Brexit, a global perspective in the immediate aftermath…

Following the UK’s EU referendum, the UK has a clear mandate for exit from the European Union. There is doubt, however, about what the future may look like for the UK and its relationship with Europe or the rest of the world. It is likely that there will now be a prolonged transition period, with the next UK government needing time to plan, prepare and negotiate the UK’s future.

Some key thoughts in the meantime:

• For UK nationals living elsewhere in the EU, and EU nationals living in the UK, there will be no immediate change. Protection of citizens already established in those states is likely to form part of negotiations between the UK and the EU.
• Free movement of EU citizens is expected to be negotiated as a condition of any trade deal between the UK and the EU. However, if ultimately the UK decides to no longer share in the EU’s right to free movement of labor, then citizens of other member states will not enjoy an automatic right to work, travel and live in the UK. Similarly, UK citizens will not enjoy EU citizenship rights. Prior to the referendum, the UK had already made it more difficult for EU citizens to gain permanent residence in the UK. However, the UK government will be aware that imposing fundamental limits on the free movement of labor at this time could make the UK a much less attractive destination for international businesses and skilled and educated migrants.
• Nationals of other countries working in the UK, such as from the US, should see no imminent changes. The UK government is saying that the UK is open for business on a global scale. This is an opportunity to grow and strengthen relationships across the globe. At present the UK is not seeing any large-scale recruitment freezes or job losses.
• Trade and investment are good for the UK’s employment growth and stability. The UK government will want to keep a level playing field with the UK’s European counterparts, and look for opportunities across the globe, at this crucial time. One key area where it will want to display its good practice is data protection. Realistically, a trade deal between the UK and the EU may also mean the UK continuing to be subject to key EU legislation.
• The UK has a body of homegrown legislation protecting UK employment law rights. The fundamental right that exists in the UK to claim unfair dismissal will not be affected by its withdrawal from Europe. The UK also had discrimination laws in place before its ascension to the EU; EU aims and legislation are so established in UK good employment practice that they are likely to remain fundamentally the same for now. While moving to a US-style system, where employees receive lower overall protection, is possible, it is unlikely in the short term, given the broader cultural change needed to accept the US norms.
• Subject to the above, EU rights, or improvements in those rights, in the UK may eventually be diminished or lost. However, it seems likely that grand proposals will eventually be reduced to a few smaller, less significant changes. If the UK is not required to keep EU legislation in these areas as part of a broader deal, the government may review and make changes to the current position in a number of areas, such as: (i) harmonization of terms following a TUPE transfer, (ii) limits on bankers’ bonuses, (iii) working time controls, (iv) collective redundancy consultation, (v) agency workers’ rights and (vi) the absence of a cap on discrimination awards.
• If the UK is no longer subject to the jurisdiction of the European Court of Justice, UK case law may develop in a slightly different direction. This may mean a gradual parting of ways between the UK and EU states.

On balance, it is most likely that the next government will want to preserve the status quo, at least in the short term, and wait for the dust to settle before looking for opportunities to make more fundamental and valuable changes. Dentons will keep you posted as the picture evolves.