Britain and Brexit: A forecast of the future of employment protection during corporate insolvency

• Author: Jennifer L. L. Gant
• Date: 01 May 2020
• Published date: 01 May 2020
• DOI: http://doi.org/10.1002/iir.1371

RESEARCH ARTICLE

Britain and Brexit: A forecast of the future of

employment protection during corporate

insolvency

Jennifer L. L. Gant

Post-Doctoral Researcher on the JCOERE

Project, School of Law, University College

Cork, Cork, Ireland

Correspondence

Jennifer L. L. Gant, Post-Doctoral

Researcher on the JCOERE Project,

School of Law, University College Cork,

Cork, Ireland.

Email: jennifer.gant@ucc.ie

Abstract

Brexit has produced a lot of uncertainties in the UK,

not the least of which are the future of protections that

have been derived from EU social policy Directives.

Arguably, the UK's membership in the EU has pushed

it further into a socially liberal and protective frame-

work that it might not have adopted had it remained

outside of the EU's sphere of influence. The question

now is what direction the UK will take with regard to

both the rescue culture and the social protections, both

of which have been highly influenced by EU law and

policy. The UK has ever been the “odd man out”in the

EU, springing as it does from a significantly different

legal origin than the Franco/German model at the

heart of the EU. Examining the developmental path of

other common law jurisdictions (America, Canada, and

Australia) whose legal systems are derived from the

British may be instructive in relation to the direction

the UK might have taken had it not joined the EU,

with a particular focus on the employment protections

derived from the EU which are often applicable during

insolvency and rescue procedures. An analysis of this

counterfactual position may then also provide a clue or

forecast as to the direction that the UK may take fol-

lowing Brexit.

Received: 8 July 2019 Revised: 5 January 2020 Accepted: 5 April 2020

DOI: 10.1002/iir.1371

© 2020 INSOL International and John Wiley & Sons Ltd

Int Insolv Rev. 2020;29:61–82. wileyonlinelibrary.com/journal/iir 61

1|INTRODUCTION

The spectre of Brexit and its impact on Europe and the United Kingdom (UK), along with the

political uncertainty of a major world power in continuing turmoil and division (the United

States), has called into question the path that many social and economic policies may take in

the future in the Western World. The balance of social policy and economic efficiency is

nowhere more evident than in the treatment of employees during bankruptcy/insolvency proce-

dures, which may provide a barometer of changes yet to come.

As a former member of the European Union (EU), the UK was subject to Regulations and

Directives that implemented EU social policy objectives and influenced the functioning of

therescueculturethroughouttheMemberStates. The EU has had a significant influence on

the direction the UK has taken in matters of social policy since its accession in 1973. Argu-

ably, this has forced the UK into a socially liberal and protective framework that it might not

otherwise have adopted to such a degree. EU policy has also had an influence on the UK's

adoption of the rescue culture, which is now the foundation for insolvency systems through-

out the EU and in many modern world economies. However, it is possible that the UK was

already on a natural path toward the development of a rescue culture within the British

insolvency system.

Following the invocation of Article 50 of the Treaty of Lisbon, the UK has been making its

way toward a deal or no-deal Brexit scenario. Now that Brexit has become a reality, and Britain

begins to untangle itself from the influence of the EU, how will the rescue culture and the social

protections present within it under the current legal regime be changed? In what direction is

the UK likely to go? While difficult to predict, the direction that the UK may take now that the

European Communities Act of 1972 has been repealed and the UK is once again left to its own

legislative devices, conversations in Parliament across the period prior to Brexit have given a

certain flavour of potential futures. In addition, a consideration of different jurisdictions, such

as America, Canada, and Australia, each having a similar English common law origin and his-

torical links to the UK, can be instructive in relation to which direction the UK may have taken

had it never joined the EU. An analysis of this counterfactual position may then also provide a

clue as to the direction that the UK may take.

The UK has ever been the “odd man out”in the EU, springing as it does from a significantly

different legal origin than the Franco/German model at the heart of the EU. By examining the

developmental path of the United States, Australia, Canada, and the UK in this area of law

prior to EU accession, the behaviour and reactions of the UK during EU membership, and com-

paring this to similar developments in the comparator countries, it may be possible to forecast

the eventual direction that the law of post-Brexit Britain may take in relation to the available

social protections during insolvency procedures in the future.

2|METHODOLOGY: COMPARATIVE LEGAL HISTORY IN

THE CONTEXT OF PATH DEPENDENCE

This article utilizes a comparative historical research methodology predicated on the theory of

path dependency, which can be described as meaning:

“that what happened at an earlier point in time will affect the possible outcomes of

a sequence of events occurring at a later point in time.”

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