Court of Appeal may depart from retained EU case law: impact on employers

Court of Appeal may depart from retained EU case law: impact on employers

Intellectual Property - managing the Brexit transition

The UK left the EU on 31 January 2020 and immediately entered into a “transition period” which ends at 11pm on 31 December 2020. After this time, UK courts and tribunals will not be bound by future decisions of the Court of Justice of the European Union (CJEU). 

They will, however, continue to be bound by principles and decisions of the CJEU handed down before the end of the transition period. Only the Supreme Court in England, and now additionally the Court of Appeal, will be able to depart from retained EU case law. Employers should prepare themselves for CJEU decisions impacting UK employment law to potentially be overturned by our domestic courts.

The status of CJEU decisions during the transition period

The European Union (Withdrawal) Act 2018 (EUWA), sets out the legal framework following the UK’s departure from the EU and after the end of the transition period. The EUWA provides that the principles and decisions of the CJEU continue to bind UK courts and tribunals during the transition period. 

Interpreting retained EU law after the end of the transition period

From 1 January 2021, UK courts and tribunals will not be bound by any principles laid down or any decisions made by the CJEU after the end of the transition period. UK courts and tribunals will, however, be required to interpret retained EU law in accordance with retained EU case law (primarily the principles and decisions of the CJEU handed down before the end of the transition period). The EUA does provide that courts and tribunals may have regard to anything done after the transition period by the CJEU (so far as it is relevant to any matter before the court or tribunal), although it is unknown to what extent courts and tribunals will be influenced by future CJEU decisions. Courts and tribunals will not be bound by any retained domestic case law by which they would not otherwise be bound (for example, the Employment Appeal Tribunal will not be bound by first instance tribunal decisions which concern retained EU law).

Power to depart from retained EU case law

Until recently, only the Supreme Court was granted the power to depart from retained EU case law after the end of the transition period (and the High Court of Justiciary in Scotland). In deciding whether to depart from retained EU case law, the Supreme Court must apply the same test as it would apply in deciding whether to depart from its own case law: in other words, the Supreme Court is entitled to overturn retained EU case law where it considers it "right to do so". Should the Supreme Court decide to depart from retained EU case law in any given case, that decision will create principles which lower courts and tribunals are in turn bound to follow in relevant cases.

Section 6 of EUWA gives ministers the option to make regulations prior to the end of the transition period that will allow additional courts or tribunals to depart from retained EU case law. 

Consultation on the departure from retained EU case law by UK courts and tribunals

EUWA stipulates that, before making such regulations, the government has to consult specified persons. On 2 July 2020, the government issued a consultation on proposals to extend the power to depart from retained EU case law to courts and tribunals less senior than the Supreme Court (and the High Court of Justiciary in Scotland). 

In the consultation paper, the government set out its reasons for proposing that the right to depart from retained EU law be extended to lower courts: “[this] would provide greater scope for the interpretation of case law to evolve to recognise the UK’s changing status… if only the UK Supreme Court or the High Court of Justiciary retain this power, cases may take longer to consider and the law becomes “fossilised”, given the more limited capacity of these courts.”  The government did, however, identify the risk that, “the lower the level of court and tribunal at which the power to depart from retained EU case law is set, the greater the risk that we will see divergence in approach between the jurisdictions in the UK… this risks undermining certainty in the law and may encourage “forum shopping” by parties to bring litigation in the jurisdiction that they believe will lead to the most favourable outcome.”

The consultation closed on 13 August 2020 and the government published its response on 15 October 2020, concluding that it was appropriate to extend the power to depart from retained EU case law to the Court of Appeal (and equivalent) level. The government’s response explained that, in its view, extending the power at this level will strike the appropriate balance between the need for legal certainty and for a timely departure from retained EU law.

Power to depart from retained EU case law extended to Court of Appeal

The European Union (Withdrawal) Act 2018 (Relevant Court) (Retained EU Case Law) Regulations 2020 were laid before Parliament on 15 October 2020. They confirm that the Court of Appeal will not bound by any retained EU case law after the end of the transition period. In deciding whether to depart from any retained EU case law, the Court of Appeal must apply the same test as the Supreme Court would apply in deciding whether to depart from the case law of the Supreme Court. 

Impact on UK employment law

It is impossible to tell at this stage what impact the extension of the power to the Court of Appeal will have on UK employment law. It may be that the Court of Appeal will use this power to unpick the recent and largely unpopular CJEU case law on holiday accrual and calculating holiday pay. We may also see a departure from CJEU decisions affecting the rights of transferring employees in the context of a TUPE transfer. The end of the transition period could, therefore, mark the start of a period of substantial uncertainty for UK workplaces, while employers wait to understand the direction in which the Court of Appeal may choose to exercise its new power. 

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