EU Referendum – what it means for HR

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With the EU referendum soon upon us, the press has been widely speculating on what each respective outcome will have on the fortunes of everything from national security to British Football. However, aside from hot debate surrounding how the results could affect the UK labour market, few column inches have been dedicated to wider HR issues.  

From a regulatory perspective, many of the UK’s current employment laws are derived from or heavily influenced by EU legislation. These include everything from anti-discrimination laws and pregnancy and maternity rights to working time regulations, the right to a minimum entitlement of paid annual leave, equal pay and collective redundancy. Needless to say, in the case of a ‘Brexit’, the abolition of these laws, or new guidelines in these areas, could have a marked effect on long-established HR processes and the skills and technology that HR professionals need to operate.     

According to recent reports, a number of Conservative MPs have already suggested employment laws dealing with issues such as working time and maternity rights should be a priority for the renegotiation agenda - and Cameron himself has indicated his desire to opt out of the working time directive. Consequently, we could see the maximum 48 hour week abolished, a reduction in statutory holiday rights, a watering down of maternity rights and/or a repeal of the Tupe and collective redundancy legislation. Although these possible changes are unlikely to have an immediate impact on HR functions, if arrangements for withdrawal are put in place, the HR landscape could shift significantly in the coming years.    

It is also likely, in the case of an ‘out’ vote, that the Government would face pressure from employers’ associations to repeal or amend some of the more controversial EU-derived employment laws, such as Agency Worker Regulations (AWR), which – in APSCo’s opinion - have singularly failed to reflect the developed UK flexible recruitment market. HR Directors who utilise contractors as part of a wider strategic workforce plan will be all too familiar with the legislative impact of these rules, and even if the UK remains part of the union we could possibly see changes in this area. However, it is not yet clear if the ‘burden reduction implementation mechanism’ that Cameron secured as part of his EU deal will have any real impact on cutting red tape.

Indeed, many questions remain unanswered. Most poignantly, what the outcome is likely to be, with recent polls showing the ‘in’ and ‘out’ camps are neck-and-neck, with a recent survey of recruitment professionals by APSCo finding that 59 per cent of respondents say they will vote to remain part of the EU, with 43 per cent of these believing that their business would suffer materially if Britain was to withdraw. This is likely to be because of the benefits that free movement of labour brings to the HR and recruitment disciplines and a concern that removing the UK from the overarching principle of free movement within the rest of Europe could have a negative impact on the availability of skilled resource.

According to a House of Commons research briefing, most studies on the impact of migration on the UK economy have found ‘weak or ambiguous effects on economic output, employment and wages on average’. However HR professionals on the ground I have spoken to seem more concerned about the possible impact that a withdrawal will have on the supply of talent.  

One form that new relationship might take is for the UK to join the European Economic Area (EEA). This would guarantee the UK’s access to the single market, including free movement of workers. However, if the UK votes to leave and no alternative arrangements are put in place, then EU workers will then be in the same position as non-EU nationals are now and so will be subject to UK immigration law, including visas for which a fee is payable, and potential caps on the number of certain types of visas. The effect that this scenario would have on UK based organisations is yet to be determined.

Indeed, the full impact of any eventual outcome will be a learning curve for all of us – but I have no doubt that whatever way the penny drops, the HR and recruitment professions will adapt expertly to fit the new landscape.

About Nick Bowles

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