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How will Brexit affect payroll and HR in UK businesses?

The June referendum on Britain’s membership of the EU could have profound implications on UK businesses. If we vote to leave the EU, payroll and HR will be facing some unique challenges.

But, a vote to leave won’t see us taking our ball and going home straight away. Under Article 50 of the EU Treaty, it could take us up to two years to become totally autonomous. So, if we do leave, we’ll have time to adjust. But what changes are we likely to see?

Impact on Big Business
A Leave vote will see big shifts in head offices. Non-EU Businesses use the UK as a platform to penetrate EU markets. Currently, the UK is host  to more business headquarters than France, Germany, the Netherlands, and Switzerland combined. In the event of a Leave vote, we can expect some head offices to move.

A Leave vote would open the UK up to new emerging markets. This could result in further business shifts regarding the location of key offices. Opening UK business to global markets will inevitably mean more challenges for payroll departments, as highlighted by payroll companies.

To compete with the EU in the global markets, the UK needs an edge. We can expect to see reductions in taxation and other changes that would allow us to undercut the EU, making us an independent force on the global stage.

Impact on SMEs
A Leave vote would also encourage businesses to invest in skill development, increasing the quality of the UK’s workforce. HR departments will have to consider development plans and investment in training to make up for the deficit of skilled EU workers.

Investment in people, training and growth should be at the heart of UK businesses if they want to continue to remain competitive in a post-referendum world.

For SMEs, a vote to leave the EU could be a boon. Free from oppressive EU business regulations, hard pressed SME’s, already struggling from auto-enrolment and the cost of the National Living Wage, will have a weight taken off their shoulders.

A study suggests that national regulations could be up to two and a half times more effective than EU regulation. With a Leave vote, SME’s could have fewer compliance obligations while being more profitable under more effective UK regulations.

Impact on Payroll
One of the biggest challenges affecting payroll in the event of a Brexit vote will be data management. Many UK businesses have EU employees, and the challenge for payroll companies will be to reconcile EU legislation against UK legislation. Data security is held to standard by ISO 27001, but a Brexit vote could potentially release the UK from the EU’s strict Data Protection directive.

The state of play is complex and any changes are sure to result in more complexity. Would the Government increase our own Data Protection mandate, being the EU in all but name, or will payroll just have to be more flexible and more knowledgeable than ever about legislation?

With the polls shifting from Stay to Leave on an almost daily basis, the future is full of uncertainty. We have no idea what will happen until the vote is cast on June 23rd. As we move ever closer to the referendum, voters need to educate themselves, learn the facts and ignore the rhetoric of soap-boxing pundits. The best outcome for this referendum is a decision decided by informed and objective voters.

By Henry Martin
Henry is an HR professional with over a decades experience. He has worked in the aviation industry and land management sectors. He now works for FMP Global who provide complete payroll solutions to businesses of all shapes and sizes. 

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