It’s difficult to avoid hearing about Brexit; it’s in the newspapers, on the TV, discussed online, debated on social media and a major topic of conversation. While some of us would rather we either forget about the whole thing or put a plan in place to deliver it, a large portion of people across a variety of industries and sectors are wondering “how will Brexit affect me?”. Employment is often one of the first issues that people think about, so what does Brexit mean for employment in the UK and how can business owners, Managing Directors and HR Teams ensure they are prepared to answer employees’ questions about it?
Arm yourself with Information
Amongst all the uncertainty about Brexit, this might be easier said than done. However, there is information out there and the best approach is to be as informed as possible, so that you can consider the potential implications and draw up a plan, rather than waiting, panicking and being reactive.
The gov.uk website is a great starting point and provides a wealth of information, with a diagnostic tool on ‘preparing your business or organisation for the UK leaving the EU’. The tool helps you find out:
what your business or organisation may need to do to prepare for the UK leaving the EU
- what’s changing in your industry
- information on specific rules and regulations
- There are 7 simple questions you’ll need to answer in order to get guidance relevant to your business or organisation.
Implications on Employment
The Institute of Employment Studies is another good resource for understanding the possible impact of Brexit, with working rights and the availability of labour being two key issues.
Approximately 2.15 million EU nationals are currently working in the UK, making up 7% of the workforce. Changes to living situations will affect this number, meaning that either low-skilled jobs may be left vacant or that EU nationals are feeling less secure and will need to be fully informed of their position in a company.
Assuming free movement of EU nationals ends post-Brexit (which can’t be guaranteed) the Migration Advisory Committee (MAC) report suggests the UK’s current Points Based System for immigration should be extended to cover EU migrants and altered so that more skilled, rather than lower-skilled, workers gain permits to work here. The Tier 2 (General) category would lose its cap on the number of permits issued and would be widened to include medium as well as highly skilled workers. The £30,000 salary threshold for this category would remain, as would the immigration skills charge of £1,000 per worker. More occupations would be eligible for this type of sponsorship, and employers would not have to advertise non-shortage occupation roles domestically for 28 days before offering the job to a foreign worker.
Only the agricultural sector would be given its own scheme to enable lower-skilled workers to come and work here. Employer groups are already expressing concern that the MAC recommendations won’t help labour shortages in the retail, hospitality, health and social care sectors without further reforms to the system.
The picture for EU nationals already working in the UK is clearer. They can apply to remain here indefinitely (called ‘settled status’) if they have been here for five years or will have been by the end of 2020. Those that have been here for fewer than five years by that time can apply for pre-settled status, so they can accrue the necessary years to qualify for full settled status.
Further information on EU citizens’ rights can be found here.
Some businesses will shift operations overseas to remain a part of the single market – in fact, we have already seen £1 trillion of capital from the financial sector move out of London so as to remain unaffected. Pay may be affected either way: if immigration increases to fill the low-skilled jobs, pay will take a cut. If, however, the low-skilled jobs need workers, pay may increase in order to incentivise British nationals to take up some of these jobs.
It will be down to Parliament to decide, post-Brexit (assuming it ever happens!), whether our employment protection laws continue as they are. The European Union (Withdrawal) Act 2018 ensures that both UK law stemming from Europe, like TUPE and the Working Time Regulations, will continue to apply, as well as EU laws with direct effect, like the General Data Protection Regulation. Areas ripe for reform post-Brexit could include discrimination compensation (currently uncapped), harmonising terms and conditions after a TUPE transfer, holiday accrual and pay, and the Agency Workers Regulations.
However, a future trade deal with the EU is likely to be dependent on established principles of employment protection, and the government proposed in a white paper that the UK and EU should commit to the “non-regression of employment law standards”. CIPD research on employment regulation shows that employers probably wouldn’t want major changes to employment law post-Brexit, in any case.
The CIPD has its own Brexit Hub, which is another fantastic resource for employers to ensure they are up-to-speed and fully informed on the implications.
Amongst all the uncertainty, the one thing that is certain is change, and with change comes risk. So, what are the top five Brexit risks employers should plan for:
1. Free movement of workers
- Businesses may be at risk as a result of losing workers, either by virtue of the number of affected workers or because they occupy key roles.
- Take steps now to identify which of your staff who are EU nationals, who reside and work in the UK, have accumulated rights to remain in the UK/EU and those who could be vulnerable. The same exercise should apply to UK nationals living and working in the EU.
- Then establish who of these potentially affected workers occupy key positions by virtue of seniority, revenue generation or unique skill sets.
This exercise will at least enable you to identify areas of risk and to consider contingency plans to retain or replace key affected workers if this proves necessary following Brexit.
2. Jumping the Gun
- If you identify risks arising from possible immigration changes it would be quite natural to start replacing likely affected workers and to cease recruiting EU nationals to work in the UK and vice versa.
- This approach might be objectively justified in some cases. However, until the UK leaves the EU, and likely through any transitional period, the UK will remain subject to applicable EU and current domestic laws and such an approach runs the risk of giving rise to discrimination claims.
3. Upskilling and Relocating Workers
- A related risk is that of developing a skills deficit, either as EU workers anticipate developments and choose to leave or are forced to do so once the UK leaves the EU.
- Is there a shortage of homegrown talent to fill this skills deficit?
- Identify key skills likely to be affected and begin planning how to provide the training and experience to plug the skills gap.
- If this isn’t possible, begin planning to ensure the retention, and facilitate possible relocation of such workers.
The timeline for such steps should be considered now as this will involve taking into account commercial, practical and legal issues under UK employment law and the local employment and other laws of any destination jurisdiction.
4. Relocating Services
- You may face difficulties if certain aspects of your business are organised across different jurisdictions. For example, some businesses have centralised aspects of their internal services outside the UK, such as accounting, IT and some HR and legal services, involving the provision of services and the transfer of data in and out of the UK.
- There is a risk that aspects of these shared services may be affected by the terms on which the UK leaves the EU and any subsequent divergence between UK legislation and the current EU legal standards.
5. Protection of Business Assets
- Think about the future enforceability of contractual protections, notably post-termination restrictions.
- Enforcing such protections across borders is complicated by the fact that some jurisdictions treat such provisions as being matters of domestic public policy and either enforce them narrowly or not at all in accordance with their own laws, especially where injunctions are sought.