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Impact of Brexit on Employers and HR

5 min read

The end of the transition period is upon us and you might be wondering how Brexit impacts your business as an employer. There are many things to consider as an HR manager. How might Brexit affect recruitment and staff retention? What repercussions could it have on your workforce?

In this article, we will summarise the current status of the UK’s relationship with the EU. We will also look at some of the effects of Brexit on business and employment laws. Finally, we will discuss what this means for you and your business and the implications this will have on HR departments.

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Brexit Latest Update

It now looks as if a post-Brexit trade deal has been agreed. The UK and European Parliament still need to vote on the deal, but it will take effect provisionally from January 1st 2021. The deal secures tariff-free trade in goods with the EU. It also covers healthcare and continued data sharing for security purposes.

Although this seems like a promising start, the Institute for Public Policy Research has published an analysis claiming that that the deal will have important implications for future UK labour protections. The IPPR believes the new process sets such a high bar for proof that UK standards could easily be watered down. Although we won’t see any major changes for a while, this could potentially have a significant impact on workers’ rights, trade unions, and employment law.

Brexit and Employment Law

Perhaps the biggest impact on employment laws is that UK Courts will no longer be bound by the Court of Justice of the European Union (CJEU), although existing CJEU decisions must be upheld. Aside from this, though, Brexit is unlikely to have any immediate major impact on UK employment laws.

According to the European Union (Withdrawal) Act 2018, existing EU laws will be converted into UK law and referred to as “retained EU law”. These laws will remain in force unless they are changed by any subsequent domestic legislation. This includes anti-discrimination rights, TUPE regulations, family leave, and working time rights.

In the long term, the UK government has announced that it is working on a new Employment Bill. The bill is hoped to include measures to protect workers’ rights such as redundancy protections and leave for unpaid carers. This is all speculation though and there is no known timescale for the publication of the bill.

What Changes Might we See?

The political declaration outlining the future relationship between the EU and UK includes a commitment to work together to protect the “high standards of workers’ rights”. It also states that the future relationship must be based on open and fair competition, including provisions on employment standards.

There will eventually be changes to UK employment laws, though. Firstly, changes are likely to be made to the Working Time Regulations. These regulations protect a number of employment rights including the 48-hour-working-week and the accrual of holiday entitlement. The UK Government has previously opted out of certain elements of this Directive, so post-Brexit scrutiny is a strong possibility. Additionally, rights under the TUPE Regulations 2006 could be reduced and trade unions could encounter difficulties.

How Brexit Will Impact Businesses

So what does all this mean for businesses across the UK? How might potential changes to UK employment laws impact your business?

Every industry will experience different challenges as they prepare for the end of the transition period. Those that trade internationally will encounter the most, but organisations from all sectors of the economy should be aware of how Brexit impacts business in general:

  • Brexit is likely to result in increased costs and delays to supply chains.
  • UK importers and exporters must adapt to new customs requirements.
  • Brexit could potentially have an enormous impact on UK law, although it is likely that UK regulations will continue to comply with established EU standards, at least in the short term.
  • Brexit will have an impact on activity across a range of core metrics including GDP growth, inflation and employment.
  • It is likely to have an impact on stocks and exchange rates.

Brexit HR Implications

Brexit won’t just affect the economy and trade. It could also have an impact on the people in your company too, especially if any of your employees hold an EU passport. As an HR manager, you should be preparing for these changes. Start by conducting an audit of your workforce. Are any of your employees EEA nationals? Are any of them British nationals working in the EEA? If you have any EU employees you must ensure they apply for settlement in the UK before June 30th 2021 (the end of the final grace period). Workforce planning and development should be your top priority now. Adapting to Brexit should form an integral part of your HR checklist.

You also need to consider any effects Brexit might have on your recruitment and staff retention policies. If your business relies on recruiting international talent then make sure you are aware of the changing immigration laws. Any candidates from abroad will now need an official offer from a licensed sponsor (you might want to consider getting a sponsor license), speak English proficiently, and have a job of a minimum skill level of RQF 3 on the UK’s scale. Candidates must also be paid at least £25,600 or the average pay for the position.

Finally, one of the most important roles of every HR department is to support its workforce. Reassure your employees and help them with any practical matters. Develop communication channels so that employees have a platform to raise any potential concerns. And, most importantly, make sure you are fully informed of all the new rules for business and circulate the information through your teams.

Brexit Checklist for HR

  • Create a positive mindset

    This might sound a bit corny, however it is beneficial that HR talks about Brexit in a positive way and highlighting the benefits. Staff members with an EU-passport might be worried about the uncertainties and whether they will be able to stay or not. Reassure your team that there is no need to worry and that you instead will help them adapt to the changes and take advantage of new opportunities that it may bring.

  • Be honest

    Even though you should be talking about this in a positive way, you should still be honest. If it will be affecting your business and staff in a significant way, be open with your teams and be prepared to respond to any questions and doubts they might have.

  • Ask your employees to send their settlement applications ASAP

    Give your EU-staff members the opportunity to send their applications for settlement during working hours. Arrange a gathering to help with their applications best you can. Applications can be sent from an app for Android phones (unfortunately, it does not work from iPhones as of yet) or a computer. They will also need to bring their passports.

  • Update your annual HR strategy

    Maybe you already took Brexit in to consideration when first creating your HR Strategy for 2019, however it is still recommended to go over it again and update with any recent changes. In particular if you know of any staff members that are considering leaving the UK you need to take action quickly to find a replacement. As mentioned above, finding and retaining talent is key.

  • Review your compensation schemes

    Even if Brexit will not affect your business economically it is recommended to do a review of the staff compensation. Salary-increases for the next year, any budget-cuts or savings that need to be put in to place, bonuses and incentives.

  • Staff Benefits – Holidays, maternity leave and working time

    Employee rights which have previously been regulated by the EU will now be easier to adapt to each company individually, while still following UK regulations of course. This is not an urgent task and you might not want to change any of your current staff benefits, but it is still important to keep in mind.


Written by Cat Symonds; Edited by Carmina Davis

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