With Brexit Uncertainty Looming, UK Businesses and Employees Lose Confidence in Economy

With Brexit Uncertainty Looming, UK Businesses and Employees Lose Confidence in Economy

The deadline for the UK to withdraw from the European Union is coming up in just two weeks, on March 29. This week, the UK Parliament voted against a deal negotiated between Prime Minister Theresa May’s government and EU leaders, against a no-deal Brexit, and in favor of delaying the Brexit date in order to buy additional time to figure out a solution. Any delay will require the consent of the 27 remaining EU countries, which is not guaranteed, and even with more time, legislators will still face the same tough choices.

As the clock counts down to the deadline, Brexit has created a lot of uncertainty for UK organizations and their employees, especially workers from other EU countries whose future status is up in the air. This uncertainty has done significant damage to UK employees’ confidence in the business environment, Gartner’s latest Global Talent Monitor report indicates:

Employee confidence in the UK business environment has slumped, according to Gartner, Inc. The latest data in Gartner’s Global Talent Monitor report for 4Q18 shows employee confidence in near-term business conditions and long-term economic prospects reaching an index score of 55.6, a decline of 7.5 per cent from an index score of 60.09 in 3Q18. These results follow a worldwide trend that has seen global business confidence sink to its lowest point since the fourth quarter of 2017.

This lapse in confidence was paired with a sharp decline in employees’ active job seeking behavior, which fell by 7.2 per cent from 3Q18. Amid declining perceptions of the job market, coupled with the highly uncertain Brexit outlook, employees’ intent to stay in their current jobs in 4Q18 increased for the first time in 2018, as did their willingness to go above and beyond in their present roles.

UK employers are staring down the uncertainty of Brexit in the context of a tight talent market in which it has become exceptionally challenging to fill critical skills gaps. The Global Talent Monitor data from the final quarter of last year suggests that talent attraction will be a major challenge for employers this year, regardless of what happens with Brexit, as employees take a more pessimistic view of the job market and become more averse to the risks inherent in changing jobs. (Gartner for HR Leaders clients can see all the latest data from our Global Talent Monitor here.)

Uncertainty is a key factor — perhaps the key factor — driving the Brexit panic, as illustrated by the Decision Maker Panel, a survey of 7,500 UK business executives that researchers from the Bank of England, University of Nottingham, and Stanford University have been running regularly to gauge the impact of Brexit on companies. Writing at the Harvard Business Review, the researchers ascribe declines in investment, employment, and productivity to Brexit-related uncertainty:

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Does Hermes’ Union Deal Predict the Future of Gig Economy Workers’ Rights in the UK?

Does Hermes’ Union Deal Predict the Future of Gig Economy Workers’ Rights in the UK?

In a deal reached earlier this month with one of the UK’s largest trade unions, the courier company Hermes is offering its self-employed drivers the option to obtain some of the rights enjoyed by regular employees, including a guaranteed minimum wage and holiday pay, the Guardian reported:

Under the agreement with the GMB union, Hermes’ 15,000 drivers will continue to be self-employed but can opt into contracts with better rights. The deal comes after almost 200 Hermes couriers won the right to be recognised as “workers” at an employment tribunal last summer in a case backed by the GMB. Under employment law, “workers” are guaranteed rights including holiday pay, the legal minimum wage, minimum rest breaks and protection against unlawful discrimination.

The GMB has been active in advocating for the rights of British workers in the gig economy, also backing similar labor tribunal cases against other companies operating on an independent contractor model, including Uber, which lost a landmark case in 2016. Other British unions and union federations have also supported claims regarding the rights of gig economy workers, with tribunals ruling in favor of the workers in most of these cases. The settlement reached this month means that Hermes will drop its planned appeal against the ruling last year, while the GMB will refrain from pursuing further litigation against the company.

The “worker” classification in UK employment law defines a space between employees and the self-employed, but the tests for classifying workers as such are primarily defined by case law and increasingly unclear as technological shifts have brought about changes in the way people work. The Taylor Review of modern working practices recommended in its 2017 report that the government relabel “workers” as “dependent contractors,” write a clearer definition of this category into law, and make it the default status for companies that have a self-employed workforce above a certain size. The government said last year that it would adopt most of the review’s recommendations, but did not commit to writing this “worker by default” model into law.

Yvonne Gallagher, A partner at the London-based law firm Harbottle and Lewis, commented to Personnel Today that the Hermes deal would raise some questions about these drivers’ tax and national insurance obligations:

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UK Unveils Labor Reform Package Based on Taylor Review Recommendations

UK Unveils Labor Reform Package Based on Taylor Review Recommendations

The UK on Monday enacted a sweeping series of reforms to its labor laws, raising fines on employers for deliberately harming their workers and obliging them to give employees details of their legal rights from their first day on the job, among other changes. Based on the findings issued last year by the Independent Review of Employment Practices in the Modern Economy, led by Matthew Taylor, a former advisor to Tony Blair, the reforms are intended to strengthen the rights of agency workers and those participating in the gig economy, as well as to step up enforcement of existing labor protections. According to Personnel Today, the new legislation will:

  • repeal the Swedish derogation, which allows organisations to pay agency workers on cheaper rates than permanent staff;
  • extend the right to a written statement of rights from a person’s first day in their job to workers, going further to confirm their eligibility for sick leave and pay, as well as other types of paid leave including maternity, paternity and shared parental leave;
  • quadrupling the maximum fines handed out at employment tribunals to employers that have shown malice, spite or gross oversight from £5,000 to £20,000;
  • extending the holiday pay reference period from 12 to 52 weeks to ensure that those in seasonal roles are able to take the time off they are entitled to; and
  • lowering the threshold required for a request to set up information and consultation arrangements from 10% of employees to 2%.

In a report called the “Good Work Plan,” the government also pledged to enact further legislation so that employment classification tests “reflect the reality of the modern working relationships.” The Taylor Review had recommended that the employment status currently known as “worker” be renamed “dependent contractor” and that workers in this category be entitled to employment protections like the minimum wage, sick leave, and holiday pay. It also recommended enacting legislation to clarify the legal tests for different employment classifications, rather than relying on case law as the UK currently does.

The government’s reform package did not, however, ban the controversial practice of zero-hour contracts. Taylor had concluded that abolishing these contracts would do more harm than good, though his review also recommended that workers in zero-hour arrangements be entitled to request guaranteed hours after working for their employer for 12 months. The government of Ireland, in contrast, has said it plans to end most zero-hour contracts with a bill expected to pass the legislature in the spring. Whitehall’s decision not to ban zero-hour contracts drew criticism from unions, the Guardian reported on Sunday, with Trades Union Congress general secretary Frances O’Grady saying the government had missed an opportunity to strengthen the rights of a vulnerable segment of the workforce:

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The Talent Ramifications of the Brexit Deal (or No Deal)

The Talent Ramifications of the Brexit Deal (or No Deal)

The UK’s planned exit from the European Union is fast approaching, and a new deal over the terms of that exit faces an uncertain future in the UK parliament. Whatever happens, there will be talent implications for employers and HR leaders in the UK and Europe. Below is our broad look at the background of the process and terms of the latest proposed deal, and what the potential consequences could be — viewing several key issues through the lens of HR, including immigration, employment law, and the risks of a no-deal Brexit.

Fast Facts

  • The UK will formally exit the European Union on March 29, 2019, marking the deadline for UK and EU negotiators to reach a deal on an orderly Brexit transition. UK Prime Minister Theresa May has reached a draft agreement with the EU that would provide for a 21-month transition period, after which the UK would be able to control immigration from the EU, while backstop measures would allow the UK to remain in the EU customs union and enable a soft border between Northern Ireland and the Republic of Ireland if a final trade deal is not reached by December 2020. The transition period could be extended once, into 2022, if the UK and EU agree to do so.
  • A scheduled Parliament vote on the deal with the EU was delayed on December 10 after the May government realized the agreement would most likely be rejected. May then survived a confidence vote two days later, and plans to continue lobbying for the deal, which will not be scheduled for another vote in Parliament until sometime in January.
  • May’s deal, as drafted, would preserve the free movement of labor between the UK and other EU countries for the duration of the transition period, while any EU citizens living in the UK before the end of that period would have a right to stay, but would have to apply for residency documentation. Afterward, EU citizens would no longer have special privileges in immigrating to the UK. May has proposed a skills-based system for admitting immigrants after Brexit, but some business leaders and the National Health Service fear this system will leave them short-staffed in roles that would not qualify as high-skill under May’s scheme but for which native talent is in short supply.
  • The UK government has pledged to uphold employment laws based on EU regulations after Brexit, but some of these laws may be partly amended to be more flexible for employers or to reduce their liabilities. Unions, however, fear that these protections may be weakened substantially.
  • If there is no deal by the March 29 deadline, the UK will face a “messy” exit from the EU—likely causing severe economic disruptions. In the event of a no-deal Brexit, the UK would revert to trading with Europe under World Trade Organization guidelines, reintroducing customs and border controls. A no-deal Brexit can be expected to hurt the pound and cause instability in the British financial sector, which could spread to continental Europe and the rest of the world.
  • In a no-deal scenario, the government has promised that EU citizens’ immigration status would not change before 2021, but it remains unclear what employers will have to do to ensure that their European employees are able to continue living and working in the UK. Many businesses have put contingency plans into action to protect against the consequences of a no-deal Brexit, but most HR managers in the UK are underprepared for this scenario. In any case, Brexit is expected to result in a labor supply shock and make it more challenging for UK employers to fill job vacancies.

Background

On June 23, 2016, citizens of the UK narrowly voted to withdraw their country from the European Union. The “Brexit” referendum sent a shockwave through the British, European, and global economies, and prompted concern and uncertainty at many organizations in the UK and abroad.

Conservative Prime Minister Theresa May, who came to power shortly after the referendum in 2016, has worked to cut a deal with Brussels that preserves the UK’s strong trade ties with the EU, but has also stressed that no deal is better than a bad deal as far as her government is concerned. UK and EU negotiators deadlocked over several key points where London and Brussels are at cross-purposes, and uncertainty over whether and how these obstacles will be overcome has been a major source of anxiety for UK businesses over the past two years.

Chief among these issues are immigration and the free movement of people between the UK and the rest of the EU. May has stressed the need for the UK to “take back control” of its borders, even if it meant losing access to the EU’s single market. Free movement of people is one of the “four freedoms” underpinning that single market; the UK wants to preserve free movement of goods, services, and capital, while regaining the right to restrict immigration from the EU. For its part, Brussels has resisted creating new forms of special treatment for the UK that would make Brexit easier, partly to discourage other EU countries from pursuing exits of their own. Another, related area of disagreement is the border between the Republic of Ireland and Northern Ireland, which forms the UK’s only land border with another EU country. Many businesses on the island of Ireland have supply chains that cross that border every day and employees living on both sides of it; creating a hard border with customs and immigration controls would be costly and complicated for these organizations.

The deadline for reaching an agreement is March 29, 2019. If no agreement is reached, the UK will “crash out” of the EU and trade with the bloc under World Trade Organization guidelines. May announced on November 25 that her Brexit negotiators and their counterparts in Brussels had reached a draft agreement that would solve some of these challenges.

A vote on the deal in the UK Parliament had been scheduled for December 11, but May called it off one day before when it was clear that the deal was going to be rejected. Many MPs opposed the agreement, claiming the proposed Brexit is too hard or not hard enough, or because they believe the country should hold another referendum on the question before proceeding.

Prime Minister May said on December 10 that she would ask the EU for new “reassurances” on the deal, and in particular the backstop plan for the Northern Ireland border, which many MPs said they opposed. The EU has maintained they will not renegotiate the agreement, however. May’s government offered no specific timeline as to when there would be another scheduled vote in Parliament on this or any revised deal — but has said it will not happen until January. There is also a January 21 deadline to present the deal to Parliament. May survived a confidence v

Here is a broad outline of what might happen next and the key issues HR leaders need to understand:

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UK Men Want to Be More Involved Parents, but Traditional Gender Roles Endure

UK Men Want to Be More Involved Parents, but Traditional Gender Roles Endure

“Equal Lives,” a new report prepared by the UK organization Business in the Community in partnership with Santander, sheds light on the needs, perceptions, and attitudes of working men and women in the UK regarding the balance of work and caregiving. Overall, the report finds that men want to be more involved in caring for their children and elderly parents, but feel hindered from doing so by a combination of organizational and public policies and societal expectations around gender roles. Some of the report’s key findings include:

  • The majority of men (85%) agree they should be as involved in all aspects of childcare as women. At the same time, over nine in ten men believe it is equally acceptable for both women and men to take time out from employment in order to care for their family. …
  • Even in organisations which have familyfriendly policies, men report concerns for career, progression, finances and a feeling that their caring duties are not as recognised as women’s and less appreciated by organisations.
  • The ability to work flexibly is the organisational policy that both men and women find the most important when it comes to balancing work and care. However, takeup is significantly lower than its perceived importance.
  • Many men say they would be encouraged to use policies to support them with balancing work and care if they were confident that it would not impact their career prospects or if there were more visible examples from senior leaders in their organisation.

“This finding resonates with the conversations we’ve had in our ongoing research with men and couples who opted to take shared parental leave,” professors Emma Banister and Ben Kerrane note at the Conversation. Enacted in 2015, the UK’s Shared Parental Leave policy grants new mothers (or “lead parents” in same-sex couples) a year of leave to divide between themselves and their partners in any proportion they choose. Take-up of SPL has been disappointingly low, which critics attribute to a lack of public awareness and the common practice among employers of “topping up” the statutory minimum of parental leave pay for mothers but not fathers. Beyond that, Banister and Kerrane’s research suggests that the scheme may be hindering itself by replicating the gender expectations it is meant to ameliorate:

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Many UK Women Experience, Witness Sexual Harassment at Work

Many UK Women Experience, Witness Sexual Harassment at Work

In a survey of UK women released this week by the law firm Slater and Gordon, 37 percent reported that they had personally been sexually harassed at work within the past 12 months, while 39 percent said they had witnessed a colleague being harassed, Personnel Today reports:

Fifty-two per cent said their employer had not taken any action to combat sexual harassment, while 56% said their organisation did not have a sexual harassment policy, or were not aware of one. Despite the rise of the #MeToo movement and the allegations made against Hollywood film producer Harvey Weinstein increasing awareness of the problem, 28% claimed they still had a predatory male colleague or boss who harassed female members of staff.

Although the survey found only 21% of victims came forward about harassment, employment lawyer Clare Armstrong said Slater and Gordon had seen an increase in the number of people getting in contact about the issue.

As to why so few victims come forward, another survey published earlier this month by the Young Women’s Trust found that among women ages 18-30, 24 percent would be reluctant to report sexual harassment out of fear of losing their jobs, while another 17 percent expressed fear of having their hours cut. Fifteen percent of young women said they had been sexually harassed at work and chosen not to report it, while 32 percent said they didn’t know how to report harassment to their employer.

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CIPD and Mind Publish Guide to Mental Health for Line Managers

CIPD and Mind Publish Guide to Mental Health for Line Managers

The CIPD and UK mental health charity Mind issued a new resource this week, the People Managers’ Guide to Mental Health, to help managers better identify and address mental health issues in the workplace, People Management reported on Wednesday:

Among the publication’s suggestions were using regular catch-ups and supervised meetings to monitor staff wellbeing and being alert to potential workplace triggers for distress, such as long hours or unmanageable workloads. The report also recommended businesses work to address the stigma still attached to mental health and encourage people to talk openly about their needs. The publication stressed that managers must be prepared to broach important dialogues and offer support. …

Following a disclosure of mental ill-health at work, managers should be prepared to make reasonable adjustments – such as relaxing requirements to work set hours in favour of flexible working, giving employees time off for appointments related to their mental health, such as therapy or counselling, and increasing one-to-one supervisions with staff.

The guide is written for readers in the UK and refers to some laws, regulations, and conventions specific to that country, but the bulk of its advice is applicable to managers anywhere. Research conducted last year by the UK health provider Bupa found that more than one in three line managers would have difficulty identifying mental health problems among their staff, while 30 per cent would not know what to do if a member of their team had a mental health problem.

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