordance with previous arrangement for at least a further 4 months, which may be extended to 6 months. It is hoped that during this time the EU will issue an “adequacy decision” in relation to the UK to enable data to continue flow freely. The ICO has welcomed this announcement.

In relation to data moving from the UK to the EEA, the position is governed by the newly defined UK GDPR (which is the Data Protection Brexit Regulations and the retained EU law version of the GDPR). The UK has already decided that the 30 EU/ EEA countries, as well the 12 other countries that already have an EU “adequacy decision”, are adequate and so no further changes to process are necessary here.

Immigration and retained EU law

We have only touched on the key employment law issues in the trade deal in this article. Brexit does of course have wider consequences for employers. In our recent ‘Life after Brexit’ series, we discussed the end of free movement and the new immigration regime: Life after Brexit: An update on the UK’s new points-based immigration system . For further information on how the UK courts will approach EU law in the future, read our earlier Law Now on retained EU law and employment rights: Life after Brexit: An update on employment law implications .

Practical steps around Brexit planning

For HR teams, Brexit has to date involved a great deal of work around immigration, involving issues around sponsorship, workforce planning and right to work checks. The actions required from a purely employment law perspective are limited. Organisations may wish to identify and review references to EU law in HR documents. Actions are also called for in relation to any involvement of UK employees in European Work Councils. Please get in touch with your normal CMS contact if you wish to discuss any of the developments discussed above.