BREXIT – practical tips for HR practitioners

The political fallout has however been historic in its absurdity.  The threat of legal intervention on the process is still being heard and the economic and social impact has already begun to be felt. 

The full impact for UK business is unknown and certain industries will feel it more than others, not to mention the impact on trade between the UK and Ireland, currently estimated to be worth over 1bn euros (£840m) a week.

The IMF are certainly clear in their assertion that Brexit ‘throws a spanner in works’ of global economic growth, with the UK worst affected, slashing growth estimates for 2017 from 2.2% to 1.3% and cutting the 2016 forecast from 1.9% to 1.7%. PWC present similar figures.

The predictions for Northern Ireland are equally concerning.  PWC predict the NI economy will grow by just 1% in 2016 and 0.2% in 2017, making it the poorest performing of the 12 UK regions. An RIC’s survey stated that the NI Commercial property market has seen a significant drop in confidence and investor demand since Brexit.

Ireland raises particular concerns. The ‘border’ situation raises complicated issues around trade and free movement.  The position is unclear for ‘All Island companies’ and those trading across the Island. The potential ease for talent to travel south cannot be ignored and is presenting unique challenges and concerns on the Island.

In a series of articles on Brexit, as the decisions unfold and the landscape becomes a little clearer to navigate, we will suggest some practical ways in which HR, in particular, can take some control in a very uncertain moment in our history.  In particular, we believe the following themes require some immediate attention;

1. Who in your organisation will be responsible for Brexit impact management?
2. Have you taken action to protect employees from potential harassment and discrimination?
3. If you employ EU Nationals and rely on their skills, have you taken steps to remove panic and reassure them?
4. Have you begun to consider the longer term impact on your skill base, particularly given the shortage of STEM skills native to the UK?
5. Have you familiarised yourself with the potential impact on Employment Law?
6. Finally, have you taken steps to consider and minimise the impact (if possible) on your pension provision?

For ease of reading, we summarise key considerations. We welcome any employer wanting to discuss this further or to obtain assistance on any related topic to contact us directly (details at the bottom).

1. Who in your organisation will be responsible for Brexit impact management?

Clearly, the need to allocate specific responsibility for managing Brexit will depend on the size and nature of your organisation. We suggest that ‘if no specific responsibility is allocated, no specific action may be taken’.  It is worth thinking about and frankly for larger SMEs and organisations in retail, finance, insurance, manufacturing, healthcare and science and research-related industries, Brexit is already impacting.  KPMG is one example of an organisation which has appointed a Head of Brexit  (Karen Briggs) wholly dedicated to Brexit and its impact. Karen has said that employers in the UK need extra support on mitigating the risks and taking advantage of opportunities that arise from Brexit. 

At the very least, and whilst the commercial and finance experts work out the impact on those areas of your organisation, make the ‘people elements’ relating to Brexit either your own responsibility or that of someone within the HR team.

2. Have you taken action to protect employees from potential harassment and discrimination?

The National Police Chief’s council reported a 57% increase in hate crime in the aftermath of the Brexit result.  Something that most of us have been surprised if not appalled about is that the vote appears to have opened a Pandora ’s Box of ill feeling, frustration and at times fundamentally racist opinions directed towards immigrants.  The reasons are many, but as employers, we must take steps to minimise the impact within our own corridors, shop floors and offices.  Reports of derogatory comments, of Facebook slurs, of fisticuffs and racist abuse, leave employers vulnerable to claims of vicarious liability for failing to take action to prevent it.

Employers are advised to take steps to protect all employees, including their EU migrant worker population from harassment on the grounds of nationality or race, from colleagues and or third parties, such as customers. A statement reminding all employees of the bullying and harassment policy is wise, linking a zero tolerance approach to all potentially discriminatory actions or remarks, including those exchanged on Facebook or other social media.  Certain employee groups (and this will depend on the likely risk and culture) may need to be reminded specifically to refrain from asking inappropriate questions or making certain comments. This might include refraining from asking colleagues when they are planning to "go home" or how long they have been in the UK. It is important that the employer can demonstrate it has taken action to prevent harassment and / or discrimination.

Given the age split in voting trends during the referendum, the warning should also include a reminder that insulting ‘older’ or ‘younger’ colleagues for their political views may be considered age discrimination. Arguments about the Brexit vote between differing age groups might easily develop and could descend into age-related insults on both sides. Allegations ranging from being "simple minded", “out of touch” or even “selfish" have been commonly reported. A good approach is to gauge the tone in your own workplace and nip damaging behaviours in the bud before they develop.  Usually, a quiet word is enough to stop the behaviour repeating itself.

3. If you employ EU Nationals and rely on their skills, have you taken steps to remove panic and reassure them? Have you considered UK Nationals working for you in the EU?

Northern Ireland, as well as the rest of the UK, employs a large number of EU Nationals. Around 5% of the UK population is made up of EU Nationals, with the highest proportion of that number (almost one third) coming from Poland. In the past month, there has been understandable concern from EU Nationals who have come to work in the UK, particularly within the last few years, given the well-publicised intended restrictions to be made on immigration and no guarantees of protection for EU Nationals who have recently com to live and work here.  The UK benefits from current EU free movement of labour, not least to plug STEM skills gaps in areas like medicine and research as well as a range of other academic, technical posts, as well as those plugging more manual skill shortages in construction, food and manufacturing roles.  Simon Stevens the CEO of the NHS has been extremely vocal in his appeal to Government to guarantee the position of health workers from the EU. None is yet forthcoming despite suggestions by David Davis that this position is favoured.

Whilst the position is not yet absolutely clear, all signs from Government appear to reassure EU Nationals already working and living in the UK. An important step for employers is to clearly communicate the value it places on those employees and to seek to reassure them about steps which will be taken to secure their position.

Actions employers are already taking (or planning to) to safeguard the UK residence right of their employees include;

• assisting with applications for indefinite leave to remain for employees who have resided in the UK for five years;
• assisting those with less than five years in the UK to obtain registration certificates to record their current status in the UK;
• assisting with applications for British citizenship for those who have six years residence in the UK;
• considering what rights to British citizenship employees might have on a spousal or ancestry basis.

The 1.2 million UK nationals currently living and working in EEA countries (plus Switzerland) should also be reassured given that their situation will remain unchanged for as long as the UK remains a member of the EU (the coming 2 years). In addition, if a UK national has lived and worked in another EU member for five years or more they may have acquired the right to apply for long-term residency status. Citizenship in some cases will be an option, depending on the immigration policy of the specific member state.  Employers need to keep a close eye on the negotiations with the EU which will inevitably take place in the coming year or two.

4. Have you begun to consider the longer term impact on your skill base, particularly given the shortage of STEM skills?

If Brexit does materialise in the way it is expected to, the rules on immigration in the UK are set to change to a much stricter system, possibly including a two-tier points system not unlike the Australian approach. For those currently reliant on the EU to bridge skills gaps this is not good news, making recruitment of talent from the EU doubly complicated.

During the next two years, it will still be possible to employ personnel from the EU, EEA and Switzerland in the UK. Many are facing the challenge of the reticence of candidates to move due to the uncertainty around their position.

However, post-Brexit the position in the UK is uncertain. Institutions such as scientific research facilities, in Northern Ireland for example, are already reporting that key candidates are now discouraged from proceeding with applications and talented incumbents are making noises about moving away. Such institutions in the south of Ireland report seeing this as an opportunity to attract such talent.

A key consideration will be to review the incentives offered to those coming from the EU with key skills.  Secondly, a new approach to sourcing and developing talent should include options for plugging skills gaps with upskilling and formal retraining from a National pool. This may well involve closer links with colleges and universities as well as vocational training organisations.

Costs are also a factor in the short term. If the trend of a consistently weak pound  continues, offering an attractive comparable salary will be more costly and any appointments from the EU may now incur visa application fees.

Employers of lower skilled workers should take particular note also of the risk that limitations could be placed on the type of employees who will be allowed to seek employment in the UK, potentially restricting the ability to source low skilled and lower paid labour from the EU. Forward planning in industries such as hospitality which rely heavily on this kind of labour will need to be done, to account for a likely increase in the projected wage bill in future years.

There is no clarity at this point around what will happen on immigration and much of this will depend on what kind of trade deal is reached.  However, there is time to plan. Organisations reliant on European immigration and skills would be well advised to consider the alternative responses and strategies available to them, perhaps by scenario planning dependent on the range of potential outcomes. 

5. Have you familiarised yourself with the potential impact on Employment Law?

We will leave the detail on this element to the legal writers for Legal-Island, however, the short answer to this is that whilst no short term changes are expected, the longer term amendments to employment law could well work in favour of employers, and employers are encouraged to get involved in business forums to lobby government for favourable change. 

Employment laws which aren’t derived from EU law would remain unaffected by Brexit (e.g. the right not to be unfairly dismissed, protection for whistle-blowers, the right to be paid in accordance with the national minimum wage etc.).

However, legal experts suggest that Brexit may bring changes to areas such as the anti-discrimination rights, transfer of undertakings regulations, family leave entitlements, collective consultation obligations, duties to agency workers or working time regulations.  That said, significant change is unlikely where laws have become embedded and are generally valued. So watch this space and do not miss the chance to influence change.

6. Finally, have you taken steps to consider and minimise the impact (if possible) on your pension provision?

Financial experts are warning that the impact on both defined benefit (DB) and defined contribution (DC) pensions could be significant given the economic instability and market volatility. Employers are advised to enter into early dialogue with pension trustees about plans in place to sustain financial stability and any plans to review schemes linked to EU organisations.  Employees should be reassured via a communication to members from the trustees, laying out what steps being taken to mitigate risks to their pension schemes.

Is Brexit already impacting on your organisation, if so in what way and what actions are you taking?