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Brexit: What does this mean for employment law and HR?

business people walkeing down a pavement Print publication

24/06/2016

Implications of Brexit on employment law and HR

The referendum is decided and the UK is to leave the EU. One thing that both sides of the In/Out debate agree on is that there will now be a huge period of uncertainty about what happens next. So, do we need to ‘do anything’ HR-wise to prepare for leaving the EU? Will day-to-day life in the workplace carry on much as before (with a few less political debates at the water cooler)? One thing’s for sure, it’s all a bit unprecedented. To assist employers, our employment team have prepared some key points to note for employers in the immediate aftermath of the Brexit vote.

Nothing will happen overnight

Legally the result of the referendum is ‘advisory’ rather than mandatory. The UK will remain a member of the EU until an exit is negotiated, which will be a complex political process. The UK has two years to negotiate its departure after triggering the exit provisions of the Lisbon treaty. So really, anything could happen. Some commentators have noted the possibility that the negotiation process may lead to the UK not actually exiting after all (although query whether that would require another referendum). It will be a case of ‘watch this space’ for a rather long time.

Action: For most employers there is unlikely to be a business case to take any immediate action as a result of the referendum outcome other than to stay up to date with developments and keep an eye on the horizon (more on this below).

UK employment laws may be modified or repealed

Jeremy Corbyn predicts a ‘bonfire of workers’ rights’. Other commentators predict very little practical change. Our view is that there will, over time, be some deregulatory changes. Fundamental ‘vanilla’ employment protection as we know it, however, is likely to remain largely untouched. We are not about to become the US with firing at will and no right to claim unfair dismissal. Nothing will happen fast as the political and trade machinations must first happen as a precursor to any employment law changes.

As we know, much of UK employment law derives from Europe (equality laws, protection on transfer of undertakings, pregnancy and maternity protection, working time provisions, fixed-term, part-time and agency worker protections to name but a few). Many of these rights are embedded into British culture – for example, could we imagine the right to paid holiday being axed? Some of the rights, however, may well be more vulnerable if the government pursues its drive towards deregulation. Agency worker protection, rights to collective information and consultation, health and safety protection are likely to be in the immediate firing line. Some legal commentators believe that we may see caps on discrimination compensation (something that would have been impossible prior to Brexit as it would breach the principle that domestic law must not make it impossible to exercise rights conferred by EU law). The bottom line is that UK employment laws cannot be repealed overnight. Any significant changes would normally follow a period of public consultation; if (and when) things do change employers will have a reasonable amount of time to prepare.

Action: Stay up to date with proposed changes as they are announced. You may wish to subscribe to our employment newsletter please see our ‘Sign up to our publications’ at the bottom of this page and bookmark our employment legislation tracker. We will also be covering any changes on the horizon at our next Breakfast Briefing on 6 October 2016 register with kiri.richardson@walkermorris.co.uk.

Some corporates may relocate HQs and reduce UK headcount

This particular consequence of an ‘Out’ victory was widely publicised by the Remain campaign. The automotive and financial services sectors, in particular, may well scale back UK operations and other multinationals may take similar action. If this ‘scaling back’ comes to pass, suppliers and customers of such businesses and their workforces will be affected by the inevitable and much talked about ‘ripple effect’. Whilst this uncertainty may be enough in itself to have an impact, much will depend on forthcoming trade negotiations.

Action: If your organisation could be affected either directly or indirectly by suppliers or customers scaling back operations in the UK it would be wise to carry out an initial impact assessment looking at potential worst/best case scenarios. Health-check the organisation’s collective redundancy procedures if the prospect of headcount reduction or restructuring is on the horizon. Taking time to plan a route-map for this could save huge amounts of time and expense not least because it reduces the risk of potential tribunal claims.

Business uncertainty may affect hiring and investment decisions

A recent report found that growth in permanent hires has slowed as companies take a ‘wait and see’ approach and that demand for temporary staff and interims is growing at a much sharper rate.

Action: How the Brexit vote impacts each organisation will differ and it will be up to each employer to decide how best to manage the impact. Wise employers will obviously base their hiring and investment decisions on what is best for their organisation rather than reported trends or media scaremongering.

Immigration rules will be tightened

Inevitably, there will be significant changes to immigration rules and requirements over the next few years as Brexit plays out. For example, it may be that we see the introduction of an Australian/Canadian style points system to facilitate the employment of overseas workers with ‘in-demand skills’. New trade deals are likely to come with strings attached in terms of worker movement. This is one area where nothing less than a crystal ball is required!

Action: Affected employers (those hiring from overseas or whose workers move around within the EU) will need to stay bang up to date with immigration changes. If you are affected, Walker Morris have a business immigration team who can assist with this and act as a ‘first alert’.

If you have any questions or would like to discuss anything in this article please contact David Smedley or Andrew Rayment.

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