With Brexit being the ‘hot topic’ of 2016 and undoubtedly one of the most widely debated topics of the upcoming months, here is a two minute HR Blast for you to begin to consider some of the HR implications of a Brexit.
Brexit: Are we in or are we out?
In case you hadn’t heard, the UK is due to have an in-out referendum in June this year. If we stay in the EU, then HR can take a holiday. If we vote to come out – well, let’s just say you might regret not taking a holiday earlier in the year!
There is, of course, no reason why, if we come out of the EU, much of our current employment and associated legislation cannot remain exactly as it is.
The reality though is that many businesses feel that the EU has brought us significantly more employee rights and red tape than we might otherwise have had (at a cost to businesses) and are aggrieved particularly in relation to working time and TUPE plus entitlements around maternity, discrimination protection, holiday entitlements and agency workers rights. Some businesses will, therefore, argue for deregulation.
For business, what has caused the most stir?
The Lock V British Gas case; the ECJ ruled that commission payments do fall within the meaning of normal pay and should be taken into consideration when calculating holiday pay.
The ANGED V FASGA case and Pereda V Madrid Movilidad SA; the ECJ confirmed that workers who fall sick during annual leave must be allowed to reschedule the leave affected by illness.
Stringer and others v HM Revenue and Customs; confirmed that holiday does accrue during sickness absence and must be allowed to carry over holiday if necessary.
Kaltoft v Municipality of Billund; the ECJ held that an overweight individual could be deemed to have a disability if their weight hinders full participation in working life.
There is an argument that we would make the UK more competitive by changing and reducing some of the employment regulations. According to Open Europe, a think-tank, we could save ourselves up to 14.8 billion if there was complete deregulation from EU regulations.
However, leaving Europe could impact both our ability to trade and our financial hubs which generate around 22% of current GDP. Leaving would also cause a lot of confusion for employers and employees and the process of deregulation in itself would be costly and time-consuming.
Why has being in the EU cost so much?
Being in the EU has meant that we are subject to EU Directives, which we then have to implement and adopt into our own legislation. Some of the Directives have been particularly burdensome. These include the Agency Workers Directive, the Information and Consultation of Employees Directive and the Working Time Directive all of which have created huge administrative and compliance costs, particularly for smaller businesses.
With some legislation e.g. TUPE which implemented the EU Acquired Rights Directive, we ‘gold plated’ the EU Directive when we adopted it, causing a lot of frustration from businesses.
The lack of specificity with many Directives and consequent lack of specificity in our own legislation has meant that we needed to clarify some aspects of EU legislation. This process involves asking questions to the Court of Justice of the EU (CJEU) which results in significant delays in legal decisions and extra administrative burdens and costs.
If we don’t stay in the EU, there will undoubtedly be pressure on the Government to consider reversing some of the legislation that has come directly from the EU. However the practicalities of changing laws and regulations that are now entrenched and form contractual entitlements (e.g. holiday, working hours, maternity) for many employees, could be difficult and painful and in many cases would mean terminating contracts and re-hiring staff on revised terms. This would inevitably involve a degree of legal risk, as with any termination or change of contracts.
If we seek to downgrade certain employee ‘benefits’ or ‘entitlements’ that have resulted from EU legislation there might also be a backlash from employees around the UK and a consequent resurgence of union membership, which some might wish to avoid.
Coming out of the EU might, therefore, be a way to reduce exposure to future EU legislation, rather than deregulate what we already have.
The UK is committed to the ECHR as a consequence of having signed the European Convention of Human Rights and some say it is inconceivable we would seek to withdraw.
In practice, the upheaval and time deregulating would take, would naturally mean that change would be brought in, in a piecemeal fashion. This means that we would be unlikely to see any significant changes to employment legislation for some time.
As an alternative to staying in the EU, the UK might have the option to choose to remain in the European Economic Area (EEA) and the European Free Trade Area (EFTA), as Norway did, but that would leave us obliged to accept the majority of EU legislation without having any input or rights.
Changing legislation does not happen overnight. With consultation, three readings in each house and then royal assent, we might estimate that it will take up to 2 years to bring in legislation that is not fast tracked. And that is after the long period it is likely to take to actually disengage the UK from UK – which some have estimated as several years.
Whilst there has already been a flurry of activity around this with reports of more EU citizens seeking to work here prior to the June referendum and reports from those worried they will be instantly deported back to whichever European country they first came from, the reality is that nothing is likely to happen fast. Organisations and individuals need to stop panicking as much of this are very much ‘wait and see’.
In reality, of course, we had immigration laws before our current immigration legislation and if we come out of Europe, we will again have immigration laws. The UK will at no point operate in an isolated zone where no foreign workers are allowed.
Currently, Australia operates a points system where immigrants are graded on their potential use to the economy before being granted visas. This could be the route that a UK outside the EU would choose to take. But whatever route we might take it would take a number of years to bring into force.
Ensuring good levels of regular communication within the organisation to all staff letting them know the business leaders current thoughts about impact and the management of that. Going silent on staff during times of change is seldom helpful when people are worrying.
Planning for a communication exercise immediately following the vote in June.
Working with your staff representative forum to ensure staff are being listened to and their ideas and views being regularly fed back to the business leaders.
Set clear standards for staff in respect of what ‘campaigning’ is or is not permitted between now and June by individual members of staff at work.
Training for managers on managing change.