Keep Calm and Continue the Brexit: Potential Impact on the CW Market | DCR Workforce Blog

Keep Calm and Continue the Brexit: Potential Impact on the CW Market

As Theresa May swears in to take up the job that no one else really wants, the British Exit (or “Brexit”) from the European Union (EU) is set to move inexorably ahead. So, it’s high time we accept the facts and look at the possible impact Brexit may have on hiring, talent management and overall workforce management best practices for the UK as well as the EU.

The UK will not allow other EU nationals to enter the UK without immigration permissions to work in the UK and vice versa. If the Europeans who already form a huge part of the skilled and unskilled workforces currently in the UK are forced to leave, the businesses in the UK may find it hard to manage the time, cost and effort required to replace them, unless the UK and EU negotiate an agreement that doesn’t affect the movement of employees in and out of the UK. Then there would be no real impact of Brexit on the recruitment and workforce management practices and talent strategies of either region.

Effects on the job market in general

  • The UK, like the rest of the world, is already battling issues with skill gaps in areas such as engineering and information technology. If the market demand for skilled workers shoots up as a result of the UK’s inability to retain skilled employees, the wider gap will affect the recruitment market as well as the productivity and service levels of businesses.
  • Much effort and time will be needed to educate and train new employees to replace the leaving employees.
  • Adoption of cloud-based HR and workforce management solutions may help businesses manage costs, improve efficiencies and comply with employment legislation better.

Brexit: Implications for contingent and agency workers

Unless the Brexit contract negotiates an agreement which allows free movement, the effect of Brexit could prove severely restrictive on the contingent and agency workers in the UK and the businesses which depend on the right skills to ensure their growth and success.

Many of the current laws related to contingent workers and agency workers were based on EU legislation.  Post-Brexit, the UK may or may not retain some of them; while there are some local HM Treasury laws, such as the recent value-added taxes on the staffing sector, which may stay affected. Same is the case with the national minimum/living wage and pension system as well as the 2003 Conduct Regulations and Employment Agencies Act of 1973 which regulates who and how much staffing companies can charge.

Some EU-derived laws and market conditions, as detailed below, may suffer setbacks:

  • Agency Workers in the UK enjoy working time regulations, get the same pay as a comparable permanent employee and have a right to paid holidays. Post-Brexit, these rights may be taken away, but the UK’s attraction for skilled talent will pale in comparison to other EU countries, keeping the much-needed workers away. Many EU laws have been ratified through corresponding UK laws and many of them will stay in place, irrespective of Brexit.
  • Ease of operating pan-EU staffing programs enjoyed by the UK recruiters could be curtailed severely or entirely.
  • If employers are needed to sponsor a worker’s UK visa, the number of contingent and temporary workers could drop. This would be especially true of low wage workers from East European countries, who take up elementary occupations in the UK. Such a drop in available workforces would necessarily drive up wages or encourage automation of processes, as the case may be.
  • Occupations for which there’s a shortage of skilled workers will find no difficulties in finding work in the UK, whether on temporary or permanent basis.
  • UK citizens will find their free movement around the EU restricted and find that their access to benefits like free healthcare withdrawn, when living abroad.
  • Employers looking to hire between now and the effective date of Brexit may prefer to use contingent or temporary workers rather than permanent workers, during the run leading up to the date. To mitigate risk further, they may consider establishing a rigorous background check and screening process for the contingent staff to ensure the safety of their (and their clients’) data and assets.

As of now, one in eight of the workers in the UK are EU nationals. As incidents of racial discrimination destroy the expectation that EU citizens who are already in the UK, before the Brexit vote, can continue to remain in the UK legally. The magnitude of change required by Brexit gains some perspective when we consider the plight of the 257,000 EU nationals who moved to the UK over the last 12 months – and many more like them on both sides of the English Channel!

What other implications on the workforce do you foresee occurring with Brexit?

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.