Employment law and Brexit

How Brexit might impact the workforce

There is a lot of speculation around how UK laws will change – if at all – following the UK’s exit from the European Union (EU). There are two areas of British law that could impact the workforce – employment and immigration. In terms of immigration laws, we only discuss these briefly in this article. And before we do, it’s good to note that there will be no change to the rights and status of EU citizens living in the UK until 2021.

Whatever the current speculation is, a lot could change. However it remains the case that if the UK were to apply the same skills and earnings criteria to EU migrants as it does to non-EU migrants, it is estimated that 75 percent of EU migrants currently living here would not qualify. A scary figure to be brandished in the press. If this were to be the case, such restrictions on migration would likely lead to a shortage of workers across many sectors and in particular the blue collar workforce.

Our focus in this article is on employment laws and workers rights. EU legislation has not been the only driver behind the development of UK employment laws. But politicians who campaigned for the UK’s exit from the EU cited EU-derived laws as ‘intrusive to UK workplace relations’ and ‘unnecessary red tape for British business’. Therefore – irrespective of whether this is true or not – there may be some changes in the UK’s employment laws following the UK’s exit from the EU.

We don’t know how big these will be yet but in this post we outline current laws and discuss the general consensus as to how these may or may not change.

What is employment law?

Also known as ‘Labour law’, employment law is written to regulate the relationship between workers, employers, trade unions and the government. Discrimination, family leave rights, working time regulation, protection for atypical workers, health and safety in the workplace and the rights of employees on the transfer of a business are a few examples of areas covered by employment law.

Brexit and workers rights

There are areas of UK employment law which go further than that required by EU legislation. For example, UK statutory minimum holiday entitlement is currently 28 days (inclusive of public holidays) per year for a full time employee. The EU equivalent requires Member States to implement legislation providing a minimum of only 20 days annual leave. Elsewhere, it is doubtful that any UK government will seek to fully or even substantially change our existing employment laws (which implement EU minimum requirements).

One reason for this is that a lot of employment protection involving compliance with EU laws, reflects standards of good employee relation practices which are considered basic human rights. Indeed, some fundamental EU employment laws merely supplement rights which were already established in UK law before the EU had an influence in that particular area.

UK equal pay rights and disability discrimination are two such examples. Such rights are widely agreed across developed societies globally. Another example is the law preventing employers from discriminating against staff on the grounds of a protected characteristic such as race, gender or age. So, things like the right not to be unfairly dismissed is unlikely to be affected by the UK’s EU status.

Some UK employment laws have also developed from domestic laws. For example, the recently introduced right to shared parental leave and shared parental pay. It’s generally believed that the UK’s exit from the EU should not have any bearing on this.

Another argument suggesting that change is unlikely, is that modern UK employment law is very technical and detailed and difficult to comply with for many employers as a result. In the absence of sufficient, compelling political pressure, it’s unlikely that the government would want to increase the burden on employers by making significant changes to the basic structure of the current legal framework.

Finally and perhaps most importantly, in order to maintain working relationships with developed countries which uphold these human rights, the UK government would be unwise to change existing laws which affect them. Furthermore, the UK will also still seek to maintain strong trading relations with Europe. Therefore, the UK will need to continue to demonstrate that it has minimum employment protections in place in order to make it an appealing trading partner for other European Member States.

Working in the UK after Brexit

From a human resources viewpoint, the research suggests that Brexit will have a positive impact on the UK workforce. Surveys have revealed that organisations are placing greater emphasis on developing existing staff, increasing communications and opportunities to listen to employees, and exercising more caution in their recruitment in light of Brexit.

If this is the case, the biggest changes for businesses in the next few years will be tougher competition for well-qualified staff, development of existing staff, and increased difficulty in recruiting senior and higher skilled employees. In order to attract and retain employees with the best skills organisations will need to not only comply with but go beyond these changes.

Nearly 70% of employers claimed recently that their vacancies have become hard to fill. This has prompted some employers to raise starting salaries and those of key employees to increase staff retention. (Pay growth is currently stuck at 2% in the past year except for these staff.)

Market research carried out by the Chartered Institute of Personnel and Development highlighted a continuing demand for labour against a diminished supply. Low unemployment, decreases in net both EU migration and youth population are thought to be some of the factors behind this decline in the workforce. According to CIPD market analysis, the number of applicants per vacancy has decreased in the past year across all skill levels. The biggest decrease is seen for medium-skilled roles.

An observed reduction in the number of non-UK EU nationals in employment in the UK is thought to be a significant factor in these trends. Low productivity and growth is preventing some businesses from increasing salaries (with the view to increase staff retention).

If the gap worsens as the Brexit process continues, it will be essential for organisations to invest in building the skills they need and improving their talent pipeline for the future. CIPD recommend that employers and policy makers invest in skills and management to raise workplace productivity. Employers should encourage ‘smarter’ not just ‘harder’ working. And they also suggest that the government need to ensure that their post-Brexit immigration policy provides employers with all of the skills and labour they need.

 

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