The United Kingdom (UK) and the European Union (EU) are currently scrambling to negotiate their future relationship once the Brexit transition period ends next month. Soon, officials will have no choice but to reach a trade deal or move ahead with a “no deal” Brexit on Jan. 1, 2021.
Brexit might have been years in the making, but workers and employers have mostly been shielded from its effects until now. The UK left the EU in January 2020 under a Withdrawal Agreement that essentially left existing law in place while giving both parties a window to reach a compromise. With a little under six weeks left before the deadline, we’ll soon witness major changes to many of the rules surrounding freedom of movement, employment law and more.
It’s still unclear if the two sides will agree on a new deal, or if they’ll reach an impasse. Regardless of what happens during the remainder of the transition period, employers need to prepare for the challenges of a post-Brexit workplace come Jan. 1. Below are a few areas that employers should monitor and plan for during this time of limbo.
Many UK companies employ workers from the EU to draw on the skills and talents of the larger European labor pool. However, that will become more difficult from January as workers will no longer enjoy the freedom of movement that allows nationals of any EU member state to work and reside in other member states.
Employees who are EU, European Economic Area (EEA) or Swiss citizens will need to apply to the EU Settlement Scheme to continue living in the UK after June 30, 2021. They will receive either “settled” or “pre-settled” status:
This arrangement is open until June 30, 2021.
What you can do:
If you haven’t already, identify how many employees will be affected and communicate with them so they can continue living and working in the UK with as few issues as possible. If needed, provide them with individual support to help them understand the new requirements and apply for the program. If there are EU-based employees who want to benefit from the Settlement Scheme, discuss their options well before Dec. 31.
After Jan. 1, businesses must also familiarize themselves with a new points-based immigration scheme in order to recruit workers from outside the UK. This new system will require anyone seeking to work in the UK, excluding Irish citizens, to meet a set of requirements for which they’ll score points. Those who gain enough points will be awarded visas. There are many immigration routes, including for skilled workers and intra-company transfers, all with different requirements.
Employers must apply for a sponsor license from the UK’s Home Office to hire foreign workers under the new immigration scheme. The license will be valid for four years, but you’ll have to maintain certain responsibilities as a sponsor, such as checking and documenting that workers have the skills, qualifications or professional credentials necessary for their jobs.
In most cases, UK nationals living and working in an EU country will retain their right to work as long as they were residents of the country before Dec. 31. You’ll need to check if individual EU countries have a system for your impacted employees to apply for a residence status, which must be completed by June 30, 2021. Once the transition period ends, EU companies recruiting UK nationals must follow the same immigration and work permit rules that are applicable to all foreign workers.
With these limitations on freedom of movement, many companies are worried about their ability to recruit skilled workers. Although the new immigration scheme will likely have a greater effect on sectors that rely on low-skilled work—as there is no visa route for these roles—employers at large will be impacted by extra hurdles, including sponsorship fees, right-to-work checks, slower recruitment and more. It will take all employers extra time and resources to ensure compliance with new post-Brexit regulations.
However, there are a few bright spots in the immigration scheme that are encouraging for talent planning:
A new graduate immigration route will also allow international students to remain in the UK for two years to work or seek employment, which could help fill some gaps in the labor market. Still, many businesses will want to address restrictions on freedom of movement with alternative measures.
What you can do:
Employers should perform an impact assessment to identify the business areas that will be most affected and address any skills gaps that will be needed now and in the future.
If UK employers have EU-based recruits in the final stages of their talent pipeline, they should work quickly to complete the hiring process so that workers can take advantage of the Settlement Scheme before Dec. 31.
It will become more important post-Brexit for companies to invest in learning and development initiatives, so they can train and upskill their current employees and mitigate the effects of potential talent shortages.
Employers should also consider what they can do to strengthen their employer brand, which will help them attract skilled workers in tighter labor markets. Offering competitive salaries and non-financial benefits is key to overcoming the recruitment challenges presented by Brexit.
As an EU member, the UK had to provide for workers’ rights that met a minimum level set by EU law, although it could offer greater rights if desired. Much of current UK employment law is grounded in EU law, covering issues such as working time, vacation pay, maternity rights, collective consultation rules for redundancies, fixed-term contract guidelines, the equality law framework and the Transfer of Undertakings (Protection of Employment) regulations (TUPE) that protect employees' rights when a business transfers to a new employer.
However, without further action, UK employment law will no longer be bound by EU law post-Brexit, leaving workers’ rights unprotected and uncertain. A previous version of the Withdrawal Agreement safeguarded EU-derived labor laws, but those clauses are not included in the current iteration.
In December 2019, the UK’s head of state, Queen Elizabeth II, offered promises that a future Employment Bill would clarify this issue, but the UK government has yet to publish it. Some protections were introduced following the coronavirus pandemic, but an Employment Bill still needs to be passed before the end of the transition period.
The EU’s trade agreements with other countries contain clauses that forbid the parties from diminishing domestic employment law to secure a trade advantage. The European Commission previously indicated that because of their geographic proximity and economic relationship, a similar “level playing field” should be established between the UK and EU in a future deal, and it would be best to maintain current workers’ rights.
The UK government also previously drafted clauses that would require it to consult with businesses and unions on proposed Bills and report regularly on new workers’ rights adopted by the EU. These reports would include whether UK law recognizes similar rights or, if not, whether the government will adopt legislation to match EU law.
While there’s been some concern regarding the weakening of employees' rights post-Brexit, the UK government has so far committed to protecting workers’ rights. Ultimately, however, there’s no telling yet how employment law may change in the long-term.
What you can do:
Conduct an audit of the benefits you currently offer your employees, so you can understand which employment laws you must monitor and how your benefits stack up against the minimum protections guaranteed by EU law. If the UK government decides to match those workers’ rights, there’s no need for adjustments, at least in the short-term.
However, if employment law is instead eroded, you may still choose to provide benefits, where possible, that meet or exceed EU standards. This would help keep your employees comfortable and ensure you maintain a competitive employer brand.
Either way, make sure to track the progress of negotiations so your team can document new labor rules that would potentially impact your HR processes and benefits packages.
Employers face incredibly complex changes in the post-Brexit work landscape, and the clock is ticking. There’s much about employment law, global mobility and recruitment that requires both immediate and long-term attention after Dec. 31. You’ll need the most accurate, up-to-date information to ensure compliance, which requires extensive time and resources. Expandopedia’s business intelligence platform and HR consulting services can help you by providing expertly verified labor law information and assisting you with effective implementation. Some companies have chosen to avoid many of these issues by establishing a dual presence in the UK and EU through entity setup. If businesses consider this route, Expandopedia can also help manage the process. Contact us here to explore your options for post-Brexit guidance.
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Written by Annalisa Rodriguez