EU referendum: Would a Brexit free the UK workplace from EU red tape?

The Leave campaign has said that by 2020 it will impose visa requirements on all foreign workers seeking employment in the UK.

The pre-24 June scenario of EU workers having “freedom of movement” (no visas, no additional costs of hiring) will no longer apply. An Australian-type points based system will be introduced. This means employers have to satisfy a “resident labour market test” for all foreign workers.

For all foreign workers, all UK employers have to prove the negative: that no UK worker can do the job advertised because it is a highly specialised role.

This is the position which applied before 23 June 2016, but it only applied to those workers coming from outside the EU (on “Tier 2” visas). It will be virtually impossible to satisfy this test for unskilled workers and wage demands will increase as will inflation. The winning Leave campaigners say (rightly) that there is no “bias” in favour of hiring workers from the old EU.

However, businesses will spend more time processing immigration queries. Business immigration lawyers will become the most sought after in London and HR departments will have to increase in size to cope with the management time involved in hiring each foreign worker.

What about all those tiresome EU laws that would go? Which are they? In the event of Brexit, the UK would no longer have to give domestic effect to EU directives. The following laws are likely to go:

  • The Working Time Regulations: the repeal of the right to statutory holiday/48 hour week/rest-breaks. All these would become a matter of freedom of contract.
  • Agency Workers Regulations: giving equivalent rights of pay to agency workers as to permanent employees after 12 weeks continuous employment).
  • TUPE: Or certain aspects of TUPE. I.e. the right to employment protection when businesses are bought and sold.
  • Equality Legislation: some rights, e.g. the right to accrue holiday pay during maternity leave may well go.

There would not be a whole-sale re-writing of UK employment law but some important changes would happen. Is this the promised revolution? No. Does it outweigh the costs imposed by new (domestic) visa controls? No.

Despite the desire to “free ourselves from Brussels red tape,” the biggest driver of working practices in the UK is not EU employment law, it is: (a) the demand for talent (managing skills-shortages or skills-surpluses); and (b) the tax regime (corporation tax) and rate of NICs.

The claim that EU employment laws has a dramatic negative effect on the UK workplace is overblown. Our own domestic legislation has, and on 24 June will have, far greater impact.

This article first appeared in City AM