Brexit and employment

The outcome of the EU Referendum may have been a surprise to the business community. But what are the implications of Brexit on employment law and UK jobs?

Post-recession Britain is arguably wracked with xenophobia. Atleast that’s what the 48 per cent of voters backing UK to remain in the European Union seem to believe, considering the nation’s majority vote to ‘Brexit’.

Vote Leave literature prior to the vote aggrandised immigration as an issue that “will continue to be out of control” if we stay in the EU. Recent figures from the Office of National Statistics reveals no indication that immigration is currently out of control, as determined by the static net migration figures between the year ending December 2014 and the year ending December 2015.

It’s hard to convince the general public that the immigration is not a significant concern with respect to employment opportunities, benefits, or rental property, however, when nearly every restaurant, high street store, and call centre has at least one customer-facing foreign employee.

Regardless of the reasons why immigration is a cause for concern for those who vote to leave the EU, the issue will remain a priority for the next Prime Minister, prompting questions on employment laws across the industry.

Preparing for volatility

With the UK free from the legislative chains of the EU, we are now able to form our own employment laws and regulations to suit the business landscape. Companies now need to look ahead and see what impact a Brexit will have on their operations and how they can prepare for what lies ahead, according to Ian Dowd, director at NGA Human Resources.

“The UK will have more power to repeal or reshape employment legislation that many businesses dislike. However, a wholesale abolition of EU-based workplace law is unlikely for a combination of political and legal reasons,” he explained.

“The most likely legal changes will probably come around Working Time Regulations and the Agency Workers Directive, while more modest changes are likely to come for union power and TUPE, bonus payments legislation and data protection laws. Discrimination laws and family friendly working legislation seem far less likely to be affected.’

Dowd advises SMEs to reassure employees who may be concerned about their job security, particularly since the uncertainty around Brexit can impact employee engagement and motivation. “HR departments would be well advised to consider the types of skills currently in the workforce, particularly around recruitment, talent management and succession planning issues. HR departments would be encouraged to open communication, if they haven’t already done so, with their non-UK EU workers, to ensure mutual clarity on their status and the timescales of the EU exit and any subsequent changes,” he added.

Change on the horizon

“In the very short term there is going to be no change at all – we have not left, there is no brave new world. But one is or may be on its way,” Martin Chitty, employment partner at law firm Gowling WLG advised.

Chitty identified three areas of employment rights that are of primary importance to those working in the UK. Firstly, rights with no EU element will remain unchanged. This includes unfair dismissal, discrimination on pay, sex, race, marriage, ethnicity and nationality.

Then there are some rights which are EU-based and enacted in the UK, but are unlikely to be repealed, “although they might get watered down” according to Chitty.

The third set of rights are EU-based but are on the “endangered list” despite being a entrenched in UK law, including most of the Working Time Regulations. “The EU obligation on holiday pay is exceeded by what we have done so that is unlikely to be repealed; what may well go is holiday pay at above basic rate; mandatory rest periods; cap on working week; paid waiting/on call,” Chitty said.

Another endangered right is collective consultation, which is entirely EU based and open to attack. “Curiously one of the most attacked issues is ‘service provision change’ which is an entirely UK concept, works well but could do with a bit of tweaking over harmonisation. That aside, without TUPE staff in a business when it is sold get made redundant. Flexible – yes; sensible – er, not so clear,” Chitty added. “If not repealed entirely then (TUPE) is open to change – an entitlement by the new employer to agree a variation with its staff or to deal with issues of harmonisation would actually be an improvement in the current position.”

He also outlined rights that may be tweaked post-Brexit, including unlimited compensation for all forms of discrimination. “Might we go back to capped claims?” he hypothesised.

Can Brexit improve recruitment options?

Phil Foster, MD of Love Energy Savings believes that a key concern for SME owners will be how Brexit affects their recruitment strategy. “UK businesses of all shapes and sizes have, at some point or another, relied on the European Union to supplement their workforce. The UK is still in the midst of a skills shortage, and EU migrants have provided many of the vital skills that we were lacking. There is a chance that the UK will no longer be the talent magnet it used to be, resulting in more bureaucracy and a reduced candidate pool for SMEs to dive into,” he said.

Claire Nilson, senior associate in the labour and employment department at law firm Faegre Baker Daniels believes that the first faction of employees to be affected by any immigration law reforms will be those outside Europe. “It will be interesting now to see if, given the high number of people in the voting public who appeared to be voting based on their perception of a problem with immigration, there might be political impetus nonetheless to reform the immigration system, especially with the ongoing rhetoric of net migration figures. If so, my prediction is that the initial focus of reform will relate to the low hanging fruit of those coming from outside Europe,” she said.

“We are now entering a time of negotiations and, assuming that we do wish to have access to the single market, the cost of that might involve accepting free movement for nationals of EU member states. This is currently part of the deal for Norway, Iceland and Switzerland.”

Interestingly, there is an alternative view that the Brexit may actually improve recruitment options for UK businesses. “There is a very real possibility that the UK may now introduce a points-based system, such as that used in Australia, which could result in us welcoming in higher quality candidates,” Foster continued.

“By no longer having to give preference to EU workers, opportunities open up for those coming to the UK from India, China and beyond. This is surely great news for those seeking STEM candidates,” he added.

See also: Has Brexit crushed your hiring plans?

Praseeda Nair

Praseeda Nair

Praseeda was Editor for from 2016 to 2018.

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