Human Rights and Business 2017: Promoting responsibility and ensuring accountability Contents

7The implications of Brexit

222.In December 2016 we published a report on The human rights implications of Brexit,221 which looked, on a preliminary basis, at how human rights might be affected by the UK’s withdrawal from the EU. In this inquiry we have considered in more detail the specific business-related human rights that might be affected by Brexit.

The effect of Brexit on workers’ rights and reporting standards

223.A number of EU Directives govern the treatment of workers by businesses operating in the EU. These include:

224.Rt Hon David Davis MP, the Secretary of State for Exiting the EU, has made a commitment that there will not be any dilution of workers’ rights as a result of Brexit—and it is important to remember that the UK has a long history of equality legislation, dating back to the Race Relations Act 1968 and the Equal Pay Act 1970.222 More recently, equal treatment legislation (including that derived from EU Directives) has been consolidated in domestic primary legislation, by means of the Equality Act 2010. Nevertheless, David Isaac of the Equality and Human Rights Commission expressed concern about “what future derogation there might be from [EU standards] and that there will be gaps in relation to EU law which might not be plugged”.223

Increased vulnerability of workers

225.But while the general framework of equality legislation in the UK appears to be secure, concerns were expressed in the aftermath of the referendum vote in June 2016, about the increased vulnerability of EU nationals working in the UK. The Business & Human Rights Resource Centre flagged it as an area of concern:

“The government should also be aware and implement a plan of action concerning the heightened risk of exploitation, including modern slavery, of migrants following the Brexit referendum. The vote to leave the European Union means many migrants from EU countries, particularly those in low skilled or seasonal work, are especially vulnerable as their position and future rights have become more uncertain. This uncertainty will be utilised by unscrupulous employers to exploit already vulnerable workers.”224

226.Margaret Beels, Chair of the Gangmasters Licensing Authority, raised similar concerns:

“We have already detected that among the workers in the GLA sector there is huge uncertainty and an additional sense of vulnerability. We do not just get that from talking to workers’ representatives, which means the trade unions and NGOs that work with people, but also the labour providers who are experiencing difficulty in getting enough labour to do the work … So yes, we are concerned, because these are workers who have the right to be here, and they are worried.”225

EU laws on reporting and procurement

227.The Public Procurement Directives (2014),226 which introduced an obligation to consider accessibility for disabled people in procurement, and the Directive on Non-Financial Disclosure (2013),227 which requires large companies to give information on non-financial policies, such as human rights, both featured in the Government’s updated National Action Plan. As a result of Brexit, according to Professor Muchlinski, there was a “risk that EU rules and practices already forming part of the NAP will be undermined and that this will set back specific efforts in those areas”.228 He advised: “Reinventing the wheel would appear to be a futile waste of time and accumulated expertise. The better course would be to ensure that existing rules and practices relating to the NAP continue by being transposed into UK law and practice.”229


228.We heard evidence that EU workers are worried about their status within the UK and are less likely to report issues to the authorities, following the vote to leave the EU. This will leave them more vulnerable to labour exploitation.

229.Against the backdrop of Brexit, the Government must urgently reassure workers that all victims of human rights abuses will be protected, without reference to nationality or immigration status, and ensure they have clarity regarding their status in the UK.

230.We recommend that EU laws on reporting and procurement, as well as any relating to workers’ rights that are not already set out in primary legislation, should be transposed into UK law by means of the Great Repeal Bill. In the longer term, UK laws on reporting and procurement in relation to human rights should continue to set standards at least as high as those set by the EU.

Human rights clauses in trade deals

231.The EU includes human rights clauses in its international trade agreements with non-EU member states. The EU has also established Guidelines requiring human rights impact assessments for any trade arrangements.230 While such provisions vary, a standard human rights clause comprises an ‘essential elements’ clause referring to basic human rights and democracy standards, and a ‘non-execution’ clause that provides for a mechanism for applying ‘appropriate measures’ (such as sanctions) if the other party violates an ‘essential elements’ clause. Such clauses have been invoked by the EU when there has been a coup d’état, for instance, leading to the suspension of financial aid. If the other party to a trade agreement does not comply with this human rights commitment, the agreement or parts of it can, as a last resort, be suspended.

232.The Cotonou Agreement,231 the most comprehensive partnership agreement between the EU and developing countries, forming the basis for the EU’s relations with 79 developing countries, is a good example. Article 9(2) states: “Respect for human rights, democratic principles and the rule of law … shall underpin the domestic and international policies of the Parties and constitute the essential elements of this Agreement”. Subject to some procedural preconditions, Article 96 allows “a Party [that] considers that the other Party fails to fulfil an obligation stemming from respect for human rights, democratic principles and the rule of law”, as set out in Article 9(2), to take “appropriate measures”. Any such measures must be “taken in accordance with international law, and proportional to the violation,” and “shall be revoked as soon as the reasons for taking them no longer prevail”.

233.Once the UK leaves the EU, it will cease to be a party to EU trade deals, and will negotiate new bilateral trade and investment agreements with other countries. There was universal agreement among our witnesses that the UK should, as a minimum, include in any such agreements the same level of human rights protection as are currently seen in EU trade agreements.

Case for higher standards

234.Notwithstanding what we have just outlined, Professor Keith Ewing criticised the human rights standards set by current EU trade agreements as too low:

“Most free trade agreements have labour clauses in them, but the problem with free trade agreements, certainly compared to EU law, is that they are very, very basic; they deal only with minimum standards. So the Canada-EU free trade agreement, which is in the process of being signed off at the moment, deals with the four ILO principles. You would hope that neither we in this country nor the Canadians would need to be told that we should respect no discrimination, no forced labour, no child labour and freedom of association.”232

235.Professor Peter Muchlinski suggested that the UK should look to include the model clause drafted by the United Nations Conference on Trade and Development (UNCTAD)233 in future trade agreements:

“A human rights clause could ensure that all Contracting Parties would seek to further corporate compliance with human rights in their domestic laws. In addition, any corporate rights to use treaty-based dispute settlement procedures could be made conditional on the claimant company observing human rights in its operations.”234

236.Owen Tudor of the TUC raised the enforceability of human rights clauses in trade agreements:

“At the moment, in the agreement between Canada and the EU, the sustainable development chapter allows enforcement only in so far as, if someone alleges a breach of their labour rights as a result of trading arrangements, they can get a committee of experts to come up with a stiffly worded letter. This contrasts with what a company can do if it says that its rights have been abrogated by a trading relationship; they can go to an international court or an international tribunal and get multibillion dollar settlements. It would be useful to have some sort of enforceability in the sustainable development chapters.”235

237.Asked about the Government’s plans to include human rights clauses in future bilateral trade agreements, Margot James MP, Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy, replied: “I certainly would not expect any diminution whatever”236 from the standards that currently obtain in EU trade agreements. She continued:

“Britain has a higher standard of operation in these matters than is found elsewhere in the world, including in much of the European Union. We are leaving the European Union but we are used to operating with higher ethical business standards and commitments to human rights. Therefore, it would be entirely illogical for us to do an about-turn on that prior position.”237

These sentiments were echoed by Rt Hon Baroness Anelay of St Johns DBE, Minister of State for the Commonwealth and the UN, Foreign and Commonwealth Office.238


238.We welcome the Government’s commitment that new bilateral trade agreements will include human rights protections at least equal to those currently included in EU trade agreements. We look forward to seeing this adhered to and will monitor progress with interest.

239.We encourage the Government to use the opportunity of Brexit to set higher human rights standards in future trade agreements, to include workable provisions on enforcement, and to undertake human rights impact assessments before agreeing trade agreements.

221 Joint Committee on Human Rights, The human rights implications of Brexit (Fifth Report, Session 2016–17, HC 695, HL Paper 88)

223 Q 92 (David Isaac, Equality and Human Rights Commission)

224 Written evidence from Business & Human Rights Resource Centre (HRB0019)

225 Q 92 (Margaret Beels, Gangmasters Licensing Authority)

228 Written evidence from Professor Peter Muchlinski (HRB0011). See also written evidence from Human Rights Centre, Queens University Belfast (HRB0015), Hogan Lovells International LLP (HRB0017) and The Ethical Trading Initiative (ETI) (HRB0027).

229 Written evidence from Professor Peter Muchlinski (HRB0011)

230 European Commission, Guidelines on the analysis of human rights impacts in impact assessments for trade-related policy initiative: [accessed 8 March 2017]

232 Q 21 (Professor Keith Ewing, King’s College London and Institute of Employment Rights)

233 UNCTAD, Investment Policy Framework for Sustainable Development (2015): [accessed 5 March 2017]

234 Written evidence from Professor Peter Muchlinski (HRB0011)

235 Q 15 (Owen Tudor, Trades Union Congress)

236 Q 101 (Margot James MP, Department for Business, Energy and Industrial Strategy)

237 Q 101 (Margot James MP, Department for Business, Energy and Industrial Strategy)

238 Q 111 (Baroness Anelay of St Johns, Foreign and Commonwealth Office)

4 April 2017