The UK left the European Union on 31 January and will undergo a transition period until 31 December 2020. During the transition period, the UK will remain in both the EU customs union and single market.
The transition period may be extended to 31st December 2021 or 31st December 2022 if an extension is mutually agreed before 30th June 2020. However, it is rather unlikely that there will be any extension to the transition period as the European Union (Withdrawal Agreement) Act 2020 prohibits any extension to the transition period beyond 31 December 2020.
What will change for Irish employers in the transition period?
There will be no immediate changes for employers and employees during the transition period.
Until 31 December 2020, EU employment law rights and obligations will continue to apply to the UK and the UK will continue to apply EU schemes, such as those relating to the free movement of workers, posting of workers, European Works Councils, passporting for credit institutions and the rules on the jurisdiction of employment disputes.
Can Irish Employers Continue to Employ UK Citizens without an Employment Permit?
Irish employers will be free to employ UK Citizens even after the transition period has ended. This is due to the Common Travel Area (CTA), which prescribes a variety of rights that Irish and UK citizens can exercise, including the right to live, travel, work and study in the other State.
The Irish and UK governments signed a Memorandum of Understanding reaffirming the CTA and reaffirming the commitment to maintain the CTA after Brexit.
Similarly Irish workers will continue to be able to work in the UK without the need for further immigration permission.
EU Employees in the UK Post Transition
Although Irish and UK employees will benefit from the CTA, once the transition period has elapsed EU, EEA and Swiss citizens will require immigration permission to work in the UK. The rights and status of such citizens already living in the UK will remain the same until 30 June 2021. The purpose of the "EU Settlement Scheme" is to give citizens already living in the UK permission to remain and continue working after the transition period. Those who have already resided in the UK for a period of five years can apply for indefinite leave to remain and those who have not yet accrued the necessary five years can apply for limited leave to remain until they reach the five year threshold.
For EU, EEA and Swiss citizens who intend to commence work in the UK after 1 January 2021, a new points based regime will apply, according to a policy paper released by the UK government in recent days.
A "posted worker" is an employee who normally works in one EU Member State and is sent by their employer to carry out a service in another EU Member State on a temporary basis. Two EU directives provide that, while the posted worker remains employed by the employer that has sent the employee to the other Member State and is subject to the law of the Member State they normally work in, the posted worker is entitled to core employment rights in force in the host Member State. These core rights include the minimum rate of pay, maximum work hours, minimum rest periods, minimum annual leave, equal treatment between men and women and health and safety standards where such rights and entitlements are more favourable than those that apply in the sending Member State.
Currently, employers who temporarily assign their employees based in an EU Member State to work in Ireland must notify the Workplace Relations Commission of any posted worker no later than the date that the posted worker commenced working in Ireland. A failure to comply with this requirement is a criminal offence under Irish legislation which can result in a maximum fine of €50,000. Irish based employers must also comply with the local notification requirements when posting workers to other EU Member States.
This arrangement will continue to apply during the transition period.
Post-transition, it is not yet clear how the posted workers regime will be affected. This will depend on whether an agreement is reached between the EU and the UK and, if so, the terms of the agreement. A guidance note issued by the Spanish Government states that, in the event of a no deal exit, the posted workers regime would be maintained if the competent British authorities act reciprocally.
European Works Councils
European Works Councils ("EWCs") have been relatively rare in Ireland to date. EWCs are bodies made up of European employee representatives of a specific multinational and their management counterparts. Through them, workers are informed and consulted by management on the progress of the business and any significant decision at European level that could affect their employment or working conditions.
In Ireland, the Transnational Information and Consultation of Employees Act 1996 governs EWCs and the Employees (Provision of Information and Consultation) Act 2006 applies to domestic work councils. The Transnational Information and Consultation of Employees Act 1996 provides that employers must establish an EWC in the following circumstances:
- The employer has at least 1,000 plus employees throughout the European Economic Area (EEA)
- The employer has at least 150 employees in two separate EEA states and
- The employer has received a written request to establish an EWC from at least 100 employees in two separate EEA states.
The Employees (Provision of Information and Consultation) Act 2006 requires employers with at least 50 employees in Ireland who receive a request from at least 10% of their workforce to inform and consult employees on developments affecting employment in the workplace and, in particular, on decisions likely to lead to substantial changes in work organisation or in contractual relations.
The EU Directive1 which provides for the right to establish EWCs prescribes that their central management must be situated in the EU. This could result in UK based EWCs relocating their central management to Ireland which may in turn result in an increased demand for EWCs domestically as employees' awareness of and interest in EWCs increase. Hewlett Packard has already relocated its negotiating body from the UK to Ireland. This relocation was successfully defended before the UK Central Arbitration Committee, which held that employers can opt for the location with the most favourable law for their EWC as long as the decision is made in good faith.
As such, we will be actively monitoring the situation as it unfolds over the coming months and years and will provide clients with advice and analysis on any implications for the asset financing community in Ireland as they become clear.
Where Irish-based employers have included post-termination restrictions on competition and solicitation covering the UK market, these clauses should be reviewed. For example, where the geographical scope of a clause was originally drafted to apply to the EU, such a clause no longer applies to the UK. This can be rectified by way of an addendum to the contract between the employer and the employee acknowledging that the non-compete clause in the contract of employment applies to the EU and the UK.
Where there is a concern that competitors in the UK market may seek to relocate to Ireland and poach key executives, Irish-based employers should review their non-compete clauses to ensure that their scope, in terms of business activities, geographical area and duration, is reasonable enough to be enforceable.
Amendments to non-compete clauses would be a variation to the terms of the contract of employment. Unilateral changes to employment contracts are unlawful. Employers must inform employees of any proposed changes and consult with them in order to obtain their consent to the changes. Employees are entitled to refuse to change their terms and conditions of employment. Employers should therefore consider how best to incentivise employee consent to such changes. In certain circumstances, amendments to contracts can be executed as a deed without requiring additional consideration. However, legal advice should be obtained to address whether consideration would be required in the specific circumstances in order for the amendment to be enforceable.
Currently, EU law determines which Member State's courts have jurisdiction over a dispute where both parties initiate proceedings in different Member States. This will continue throughout the transition period.
After the transition period expires, the EU regime will continue to apply in Ireland and throughout the EU. However, UK common law will apply in the UK. This could lead to increased conflict over where a dispute should be heard.
Future employment laws
One advantage for employers with operations in various EU countries is that many employment rights and obligations are broadly similar across the jurisdictions as they are based on EU law. This advantage will continue for employers who have undertakings in both Ireland and the UK as much of the employment rights granted under EU directives have been transposed into UK law. There are also many similar rights provided directly under UK and Irish law. However, as time goes on, it is likely that there will be an increased divergence in the rights and obligations under the two jurisdictions. CJEU case law will no longer apply to the UK after the transition period expires, and possibly from the withdrawal date. Many UK commentators have speculated that post-transition changes may be implemented in the areas of harmonisation of contracts after a TUPE transfer, agency workers and working hours.
However, it is possible that the UK will continue to implement elements of EU legislation as part of a negotiated trade deal between the UK and EU.
No changes are expected during the transition period. Employers should utilise this time to ensure their business is prepared well in advance of the end of the transition period.
Irish and UK employees' worker mobility into each other's respective States will not be affected due to the CTA. However, Irish-based employers should review their workforce requirements and consider whether any EEA or Swiss citizen employees are likely to be required to move to or from group companies in the UK. Those that relocate before the transition period ends may benefit from the EU Settlement Scheme.
Further changes and requirements may be outlined during the transition period.
1. Directive 2009/38/EC.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.