Brexit: What does it mean for HR?

Whichever side of the fence you sat on with regards to the recent EU referendum, there is no denying the huge impact the European Union has had on UK employment legislation. From Working Time Regulations to Agency Worker’s Regulations, and not forgetting the Equality Act 2010 which gives effect to EU directives covering discrimination on various grounds including age, sexual orientation, religion and belief; a lot of UK HR legislation has come from the EU.

Following Brexit the UK is now able to repeal, should we choose to, all EU legislation, including those that relate to HR and employment law. So, while businesses are still digesting the news and what it means on both a professional and personal level, HR teams must now work to allocate resources to understand all the unique ramifications for their businesses. Over the coming months huge amounts of information will be coming from the government, trade bodies and experts. All businesses will need to be on top of this information and guidance right from the get-go.

Here are some of the areas HR teams will need to consider:

Migration

It isn’t yet clear what the decision means for EU nationals working in the UK, but some experts have warned the referendum decision for the UK to leave the EU could see the introduction of costly policies for organisations that employ EU workers.

At present, thousands of EU migrants are employed throughout the UK, so depending on how EU negotiations progress, EU migrants will potentially have to exit the UK if they fail to qualify under the current Points Based System that we use for workers outside the EU.

On the issue, managing director of Migrate UK Jonathan Beech commented: “Unless there are transitional arrangements in place from the government, which is not clear at this stage, current EU workers in the UK will now need to fall under UK immigration rules and the UK’s Points Based System. As with non-EU workers, hiring EU workers will now become a very selective process, depending on the technicality and seniority of the vacancy, the rate of pay and whether there are any settled UK workers available to fill the role.”

But while EU workers face an uncertain time ahead, as a direct result so too does the British economy, as not only would the removal of such workers mean the jobs market would become inundated with vacancies, but currently EU workers contribute £5 billion annually, which would be lost.

Pensions

A hotly debated topic throughout the EU Referendum campaign, and an issue that is still shrouded in mystery following the leave vote, is pensions. Pensions are an important element in the relationship between employer and employee, with a significant proportion of the current legislation governing pensions coming from the EU. As a result of such legislation, the way pensions are calculated has changed. Previously, employers used to promise a fixed pension on retirement – known as a defined benefit pension, but nowadays most employees now have to save into a defined contribution pension themselves.

In short, this means that if there’s a financial crash, the value of pension investments also risks plummeting. So for anyone still saving into a pension, the biggest threat following Brexit is an extended period of financial instability. It’s therefore worrying, that a number of experts have warned that the impact on both defined benefit (DB) and defined contribution (DC) pensions could face instability.

But it’s not only continued market volatility which will impact on the health of the defined benefit (DB) schemes, increased volatility in gilt yields and sterling may have further impact on pension schemes.

Many employees could now see their financial health and their pensions suffer in the short-term economical volatility. Those planning for the future may have to scale back on their aspirations; long-term savers may be able to navigate the uncertain times, but like most challenges UK employers and HR professionals are now facing, only time will tell.

Data Protection

Perhaps one of the biggest queries surrounding the EU Referendum, was the future of data protection laws upon leaving the EU. Working within HR, you’ll no doubt have heard about the new data protection rules, known as the General Data Protection Regulation (GDPR), which were agreed in Brussels in December 2015 and are set to become enforceable in 2018.

Under these rules, which are expected to remain unchanged following Brexit, HR professionals will have an obligation to perform data erasure in response to individuals’ exercise of their right to withdraw their consent to storing or using their personal data and to request their data be deleted.

Then there is the obligation to ensure that any personal data you hold has been collected after obtaining consent that was explicit, rather than implied.

Organisations will also have an obligation to allow individuals to see their own data, and to release a copy of any data they hold about them in a commonly readable format, should it be required.

Equator HR’s Employee Portal allows employees to access their personal information directly from a web browser, allowing your employees to view or modify their specific personal information. This can reduce the burden on your Human Resource professionals to respond to routine employee requests and enquiries, and free them from many routine administration tasks maintaining the database.

The above examples are only really the tip of the iceberg when it comes to the ways in which UK employment and human resources may have to react to change following Britain’s vote to leave the EU, and unfortunately, just like much of the campaigning prior to June’s vote was built on speculation, it is the same guess work which will surround our industry until agreements with the EU are finalised.

But that doesn’t necessarily mean it is all doom and gloom for HR professionals. Many experts are welcoming the possibility of the UK repealing the EU’s Working Time Directive, which specifies maximum 48-hour working weeks. As a result of Brexit, the UK may also be allowed more freedom in calculating statutory holiday pay: commission and overtime, for example, could be excluded from holiday pay calculations.

One thing you can be certain of, is that we will be making the relevant developments to Equator HR over the coming months and years to make sure that it continues to be an efficient and compliant HR application, helping your HR team to remain up-to-date with new legislation as and when it happens.