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An employer’s guide to the impact of Brexit

An employer’s guide to the impact of Brexit

Natalie Ruane, employment law solicitor, reflects on the effects of Brexit for employers.

This month we are reflecting on the effect of Brexit for employers, both in terms of the implications for UK Employment Law and the commercial impact, especially for those employers who rely on a migrant workforce.

Impact on UK Employment Law

There has been some uncertainty about possible changes to employment law after Brexit, but in reality there is not expected to be the overhaul some have speculated. We have considered the legal areas under the spotlight, contrasting those which we expect to be unchanged compared to those where we expect to see some change.

No change

Discrimination legislation – the Equality Act 2010:
A significant part of discrimination legislation originated in UK law, including race discrimination and disability discrimination, so this is expected to be retained in full. Brexit is unlikely to have any significant impact.

‘Family friendly’ rights:
Much of the European introductions into employment law in relation to flexible working and parental leave have been welcomed by both employers and employees alike, so there is no appetite for change. Again much of this has origins in UK law. For example, the relatively new shared parental leave legislation is purely domestic in origin.

Holiday entitlement - Working Time Regulations 1998:
Again most employers agree that a work life balance benefits both employers and employees and as such the right to paid holidays introduced by the Working Time Directive is unlikely to be changed (although see comments below in respect of recent case law in this area). In fact the UK Regulations which implemented the Directive go further than the European requirement, by allowing workers 5.6 weeks paid holiday (in excess of the European requirement of 4 weeks).

Possible change

Business Transfers - The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE):
The regulations may be subject to some changes to make them more business friendly; for example allowing the currently prohibited harmonisation of terms and conditions of employment for all employees following a business transfer.

Collective redundancy consultation:
This was introduced by an EU directive and could be revised to relieve the burden on employers, for example the duty may only apply if, for example, the proposed redundancies exceed 50 or even 100.

Working hours - the Working Time Regulations 1998:
While any significant changes to these Regulations seem unlikely, aspects including the limit of 48 hours on a working week may be subject to amendment. In the case of holidays, the right to keep accruing holiday while on sick and the calculation of holiday pay having to include all aspects of remuneration (including overtime and commission) may be subject to change. Both of these relatively recent modifications to the law on holiday pay were introduced by decisions from the European Court of Justice. On leaving the EU, the ECJ will no longer have jurisdiction over the UK courts.

The Agency Worker Regulations
These regulations are unpopular and we may see repeal of these in the future. Due to their complexity and relatively new status they are not yet embedded in a way that might make them politically difficult to remove.

Comment

Observing fundamental principles of EU law is likely to be a condition of any ongoing trading relationship with Europe. The UK, like other non-EU countries such as Norway, will be expected to provide a minimum amount of EU employment and social protection to its citizens if it wants to maintain a working relationship with Europe. Therefore any changes will need to be measured and gradual. We do not expect to see any significant change in the foreseeable future, and those changes which are introduced are likely to be those which have a robust commercial justification.

The Commercial Impact

Recruitment

We now face the possibility of tighter visa regulation which makes it difficult for workers to enter (and remain) in the UK. This could lead to a regime similar to the current points-based visa system for non-EU citizens (whereby skilled workers and students can stay for a limited period). As well as being a slow and expensive process, it is unlikely to be fit for purpose since many employers who rely on a migrant workforce need low-skilled and manual workers rather than university educated students or graduates or specialist workers.

Recruiting replacements from the UK talent pool is likely to be difficult since unemployment levels are relatively low in the UK and, in addition, the low skilled roles which have previously been filled by European workers often come with low pay, flexible hours and are labour intensive, making them difficult to recruit to. It is difficult to remedy this, since increasing pay or offering fixed hours is costly and inefficient, particularly for those roles which are subject to seasonality and unpredictable customer demand.

The impact of the Referendum on migration of workers to the UK is already apparent: the jobsite Indeed has seen a sharp rise in people searching for jobs outside of the UK, and job searches from EU countries have now shifted focus to Ireland rather than the UK.

The result is likely to be a shortfall in lower skilled staff in this sector and in turn, an impact on the ability of businesses to serve their clients and customers at the standard they have come to expect.

Comment

In reality transitional arrangements and concessions are likely to be negotiated as part of any trade deal with Europe in which tariff-free access to the single market, including its talent pool, will be a priority.

It is expected that the government will be urged to revise the current points-based system which applies to non EU-Nationals to offer different criteria to employing EU nationals compared to non-EUs to ensure that the UK can continue to recruit the talent it needs.

It should be noted that alongside these changes, the new Immigration Act 2016 came into force on 12 July, which introduced the offence of employing a worker where the employer has ‘reasonable cause to believe’ that a worker is an illegal immigrant. This comes with a penalty of 5 years imprisonment.

Retention

Those European staff who are already working in the UK may find that their working rights are restricted, impacting their right to remain. There is also the risk that some Europeans may want to leave because they no longer feel welcome. Either way, employers may face losing the investment they have made in these workers, whether that be in the time spent in providing vocational training or financially if the company has funded courses and qualifications for the worker.

Comment

It seems likely that transitional arrangements and concessions will ensure that any EU citizens already in the UK will continue to have unrestricted right to live and work in the UK. It is expected that the UK government would agree an amnesty, whereby existing EU migrants could stay (at least for a reasonable period) in return for permission for UK citizens abroad to remain where they are; and that they should be allowed sufficient time to obtain citizenship of the country in which they are residing and to return home if they fail to do so.

It is important that employers deal with any incidents of prejudice or discrimination in the workplace against foreign employees robustly under your Equal Opportunities Policy and Disciplinary procedure, noting your duty to take reasonable steps to protect employees from harassment from third parties (including clients, agents and customers) as well as from other employees

Where practical, employers should encourage those foreign employees who are eligible (in the UK this would require a minimum stay of 5 years) to apply for permanent residence. Applying for citizenship may be an option for some employees who have dual nationality

Our advice to employers who do rely heavily on a migrant workforce is to consider contingency planning. In particular establish a strategy to enhance your recruitment campaigns and improve retention, for example, offering apprenticeships, career progression, vocational and professional training and improving working practice and employee relations generally to enhance retention.

For further information on how the information above might impact your organisation, contact Natalie Ruane on 01228 552222. 

About the author

Natalie Ruane profile photo

Natalie Ruane

Natalie leads the Employment Law & HR team and specialises in education.

Published: Thursday 21st July 2016
Categorised: Employment, HR

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