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Looking at the possible future outcomes of worker migration post Brexit, there are many questions fuelling the confused debate. How will we retain and attract EU Nationals? Do we need to relocate business functions and people? Who will look after patients in hospital? Will financial services organisations decamp elsewhere? What do our future employment laws look like? These are just a few of the questions Brexit poses for workforce leaders.
Article by Nick Chronias, Employment Partner – DAC Beachcroft
Approximately three million EU nationals currently work in the UK; making up about seven percent of our workforce. A number of different sectors have a well-documented reliance on EU nationals; for example, about 50,000 EU nationals work in the NHS, including 20,000 nurses and ten percent of our doctors. Around 60,000 EU nationals work in the care sector. Since the referendum for Brexit, dramatically, nearly 30 percent of EU nurses are leaving the NMC register – and the UK – and the number of EU nurses coming to work in the UK has fallen to its lowest level, with just 805 joining in 2017/18, against 6,382 the previous year. In some areas where progress has been made, the complexity of the big picture creates delay. Take “settled status” for example, under which EU citizens and their families can basically live and work in the UK so long as they are here before 31st December 2020. That deal is not yet signed and sealed, as it is part of a draft overall agreement for the withdrawal of the UK from the EU. Similarly, many farmers rely on EU nationals for seasonal crop picking and processing work. As a result, on 6th September, the Government announced a two-year pilot to support UK farmers by allowing non-EU migrant workers to work on farms and then return after six months.
“Dramatically, nearly 30 percent of EU nurses are leaving the NMC register – and the UK – and the number of EU nurses coming to work in the UK has fallen to its lowest level, with just 805 joining in 2017/18, against 6,382 the previous year”
So, how can employers ensure they are both attracting and retaining the staff they need, post-Brexit? While it may sound simple, when looking to retain staff members, it’s crucial to remind them how important and valuable they are and how much you want to keep them. Experience demonstrates there was a flurry of such activity immediately post referendum, but it has now slowed. That message needs to be constantly reinforced. Another action is to review your approach to reward. Do you have incentives in place to keep your valued EU nationals? Working out whether that is the real issue is a critical first step. If it is a driver, then try keeping such incentives as simple as possible; for example, a bonus retention plan. A third step is to upskill existing staff. According to a recent CIPD report on Brexit workforce trends, employers are now most likely to reduce recruitment difficulties by upskilling existing employees to fill hard-to-recruit-for positions.
It’s clear that, regardless of Brexit, employers face fierce competition for talent. Brexit only emphasises the importance of having every part of your employer proposition as strong as possible. We also know that a number of employers have increased their pay package to attract EU nationals and used simple cash retention plans as way of incentivising them to come and to stay. Others have looked at some form of currency hedging in their pay arrangements. Some have simply increased the pay available to senior executives because the pay package on offer is worth less in Euros, due to the devaluation of the Pound. Such arrangements do of course have to be tempered against risks of discrimination complaints if EU nationals are being favoured in pay terms simply because they are EU nationals. EU nationals here for six years or more can apply for UK citizenship now. They can also apply for indefinite leave to remain if they have been in the UK for five years or more. While these options take some time – it is currently taking about six months to process such applications – they are a way of addressing uncertainty and supporting employees. The biggest and obvious concern for EU nationals is trying to gain information regarding the immigration options that are open to them, and what they would need to do if they decided to apply for citizenship or leave to remain, and the evidence so far is that, with the facts in front of them, those employees really appreciate and value the practical advice and support that employers provide, and so providing comprehensive and easy to access advice is highly advised during these uncertain and turbulent run up to whatever outcome manifests come March 2019. Employers also need to consider the different terms on which their workforce is employed. Many have contingent workers who are contractors or are supplied through employment businesses. Where you do, it is important to understand from those suppliers what their reliance on EU nationals is; whether they have had any significant reduction in their EU national workforce since Brexit and what plans they have in place if that EU workforce is reducing or does reduce post Brexit.
When looking at implementing post-Brexit plans, thinking should not just be focussed on the next year or two. We see employers revising their talent attraction plans now for the long-term future. We know the Government favours – and indeed operates – a points-based immigration system. So, in a post-Brexit world, consider where your business can cast its net and how you could apply the points-based system to hire nationals from a wider talent pool. A frequent issue for speculation in the media is the question of whether major businesses will relocate head office or central functions from the UK after Brexit. Of course, this throws up enormous workforce planning issues: Do you want your employees to move with the business? Can they move depending on the immigration laws of the country that you are moving to? What incentives will you offer people to move? There are many other questions for you to consider if a major office relocation is on the agenda as part of your business’ contingency plans for Brexit. We also know that certain sectors have regulatory drivers. Specifically, but not exclusively, there remains considerable doubt over whether passporting arrangements will apply to our financial institutions. This has raised many questions relating to the workforce for those organisations as they plan for different Brexit scenarios. It is certainly not the case that a loss of passporting would mean wholesale relocation of staff to other EU financial centres. In fact, there is considerable debate about whether various financial institutions would relocate to EU centres or even outside of the EU. It is highly likely that very careful analysis is being carried out as to which staff and activities would have to be relocated – and which can remain in the UK – if there was no passporting post-Brexit. The personal and practical realities are also big drivers when it comes to relocating. Many of these employees have homes, families, schools and other ties to the UK. Trying to relocate a workforce is an inevitably enormous challenge and also highly distracting from the day to day conduct of the business.
Finally, let’s take a look at what will happen to our employment laws. To start with, some facts: The EU Transition Bill basically adopts into UK law any existing EU laws as at the date of Brexit. So, all of our EU-based employment laws will still apply to the UK as on 29th March 2019. It is however worth noting that many of our most important employment laws are not based on EU law. For example, our laws on unfair dismissal, redundancy pay and minimum wage. At present the Government has given no indication that it will change or repeal EU employment laws. Many of them – such as our laws on working time – are part of the fibre of the UK’s workplace and the Government has given no indication that it intends to make the UK a low employment regulation country. There is considerable speculation that the Government might repeal the Agency Worker Regulations; give greater freedom to change the terms and conditions after TUPE transfers, limit Working Time Regulations holiday pay to basic pay and repeal our laws on European Works Councils. However, this is exactly that, speculation. The more sensible approach for employers is to assume that our employment laws will remain fundamentally unchanged. While this article lays out some of the biggest obstacles workforce leaders and employers face in light of the impending Brexit deal, it does not address the wider economic implications. Of course, these may also have a significant impact on the challenges you will have to address as workforce leaders. However, like so much else on Brexit, its true impact remains uncertain. What is clear is that there are a number of steps that you and your teams can take to retain and attract the very best talent both before and after Brexit.