The Future of EU Law in the UK

The Future of EU Law in the UK

Background

Although the UK has left the EU, the European Union (Withdrawal) Act 2018 ensured that EU Law as at 31 December 2020 would essentially be “frozen” and continue to apply in domestic law, despite Brexit. This was done to ensure some sense of legislative continuity – if all EU law had suddenly ceased to apply on 31 December 2020, this would have left huge gaps in the legislative fabric of UK law, particularly in areas such as employment rights. This frozen EU law is commonly referred to as “retained EU law”. For the time being, most of this retained EU law has continued to apply in the UK, meaning that there has been little legislative divergence from the EU.

However, in September 2022, the Retained EU Law (Revocation and Reform) Bill was introduced to Parliament, promising to automatically repeal all retained EU law by 31 December 2023. This prompted a fair bit of panic among employment lawyers in particular, as the Bill in its original form would have torn large chunks out of UK employment law – including the TUPE regulations, entitlement to paid annual holiday, and the 48-hour working week – without any replacement legislation ready to fill the gaps.

The Act

Eventually, the UK Government relented, and amended the Bill. The new Retained EU Law (Revocation and Reform) Act will no longer automatically repeal all EU law but will instead alter the relationship between EU and UK law in more subtle ways. To summarise, the Act:

• Ends the supremacy of EU law and removes all directly effective EU rights on 31 December 2023.
• Encourages the Supreme Court and Court of Appeal to overturn EU-based caselaw.
• Introduces a new reference process, allowing the employment tribunal, lower courts, and the Attorney General to refer points of law from EU-based caselaw to the higher courts.
• Gives government ministers powers to reform EU-based laws (save for those introduced into UK law by an act of Parliament, such as the Equality Act 2010).

The Short-Term

31 December 2023 is no longer the legislative doomsday it once was – for the time being, UK law will remain unaffected by the Act. However, from the new year, the new reference procedure will begin to impact on employment tribunal and court proceedings. Tribunals and lower courts may make a reference where retained EU-based caselaw is relevant to the proceedings and the matter is of general public importance. While this latter limb of the test may set quite a high bar, if there is a point of law which would impact on large numbers of employers and employees, for example, then tribunals and courts may be more willing to make a reference to the higher courts.

We can also expect ministers to start exercising their new powers to reform EU laws. If the Government want to avoid the courts being swamped with references regarding these controversial areas, they will probably look to introduce these reforms towards the end of 2023 or in early 2024.

The Future

For any claims lodged after 1 January 2024, UK law will no longer have to be interpreted in line with EU directives, and directly effective EU rights will cease to apply. While EU-based caselaw remains binding on the lower courts, the aforementioned reference process means that its status will be less than certain.

The re-litigation of EU-based caselaw will give the higher courts plenty of scope to deviate on a number of issues. However, despite the Government’s encouragement, there is no guarantee that the higher courts will want to deviate from the approach of the European Court of Justice. It is entirely possible that UK law will, for the most part, continue to accord with EU law, despite the opportunity to diverge afforded by the Act.

It should also be noted that any reform of EU-based laws by ministers must comply with the requirements of the current trade agreement between the UK and EU, which requires the UK to maintain certain minimum standards. This will act as a limiting factor on the UK Government simply doing away with all EU law.

Despite this, there is already some evidence of divergence. The recently introduced Pay Transparency Directive introduces new gender pay gap reporting obligations throughout the EU, but this will not apply in the UK. The UK Government has also proposed changes to TUPE, holiday pay, and calculation of working time. You can read more about these here. It is likely that these will be some of the first legislative reforms made possible by the Act.

Of course, with a General Election on the horizon, it is difficult to offer too much certainty regarding the future direction of UK employment law. While the Conservative Government’s focus appears to be on deregulation and simplification, a Labour Government may be more likely to take an employee-friendly approach, and therefore diverge less from the EU’s current path – in some cases, Labour could even introduce reforms which go above and beyond the protections currently afforded under EU-based law.