Brexit is officially done and dusted. Well, the trade deal agreement is at least…
The signing of the Trade and Cooperation Agreement (TCA) on Christmas Eve means businesses in the UK and Europe finally know what they’re working with (sort of), and many companies were pleased to avoid tariffs and quotas.
But what about the employment field? How might the new trade deal impact employment standards and cross-country working?
What does the deal mean for employment law?
As predicted, in return for a tariff and quota-free trade deal, the UK has agreed to maintain the level of employment rights in place on 31 December 2020. This commitment includes rights regarding fair working conditions, employment standards and health and safety standards.
However, this agreement only exists for employment rights that affect trade or investment. Outside of these areas, the UK can diverge from EU employment laws.
In the case of significant divergence, the EU could apply rebalancing measures such as tariffs — but only if the deviation results in competitive advantage or there’s proof of a material impact on trade or investment. Major changes, such as removing working time, would likely affect trade as this would give UK employers a clear competitive advantage. But minor changes like amending holiday rules would arguably not affect trade in the same way.
These non-regression and rebalancing provisions are designed to ‘level the playing field’ between UK-based and EU-based employers.
What about future EU directives?
There are three new EU employment directives due to be implemented over the next two years: the Whistleblowing Directive, the Transparent and Predictable Working Conditions Directive and the Work-Life Balance for Parents and Carers Directive. The UK is free to ignore any new EU directives; however, it has already adopted or plans to adopt many of the measures contained in these three directives.
The EU Commission has also recently published a proposed Minimum Wage Directive and pledged to introduce a new Pay Transparency Directive to tackle the gender pay gap. The UK already has minimum wage laws and gender pay gap reporting requirements in place.
So, for the most part, it seems the UK and the EU are well aligned when it comes to employment laws, meaning we’re unlikely to see any radical changes anytime soon — especially as most countries are currently focused on economic recovery following the pandemic.
And what about working across countries?
Many companies have also been keen to find out how the trade deal will affect their global expansion plans.
The absence of a deal on social security coordination would have caused significant difficulties for employers with ‘multi-state workers’ (those working in two or more countries). Fortunately, certain visa-free travel will be permitted for business purposes, and the agreement does incorporate a detailed ‘Protocol on Social Security Coordination’. From 1 January 2021, the general rule remains that social security contributions are due in the country in which the employee is working.
However, things get a little trickier for companies with ‘detached workers’ (UK employees sent by their employer to work temporarily in an EEA country or Switzerland and vice versa).
There are special rules set out for detached workers. Still, certain conditions must be satisfied, including that the period of work in that country does not exceed a specified maximum (generally two years). EU member states can also choose whether or not to apply the detached worker rules, meaning the rules will differ depending on where the employee is working.
For businesses operating across multiple countries, these varying rules can quickly become a cumbersome administrative burden. But a Professional Employer Organisation (PEO) can smooth out the complexities associated with operating across multiple countries and guarantee seamless compliance — all while keeping costs down!
Looking for a PEO in Europe? For guidance and assistance with your global expansion journey post-Brexit, get in touch with PEO Worldwide today. We’ll steer you in the right direction…