Brexit impact on the UK workforce and the future of HR

Businesses are preparing themselves for the potential effects of Brexit and what it could mean for their organisation.

Ian Dowd

Jun 24th 2016

Brexit impact on the UK workforce and the future of HR

The countdown to the EU referendum is over, and many businesses are preparing themselves for the potential effects of Brexit and what it could mean for their organisation. While legislative changes will likely happen with Britain leaving the European Union, the UK workforce will be most directly affected, particularly those 3m+ EU migrants currently living and working here. With high wages and one of the lowest unemployment rates in the EU, the UK boasts an attractive job market for skilled overseas workers, which can currently come live and work in the UK with limited restrictions.  Now the so-called Brexit is a reality, working conditions for employees in the UK could change quite drastically.

The right of EU citizens to freely work and live across the EU clearly affects the supply of labour and recruitment and retention practices. Now the UK are to leave the EU, citizens of other member states may no longer enjoy an automatic right to travel and work in the UK and vice-versa. So what are the likely scenarios in this case and how would this impact UK businesses and HR professionals?

Free movement restrictions

Many commentators believe that the UK will likely enter negotiations with the EU to retain access to the single market but, should those fail, managing the movement of people could be replaced by a points-based system that currently already applies to non-EU nationals. Likewise, in the absence of any other agreement, EU countries would be free to impose their own restrictions on UK citizens, restricting their rights to live and work in the European Union. Another approach could see new legislation allowing EU citizens to remain in the UK for a specified period of time, after which they would need to obtain a visa or residence on the same basis as people from outside the EU.

The main uncertainty of the Brexit vote is for migrant employees who’ve been here fewer than four years and are ineligible for permanent residency. However, most experts believe that anyone who arrived in the UK before the Brexit vote would be allowed to stay in the UK legally, should they want to. This should minimise an immediate impact on the UK workforce. It’s important, though, to remember that nothing will change overnight.

Currently, immigration from the EU supports the UK economy’s ability to grow without pushing up wage growth and inflation. It is therefore unlikely that the government will pursue an overnight change but, in the long term, Brexit might be a catalyst for a shift in the UK's immigration policy.

Taking action 

Whilst the politicians are out debating, UK employers and their HR teams can get busy now by assessing what the Brexit vote and what it means for them and what they can do to be ready to deal with it, now it has happened. The Brexit vote is in, and the key priority for businesses is to minimise disruption to their workforce, while ensuring that all their practices remain legal.  HR teams can protect their organisation from any potential changes by planning ahead and putting excellent communication strategies in place now that the vote is in. This will ensure that everyone, from the most junior member of staff to the CEO, knows what impact Brexit has on the organisation and how this will impact them directly.

Finally, we need to remember that the HR function within businesses will remain strategically important after the Brexit vote. Now the UK will be leaving the EU, businesses still need to face major challenges of engagement, productivity, skill shortages and the impact of disruptive technologies on their organisations. HR should get ready to help businesses address these important challenges immediately.

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