Where does Brexit leave HR?

The UK has voted to leave the EU following last week’s referendum. David Cameron has announced that he will be stepping down as Prime Minister by October 2016, which means a new Prime Minister will be responsible for invoking Article 50 and negotiating with the EU the terms of its withdrawal.

Since the outcome, businesses have been faced with uncertainty and volatility in the markets while HR leaders are trying to understand what ‘Brexit’ means for their employees. The decision to leave the EU means that many employers with EU workers or those who have offices in EU countries ‘could potentially face the introduction of expensive new policies, as well as major changes to the UK employment law and how UK reacts to European court decisions in employment cases.’

There are also concerns that many businesses in the UK have not made adequate preparations for this result - but Peter Cheese of the CIPD suggests that the immediate aftermath of ‘Brexit’ might be minimal as it will take a few years for any major changes to set in. “For most businesses, the immediate impact of this historic decision will be limited as major changes won’t be able to occur for a while. However, employment law, immigration and the ability of employers to bring the right skills they need into their business were key themes focused on in the campaign that will potentially be subject to change going forwards, and these things will no doubt be on employers’ minds”, he said.


A European approach for a ‘collaborative economy’

Pre-Brexit, the European Commission launched its guidelines for the ‘collaborative economy’ (also known as the ‘gig economy’) – warning individual member states that ‘placing bans and restrictions on businesses such as Uber and Airbnb should be used only as a measure of last resort.’ The report found that the ‘collaborative economy’ has now reached €28bn (£21.6bn) in 2015 across the EU, double the collective gross for a year earlier. In the UK alone, the sharing economy was estimated to be worth £0.5bn in 2014, and by 2025 PwC forecasts the sector’s worth to hit £9bn.

The report also suggests that new models of the ‘collaborative economy’ can deliver significant benefits if managed responsibly and that Europe should be open to embracing these new opportunities. However, Jyrki Katainen, vice president of the Commission warned that while these new business models can make an important contribution to jobs and growth in the EU, “it is clear that the collaborative economy cannot be a way to abuse labour neither is it a way to avoid paying tax.” Frances O’Grady, general secretary of the TUC, said a lack of firm regulation from the top would pave the way for rogue employment practices in this growing market. “The sharing economy creates exciting new opportunities, but it has to be fair for all and not a free-for-all. Companies like Uber should not be allowed to dodge the responsibilities other employers have,” she said. 


National living wage blamed for low-hiring intentions amongst retailers

The National Living Wage (NLW), which came into effect on 1 April 2016 seems to be having an impact on retailers’ hiring intentions for the next five years. Research from the recruitment firm Manpower has revealed that one-third of UK retailers intend to limit the number of new staff they recruit as they ‘mitigate an increased wage bill.’ According to the group’s latest net employment outlook – which calculates the difference between the proportion of employers intending to increase or decrease staff levels  – employment prospects in the retail, wholesale and hospitality sectors dropped four points to +3 per cent, the weakest level since the first quarter of 2014. 

The report based on survey results from 2,110 employers also suggested that a British exit from the EU could leave organisations ‘critically short’ of skilled workers, as EU workers would no longer be able to move freely to the UK. However, Chris Rowley, professor of HR at Cass Business School, said it would be difficult to foresee how jobs in the UK would be affected post-Brexit. “Like all the other areas in the Brexit debate, it is impossible to predict with any degree of certainty how UK employment may change. The most likely scenario is business-as-usual in the short term, as rules are unlikely to change dramatically in a sudden, radical departure from the status quo,” he said.