‘Brexit’, that fateful decision that will ultimately lead to the withdrawal of the UK from the EU has significant consequences for the UK labour market, not least within the Hospitality Sector. This is true for both employers and employees and specifically because so many of our laws relating to the labour market/employment derive from Europe.
EU and UK Employment Law
The British employment landscape has been shaped by EU Directives on key employment issues, for example, discrimination, working time, TUPE, maternity/paternity/parental leave, part-time and fixed-term workers, agency workers and collective consultation rights.
Surprisingly, given the criticism often levied at EU / Brussels “Red Tape”, the UK has even gone further than required (by the EU) in some areas such as the “gold plating” of TUPE in relation to service provision changes, holidays under the Working Time Regulations and the provisions relating to shared parental leave.
The UK’s departure from the EU will mean that there is no longer any requirement for the UK to maintain laws as prescribed by the initial EU instrument, but it seems unlikely that we are about to see any substantial dilution to key provisions immediately.
The Hospitality Sector
The Hospitality Sector in the UK (Hotels, Restaurants, Catering and Events Management) employs approximately 2.9 million people.
|Sub Sector||Numbers employed|
|Hotel (and related)||512,000|
|Restaurant (and related)||1,493,000|
Its contribution to GDP in 2014 was £57 billion and there were circa 400,000 additional jobs created in the period 2010 – 2014.
Impressive numbers and within them lies a significant reliance on migrant labour.
- 75% of waiters, 37% of housekeepers and 25% of chefs are EU nationals
- One large hotel group estimated 64 % of its London workforce was non UK
- Pret a Manger employs 65% EU nationals and only 2% of its applicants are UK nationals
- Overall in the UK 25% – 38% of sector employees are EU nationals.
The BHA recently identified 4 policy priorities for discussion with Government which included (i) ensuring workforce supply to facilitate sector (continued) growth and (ii) alleviating the effects (particularly outside London and major urban areas) of the National Living Wage.
Thus, one of the key issues for the hospitality sector is that of the “free movement” of labour.
One possible path is the introduction of a completely new UK immigration system – perhaps similar to that which is in place in relation to non-EU nationals. (Foreign countries would also be free to put in place their own restrictions on travelling UK nationals).
However, the UK government has now given a strong indication that there will be a transitional arrangement for EU citizens residing in the UK to continue to have free movement post the UK’s exit from the EU. It is not clear how long this could be for but some legal commentators believe that this could be for up to 5 years from the date that the UK triggered Art 50. Theresa May has signalled that free movement of EU citizens could continue during an implementation period after the UK leaves the European Union.
The European council president, Donald Tusk, has made clear that while the EU27 will be willing to seek transitional arrangements, the “core principles”, including over immigration, must be maintained during that period.
He has suggested that if the UK wishes to stay in the single market while a free trade deal is negotiated and then implemented beyond the two-year formal exit process then free movement will have to remain.
Other areas of employment law that are potentially set for change include those below.
Whilst flowing from the EU, the obligations on employers not to discriminate against staff on the grounds of a protected characteristic (e.g. race, gender, age etc) are not simply a matter of law but have become regarded as a fundamental right. The UK Government could now lower that base of protection for employees. However, it is generally considered that these rights have become so ingrained it is unlikely they would be removed.
One change that we might see is a cap on compensation for discrimination claims, the original removal of which was a result of European case law. Such a cap would represent a significant change, but would be welcomed by most employers.
TUPE creates rights for employees to transfer on their existing terms and conditions and permits an employer to make changes only on specified and restricted grounds> For example changes can be made if unconnected to the transfer or, if connected to the transfer only when the employer can point to an economic, technical or organisational reason (ETO) that requires changes in the workforce. In the context of seeking to harmonise terms and conditions following a TUPE transfer, this is can be exceptionally difficult test for employers.
It is unlikely that TUPE would be repealed in its entirety because it is firmly embedded into UK business practice. With the aim of making TUPE more business friendly, it is possible the government would seek to make it easier to harmonise terms and conditions following a transfer as it would no longer be subject to the EU law constraints.
The Agency Worker Regulations 2010 were controversial in the UK, and the government resisted it for as long as it possibly could. It looks likely the legislation mayl be repealed. This means that the protections enjoyed by agency workers may be diluted or removed – and many employers’ recruitment practices could be affected as result.
The Working Time Directive has elicited much controversy. The changes that could be made are both numerous and significant: restrictions of payments to be included in holiday pay; the introduction of different references periods for calculating holiday pay and restricting claims for back pay further in time are all potential changes.
Brexit and the negotiations it will entail are clearly a massive undertaking.
Until such time as the UK exits the EU its labour / employment law framework will remain as it is. Thereafter, there may be some changes as referred to above but these are likely to be amendments and potential relaxation / de-regulation rather than major upheaval.
Thus, the outlook for the sector remains fairly stable in the short term.
Similarly and on a positive note, that key feature for the sector post Brexit i.e. the free movement of labour and thus access to consistent workforce supply, also looks likely to continue.