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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UK Migration Committee Recommends Uncapping Tier 2 Visas After Brexit

UK Migration Committee Recommends Uncapping Tier 2 Visas After Brexit

The UK government’s Migration Advisory Committee issued a report this week assessing the impact of immigration from the European Economic Area and suggesting ways for the government to reform immigration policy in preparation for the UK’s exit from the European Union next March. Once Brexit is fully implemented in 2020, freedom of movement is expected to end between the UK and the EU, meaning UK employers will no longer be able to seamlessly recruit workers from other European countries, which employers fear may lead to labor shortages in a range of industries from agriculture and construction to hospitality, health care, and finance.

The MAC report concludes that there is no need for the UK to continue to have separate immigration rules for EU/EEA citizens and migrants from other countries. The committee’s main recommendation for alleviating these potential shortages is to remove the cap on Tier 2 skilled-worker visas, People Management explains:

Along with ending the Tier 2 (General) visa cap, the report also suggested extending Tier 2 eligibility to medium-skilled roles and abolishing the resident market test list but retaining the £30,000 salary threshold. It added the immigration skills charge should also cover EEA citizens. The report noted these changes “would allow employers to hire migrants into medium-skill jobs but would also require employers to pay salaries that place greater upward pressure on earnings in the sectors”.

Tier 2 visas became a concern for employers earlier this year as restricted certificates of sponsorship – which must be obtained by UK employers hiring non-EEA staff – were continuously oversubscribed for in the first half of 2018. Pressure on the system only eased after the government removed NHS doctors and nurses from the cap.

The main upshot of this proposal is that highly skilled talent would be relatively easy to recruit from other countries, but low-skill workers would not. Writing at Personnel Today, Kerry Garcia and Jackie Penlington from the law firm Stevens & Bolton LLP take a closer look at what the MAC’s scheme would mean for employers:

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UK Government Seeks to Reassure Workers, Businesses Over No-Deal Brexit

UK Government Seeks to Reassure Workers, Businesses Over No-Deal Brexit

The March 2019 deadline for negotiating terms for the UK’s departure from the European Union is fast approaching, while major points of contention between London and Brussels still remain to be ironed out. While the likelihood of a “no-deal” Brexit, in which the UK would crash out of the EU with no special trade arrangements, is generally considered low, the final outcome remains uncertain with just six months to go, so British companies like London-based financial firms have been taking steps to prepare for that contingency. At the same time, European manufacturers operating in the UK have made clear that they might have to pull out of the country if the deadline passes without a deal, as the removal of the UK from the European customs union would be hugely disruptive to their supply chains.

At the same time, Europeans already living legally in the UK have been assured that they will be allowed to remain under any deal, but it is less clear what will happen to them if there is no deal. Trade unions and other labor groups have also expressed concern that Brexit could mean a reduction in the rights employees enjoy under labor laws grounded in EU policies. The bill drafted last year for removing the UK from the legal, political, and financial institutions of the EU preserves regulations derived from European labor laws, but employee advocates still fear that a weakening of these rights is in the pipeline; the possibility of a no-deal outcome compounds those suspicions.

In the past week, the government has issued several statements meant to reassure employees and employers that a no-deal Brexit remains unlikely and will have no such dire consequences if it does occur. A guidance document issued last week as part of a series of advice papers concerning a potential no-deal Brexit addressed the issue of workers’ rights, saying there would be no change to these protections in any event, Personnel Today reported:

[T]he government said domestic legislation already exceeds the level of employment protection provided under EU law. It intends to make small amendments to the language of workplace legislation to reflect that the UK will no longer be a member of the EU. No policy changes will be made.

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Survey: Most UK Workers Aren’t Working 9-to-5, and Most Don’t Want to

Survey: Most UK Workers Aren’t Working 9-to-5, and Most Don’t Want to

A new poll from YouGov has found that just 6 percent of employees in the UK are working traditional 9-to-5 hours, while only 14 percent said they would prefer to work those hours, Personnel Today reported on Tuesday:

The survey, commissioned by Blue Rubicon and McDonald’s, asked more than 4,000 adults for their views on working hours and found that most full-time workers preferred to start earlier and leave earlier: 8am to 4pm were the most popular hours for 37% of respondents while 21% chose 7am to 3pm.

Just under four in 10 respondents (42%) were already working according to shift patterns, compressed hours and job shares and many of these people told researchers that they felt more motivated than when in fixed-time work and being able to work flexible hours led them to stay in the job longer.

The desire to work more flexibly in future was expressed by 70% of respondents, with 65% adding it would improve their wellbeing and satisfaction at work. However, a third of people said they didn’t think their employer would allow them to work more flexibly. Just under half (48%) said they would prefer to work a longer day in return for a shorter working week.

Evidence that traditional work schedules are becoming obsolete has been accumulating for a few years now, and not only in the UK: A CareerBuilder survey in the US in 2016, for example, found 59 percent of US workers saying they believed the typical 9-to-5 workday was a thing of the past. Work-life balance is also an increasingly important driver of talent attraction and retention around the world, as our research at Gartner has found.

At People Management, HR experts at the CIPD underscored that the survey’s findings reflect a need for organizations to be more attentive to employees’ needs in managing schedules and designing the workweek:

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