Chapter 7
IN THIS CHAPTER
Looking at the wider implications of Brexit for UK employment law
Understanding how Brexit affects your existing European employees
Providing support for employees (European and otherwise) through uncertain times
Ensuring continued access to the labor you need after Brexit
Sizing up changes for British citizens working in Europe
Tackling short-term business trips to Europe
Ask a group of business leaders to list their company’s core assets and you may get some very different answers. Some may focus on tangible business assets, such as buildings, land, cash in the bank, equipment, stock inventory, and so on. Others may prioritize less tangible assets, like patents, customer data, brand recognition, and so on. What one business considers valuable may be less vital to another business.
But there’s one asset that pretty much all business leaders agree on — one asset that’s extremely critical to the value of any business, regardless of its size or industry. That asset is people. From frontline employees to the leadership team, people are what makes a business work, grow, and succeed.
That’s why Brexit has many business leaders concerned. Some may be worried about the potential loss of individual European employees and the valuable skills they bring to the company; others who are absolutely reliant on workers from abroad face potentially huge staffing headaches as the free movement of people between the UK and Europe comes to an end.
In this chapter, I look at the impact of Brexit on employees, access to labor, and bigger-picture employment issues in the UK.
Much of the UK’s existing employment law is borne out of EU regulations. Some Brexiteers suggested that Brexit would trigger a “bonfire” of regulation, with pesky EU rules and red tape being ripped up left, right, and center, but it’s highly unlikely that’ll play out in real life.
Even in the longer term, most areas of UK employment law that abide by EU rules are unlikely to change drastically, and the UK will probably end up largely complying with EU employment law.
It’s also worth remembering that there are some areas of UK employment law that go above and beyond the EU’s position — maternity leave and annual leave being two prime examples.
After Brexit, it’ll be up to Parliament to decide whether certain aspects of employment law and employment rights will change. This has some people concerned that the UK government may move to restrict certain workers’ rights.
One area that may be a real bone of contention is the 48-hour week. Under EU law, workers can’t work more than 48 hours a week on average, which includes overtime.
This is one area where the UK chose to depart from EU rules, even before the Brexit vote. Under UK employment law, people can choose to opt out of this 48-hour limit, meaning someone who wants to put in more hours can do so legally. (Many would question whether it’s really the employee’s “choice” to opt out if he’s under pressure from his employer and worried about losing his job, but that’s another story.)
This would prompt a fierce battle with unions in the UK, so there’s no saying the move would definitely go ahead. However, it shows that the UK may look to distance itself from EU employment law in some areas. And if the UK did go ahead with such a move, it could become a sticking point in future negotiations between the UK and the EU.
There have also been suggestions that the UK government might look to change the rules on collective redundancies. At the time of writing, current UK employment law states that if a company wants to make 20 or more employees redundant, “collective redundancy” obligations are triggered, which means the employer has to go through a formal period of consultation with staff representatives. The government may look to increase this 20-employee threshold, making it easier for employers to make large numbers of people redundant without triggering consultations.
In theory, yes. Although, the specifics will be dictated by the in-depth UK–EU negotiations that begin after Brexit. (Remember that Theresa May’s withdrawal agreement only covers the UK’s exit from the EU — almost every aspect of the UK’s ongoing relationship with the EU has yet to be decided. See Chapters 3 and 4 for more about this.)
Former Brexit Secretary David Davis made an interesting point about workers’ rights in 2016. Writing for the Conservative Home website, he said:
Empirical studies show that it is not employment regulation that stultifies economic growth… . Britain has a relatively flexible workforce, and so long as the employment law environment stays reasonably stable, it should not be a problem for business… . There is also a political or perhaps sentimental point. The great British industrial working classes voted overwhelmingly for Brexit. I am not at all attracted by the idea of rewarding them by cutting their rights.
Basically, Davis was acknowledging that many of the UK working class voted in favor of Brexit, so it makes no sense to deprive them of precious employment law protections. Many people voted for Brexit because they believed it would help Britons lead more prosperous lives. Taking away employment protections would hardly deliver that.
As of this writing, it looks very likely that Brexit will prompt a change in UK immigration rules, as, under the terms of Theresa May’s withdrawal agreement (Chapter 3) and political declaration on future UK–EU relations (Chapter 4) free movement of people between the EU and the UK will end. So, what does this mean for your employees who hail from Europe? Read on to find out.
As of 2017, there were 3.8 million people living in the UK who were born in EU27 countries (the 27 remaining members of the EU after Brexit). Many of them are gainfully employed and contributing to the success of UK businesses. (Many are self-employed, too.) In fact, EU citizens living in the UK are net contributors to UK public finances (see Chapter 2), meaning they pay more into the UK system through taxes than they take out in benefits, healthcare, and so on. And let’s not forget that certain industries in the UK are absolutely reliant on workers coming from overseas, especially from Europe.
Under the terms of Theresa May’s withdrawal agreement, EU citizens already living in the UK prior to Brexit (and any who move during the transition period) will retain the right to stay on in the UK and have their existing rights and entitlements protected until the end of the transition period (currently set to end on December 31, 2020, but this may change as the Brexit date keeps being pushed back).
Therefore, your EU national employees will need to obtain settled status if they want to remain in the UK indefinitely. Here are the key points to note on obtaining settled status:
You or your employees can find out more about the settlement scheme and apply for settled or pre-settled status at www.gov.uk/settled-status-eu-citizens-families
. There’s also a helpful employer toolkit for the settlement scheme, available at www.gov.uk/government/publications/eu-settlement-scheme-employer-toolkit
.
In the unlikely event that the UK leaves the EU without agreeing to a withdrawal deal (“no-deal Brexit”), then the transition period will no longer apply, and only those EU nationals already living in the UK prior to the exit date will be able to apply for settled and pre-settled status. At the time of writing, the deadline for applying is set as December 31, 2020.
Obviously, this may be a confusing and anxious time for employees who hail from Europe. It’s, therefore, vital that employers support their employees (European and otherwise) through Brexit uncertainty.
Whether your company employs lots of EU citizens or none at all, Brexit disruption and uncertainty may have an indirect effect on employee engagement and performance.
Regardless of where they were born, your employees may be worried about their jobs, be concerned how processes and roles may change, or simply be unclear how the business as a whole may be affected by Brexit. This uncertainty can breed significant problems from a people-management perspective.
Writing for Personnel Today in March 2019, Brian Kropp, Group Vice President of Research and Consultancy firm Gartner, noted that two negative trends tend to occur during times of business disruption:
Common sense says we should want to hang onto our jobs when times get tough, right? In theory, that makes sense. But humans are, well, human. We don’t always behave the way we should. (If we did, there’d be no crime, war, poverty, or X Factor.)
Problematic behavior in the workplace and reduced employee engagement have a drastic impact on productivity and performance:
If you want to avoid losing high-potential employees, maintain levels of engagement and performance, and nip the chance of problematic behavior in the bud, what should you do?
So far in this chapter, we’ve looked at the impact on existing employees and those European citizens already living in the UK. But what happens if you want to take on new employees from the EU after Brexit? What happens, for example, if your business relies on seasonal workers coming from the EU for a few months at a time.
Under the terms of Theresa May’s withdrawal agreement, freedom of movement will remain in place for the duration of the transition period. So, if that agreement is approved by the UK Parliament, then, in the very short term, the ability of UK businesses to recruit from the EU won’t change.
The UK government is currently talking about a skilled employment threshold of £30,000, meaning those coming to work in the UK, whether they’re from Europe or anywhere else in the world, must secure a wage of £30,000 or above to gain entry.
There has been a lot of backlash against this proposal, and it’s not yet clear whether the plans will go ahead. (If they do go ahead, the threshold could be adjusted depending on the specific skill sets required at the time.) One of the main objections is that certain sectors in the UK, including the National Health Service (NHS) and agriculture, rely on easy access to workers from the EU who don’t earn anywhere near £30,000 a year.
Workers coming to the UK on this 12-month, visa-free scheme will not be able to bring their families to live with them or access public funds (such as benefits) for the duration of their stay. The scheme will apply even if there’s a no-deal Brexit, and it’s scheduled to last until 2025 (after which point, it’ll probably be extended or replaced with something very similar).
Initial indications suggest that the proposed unskilled worker system would attract a similar number of EU workers as seen in the UK today. So, in theory, businesses won’t suffer negative consequences when it comes to attracting workers from the EU.
What’s more, sectors such as hospitality, healthcare, construction, and agriculture were reporting shortages in workers in 2018.
A number of factors contributed to this decline in EU workers coming to the UK:
Therefore, if you’re recruiting regularly from the EU, you may need to work harder to attract EU nationals in the future. For many businesses, unfortunately, this means offering higher wages.
Although most of this chapter is focused on the impact of Brexit on employees in the UK, it’s worth taking a quick timeout to consider the potential impact on British citizens who are employed (or hoping to be employed) in Europe.
Under the terms of Theresa May’s withdrawal agreement (see Chapter 3), UK citizens who are already settled in an EU member state before the end of the transition period will retain their residency rights in the country in which they’re settled. Depending on the country, they may have to reapply for their residency (just as most EU nationals living in the UK have to apply for settled status), but the chances of thousands of Brits being unilaterally kicked out of, say, Germany are extremely slim.
In the event of a no-deal Brexit, the picture is less clear, but many EU countries will simply create reciprocal arrangements with the UK, essentially meaning they’ll match whatever the UK does for European citizens. However, the arrangements will vary from country to country.
For example, in the event of a no-deal Brexit, UK citizens living in Germany will have three months to register for a new temporary residency permit. This may affect many Brits, as figures suggest there has been a significant increase in the number of British workers moving to Germany since the 2016 Brexit vote. (This phenomenon may be partly connected to the UK’s dependence on the German automotive manufacturing industry, or Germany’s strong financial sector.)
France, meanwhile, has no plans to impose a visa on British workers, and those already living in France will not need to acquire formal residency. However, this could change and is reliant on the UK government adopting a similar stance with French citizens in the UK.
When it comes to the Republic of Ireland, the “common travel area,” which ensures free movement of people between the UK and Ireland, will continue to apply after Brexit.
Despite the fact that the EU is negotiating for all member states, we’re likely to see an array of separate arrangements between the UK and individual European countries. These agreements will also be reciprocal — or, to put it another way, EU countries may go easy on UK workers applying to live and work in their country if the UK goes easy on their citizens applying for employment in the UK. You scratch our backs, we’ll scratch yours… .
Ultimately, UK citizens wanting to work in an EU country will have to apply for the right to do so. Assuming they’re granted the right to live and work in that European country, the terms of their residency will apply only to that one country. This means they won’t be automatically able to work in other European countries; they’d have to apply separately for the right to live and work elsewhere in the EU.
One potential consequence of this is that British candidates may find themselves at a disadvantage compared to European candidates, who are freely able to work right across Europe.
For some sectors, particularly technology and finance, the ability to move freely across the EU (and the UK, if granted permission) could make European candidates a much more attractive prospect than British candidates. The same goes for any multinational company with offices across Europe — the ability to live and work in any EU country may entice them to favor applicants from within the EU over an otherwise qualified British candidate.
Of course, the end of free movement is what many people voted for. Yet, the big-picture downsides for British workers received little attention during the referendum campaign.
The UK and the EU hope to secure a close trading relationship for the future, one that ensures that trade is as hassle-free as possible.
The same is true for travel arrangements. Under the terms of the political declaration on the UK’s future relationship with the EU (see Chapter 4), the UK government and its counterparts in the EU are determined to introduce reciprocal short-term travel arrangements that are as smooth and easy as possible.
Ultimately, both parties want to avoid unnecessary bureaucracy for short-term stays. After all, they’ll have their hands full negotiating a trade deal and every other aspect of the UK’s ongoing relationship with the EU — the thought of introducing visas for business trips and vacations is a bureaucratic nightmare both sides can do without.
In other words, next year’s sales conference in Malta or Marbella or whatever sunny European destination you’ve chosen, can go ahead without added travel headaches. (Sadly there’s no such easy fix for the annual alcohol- and heatstroke-induced headaches, though.)
The same is true for European companies sending European citizen employees to the UK on short-term business trips — there’s no need for a visa under the current plans.