Employment law and HR implications of Brexit

HR implications

The FCA has confirmed that regulated firms should continue to implement compliance programmes to deal with all EU legislation which is currently in the pipeline and due to be implemented in the UK (eg MiFID2, PRIIPS and the GDPR).

In the short term, it is therefore business as usual. Companies should consider appointing an HR lead on Brexit issues, and ensure that regular and clear communications are made to staff in an effort to manage any concerns. They may also want to begin an audit of their documents, structures and staff’s immigration status. Although we won’t know the outcome of the renegotiation for some time, in a number of scenarios organisations may need to implement changes. Having the necessary data immediately to hand will be useful.

Longer term, much depends on the outcome of the UK’s renegotiation with the EU. However, amongst others, businesses may want to consider the following:

• does the business wish to encourage/sponsor staff to apply for British citizenship (where eligible), permanent residency, or a residence certificate?
• will the company need to relocate some parts of their business to another jurisdiction in order to continue servicing EU clients? If so, will this trigger a cross-border business transfer, what will employment legislation look like in the new jurisdiction and what arrangements will the organisation put in place to incentivise key staff to relocate?
• what monitoring and support may the company need to put in place for employees from other EU countries, to provide reassurance and early warning of any potential abuse/harassment whilst tensions remain high? Conversely, will the organisation need to put in place support for those who voted to leave the EU, should there be any indication of backlash against them on the grounds of their political beliefs?
• does wording in the company’s contracts (for example references to the EU in restrictive covenants) and other documents need to be updated?

Impact on employment law

As both sides highlighted during the campaign, much (although by no means all) UK employment law comes from the EU. However, wholesale repeal of legislation in light of the Brexit vote is unlikely. Instead, any changes are likely to focus on allowing greater flexibility in workforce management.

Possible contenders for amendment include the Agency Worker Regulations (potential repeal); CRD IV (removal of bonus cap); Working Time Directive (repeal of 48 hour working week and rationalisation of holiday rules); discrimination (possible introduction of cap on compensation) and TUPE (simplification of ability to harmonise employees’ terms and conditions post-transfer).