Article 50 triggered: What does that mean for HR?
Beckett Frith, March 29, 2017
HR magazine rounds up all the areas HR professionals need to know about in relation to Brexit
Prime minister Theresa May has taken the UK's first step in exiting the European Union by signing the letter that will trigger Article 50.
The letter will be delivered at 12:30pm by the British ambassador to the EU, Tim Barrow, and will formally start the Brexit process.
Commenting on the triggering of Article 50, Peter Cheese, chief executive of the CIPD, said: “The triggering of Article 50 marks the start of a process that we expect to have significant implications for our immigration policy and access to EU migrant workers, as well as other possible changes to our employment legislation and frameworks.
"It may take years to fully understand the implications of Brexit for the UK but it’s also important to recognise that this is just one of many forces shaping the future world of work. Now more than ever, we need government and businesses to put people and skills development at the heart of their thinking.”
He added: “This is a pivotal moment and a real ‘call to arms’ for the HR profession too, to ensure that our organisations embrace diversity, that our people are engaged and have the chance to develop and that we’re creating successful and sustainable businesses for the future, whatever shape it takes.”
We've rounded up expert analysis on all the areas HR professionals need to know about:
HR should be leading on talent planning post-EU referendum, but is failing to act in most businesses, according to speakers at a FT | IE Corporate Learning Alliance event.
Tom Gosling, a partner in PwC’s HR practice, said HR is being “too passive” in the debate. “HR is waiting for instructions from on high rather than rolling up its sleeves and getting on with it,” he said.
And the stakes could not be higher. Already UK employers are struggling to fill roles with the right candidates because of both labour and skills shortages, according to a report from the CIPD and Adecco Group.
Despite a near-record number of vacancies – 748,000 according to the latest Office for National Statistics (ONS) data – the report found that UK employers are struggling to fill roles with the right candidates as a result of both labour and skills shortages, and this will only become more critical as Brexit progresses.
A separate report from the CBI revealed that skills shortages remain the top concern for firms and represent a growing threat, with 64% citing it as a threat to competitiveness.
“As we enter a new phase of UK-EU relations it is imperative that employers are supported effectively so our labour market continues to perform,” said Josh Hardie, CBI deputy-director general. “There is a clear opportunity for the government to work in partnership with business to position the UK as an attractive global hub and strong economy.”
Will companies stay in the UK?
Various financial institutions have claimed they will relocate staff after we leave the EU, but how likely is that to happen? Jenny Roper asks experts what is likely for some of the UK’s biggest firms. There are many regulatory arrangements on the Brexit negotiating table that would keep trading conditions favourable in the UK, but as Britain's place in the world is in flux will this change?
Employment law and pensions
Britain’s decision to leave the European Union has created a huge amount of uncertainty for UK companies, especially those with close links to Europe. That uncertainty extends to pension schemes. Faced with unappealing annuity rates, workers in defined contribution (DC) schemes could well delay their retirements until market conditions improve. What are the best options?
Many pension schemes and sponsoring employers took note when the EU’s General Data Protection Regulation (GDPR) was published in May 2016. However, Brexit has made it more complicated for schemes and employers to plan when and whether they need to comply with the big changes heralded by the GDPR.
The GDPR will come into force in EU member states on 25 May 2018. The summer of 2018 may be when the UK ceases to be a member state. It is therefore possible that the GDPR may only apply for a short period of time.
Net migration to the UK fell to a two-year low in the year to September 2016 according to the latest ONS figures, which include the first three months after the Brexit vote. Figures show net migration fell by 49,000 to 273,000, the first time it has dropped to below 300,000 in two years.
David Frost, organisational development director at Total Produce, told HR magazine employers need to focus on their talent pipelines to mitigate any adverse effects of Brexit.
“It may become more challenging to easily employ and move people across Europe, and as a result it will be essential to take a more planned and proactive approach to organisational design and recruitment,” he said.
Reducing migration levels into the UK will exacerbate the financial strains caused by the UK’s ageing workforce, according to research from Mercer. If the UK experiences an outflow of EU and non-EU workers then the working population would shrink by 700,000 to 32.6 million while the overall population increases by 4.5 million to 70.2 million. The inability of certain sectors of the UK economy to fill roles could be dramatic.
Rather than seeing the gig economy as a threat it’s time we saw it as an opportunity, with the potential to revolutionise the workplace, employment and even help us survive post-Brexit, said Alice Weightman, founder and CEO of The Work Crowd. From a business perspective, tapping into the gig economy gives employers the agility to compete in an unpredictable world, something that is all the more important with Brexit on the horizon.