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What Does Brexit Mean for HR?

Daniel ThornileyLaws Regulation2018 01 17
What Does Brexit Mean for HR?
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It’s quite tricky writing about Brexit because we don’t entirely know how — or even if — it will actually happen.

The UK cabinet has not elaborated what type of Brexit the UK will undertake; nor do we know what the EU will accept. At the moment, it seems likely that the UK will depart the single market and the Customs Union with the aim of achieving a “bespoke” free-trade agreement.

The UK is set to leave the EU in March 2019, but then there will be a transition period of 18 months or longer because no free trade deal can be cobbled together that quickly. We strongly presume that all EU legislation will apply until the end of the transition period.

Some 9 months ago, there was a 5% chance that Brexit would not happen, and now that possibility has risen to 25%. The UK parliament may vote down the Brexit Bill in autumn 2018, parliamentarians may garner enough votes to push through a second referendum, or the UK Tory party may implode with Prime Minister May resigning. These are possibilities, but at this point, they seem unlikely.

Here’s a brief overview of what Brexit will mean for HR.

A Tighter Market for Skilled Workers

Existing EU nationals working in the UK are safe and even new arrivals up to the end of the transition period could have long-term rights, but companies will need to plan for a future with more regulations regarding EU employees.

The HR market will probably tighten for skilled employees because there will be new restraints on them migrating into the UK and because many will leave.

There will be serious disruptions in retail, agriculture and health care, all of which depend on EU nationals and other migrants for much of their temporary or full-time labor. There will presumably be significant shifts in the banking and financial sectors as some firms in this sector put more people on the continent.

Much will depend on whether we stay in the single market and Customs Union, which would entail retaining migration rules. For now the assumption is that Brexit after 2021 will entail dismantling of EU migration rules as we leave the Single market and Customs Union.

Companies will be competing more for the best talent and will need to respond by being top employers; this may entail some above-trend salary/wage inflation.

An Emphasis on Retention and Development

Post-Brexit, companies will need to recruit and retain staff with better overall packages and work environment.

This could entail slightly higher costs overall for HR departments: series, training, secondments, etc.

Companies will want to look at their UK “domestic staff” and current EU nationals who have been “grand-fathered” in the recent December 2017 agreement.

Companies will need to focus more on this pool and perhaps to training up “domestic” talent.

It won’t be much good moaning that there are too few international staff on the market; companies will have to knuckle down to working better with the talent pool which is to hand.

There will be either no or only limited changes to migration legislation policy regarding EU nationals at least until the end of the transition period (sometime in 2021), so companies have about 3.5 years to play with.

More Immigration Changes to Come?

Looking forward to UK immigration legislation after Brexit (i.e. after the transition period sometime in 2021), there are several possible/probable outcomes:

Government legislation will probably include some features of “selecting the best” and defining the extent and type of migration from the EU and non-EU countries. It seems probable that EU migration will fall as a proportion of total migration and even absolutely as non-EU migration rises proportionately and even absolutely because more non-EU workers will acquire working rights under new trading agreements (e.g. with India in all probability). If that happens, companies will need to dip into the domestic pool of workers more and to train up their existing resident labour force (UK citizens and EU nationals who will acquire settled status).

Existing EU nationals working in the UK are safe and even new arrivals up to the end of the transition period could have long-term rights.

Future work permits will probably be eligible for about 2-3 years and highly skilled workers may receive permits of longer duration but definitions and status remain to be defined.

Some income threshold will be required for EU nationals arriving who claim self-sufficiency status.

As the UK government clearly recognises, future immigration legislation will not be straightforward in drafting and implementation. For organisations to navigate these changes, HR leaders must remain nimble and stay prepared for serious disruption.

What does Brexit mean for HR? Join us in London March 20-21 to hear more from Dr. Thorniley.

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