The HR implications of Brexit: What changes for employers and individuals?

Brexit is a word that has not been heard in a while given the headlines which have dominated the Global press of late. However, 31 December 2020 is the end of the transition period and from 1 January 2021 we will be ringing in the end of free-movement for the UK. We blogged about Brexit and People considerations in August 2019, but there have been many changes since then.

For Employers and Individuals alike, there have been a range of messages given over the past year concerning actions to be taken. We hope to provide some clarity in this article.

For individuals

As stated in our previous article, for EU citizens who are resident in the UK by the end of the transition period, they will be able to continue to live, work and study in the UK provided that they take certain actions. The options for these residents will be to apply for Pre-Settled Status or Settled Status depending on certain qualifying conditions.

EU citizens who arrive in the UK by 31 Dec 2020, but have not lived in the UK previously for 5 continuous years can apply for Pre-Settled Status. EU citizens who arrive in the UK by 31 Dec 2020 and do have a record of living in the UK continuously for 5 years can apply for Settled Status. There are regulations around what is considered as living in the country continuously.  As applications are taking longer than expected, applicants have an extended period until 30 June 2021 to make the application.

Pre-Settled status will be granted for five years, but will be lost if the individual leaves the UK for a period of two consecutive years. An individual granted Pre-Settled status may apply for Settled Status once five years continuous residence is met. Individuals granted Settled Status will lose this if they leave the UK for a period of five continuous years.

EU citizens who apply for Pre-Settled Status or Settled Status will be able to access healthcare in the UK, however other benefits such as support for ill health or unemployment are only able to be accessed by those granted Settled Status at the time of writing.

EU Nationals who are not residing in the UK by/on exit day will be subject to the UK new points-based immigration system from 1 January 2021. The new system will treat EU and non-EU citizens equally. From 1 January 2021, anyone coming to the UK to work will need to have a job offer from an approved employer sponsor. Points are assigned for specific skills, qualifications, salaries and shortage occupations, Visas are then awarded to those who gain enough points.

For employers

It is key at this time to understand the composition of your existing workforce. If you do currently employ EU citizens, then you should understand what their plans are by way of remaining in the UK; and if they desire to apply for Pre-Settled Status/Settled Status. It is however entirely probable that you will need to hire employees again in future, whether this be for a new vacancy or a replacement hire.

Employers who want to recruit workers from outside the UK’s resident labour market from 1 January 2021 will need to apply to become an approved sponsor in the UK. Therefore, in order to maintain a skilled and diverse workforce, then this is something to consider. As an employer, you can apply online and the standard processing time for an application is usually 8 weeks. EU citizen staff who are already in the UK or arrive before 1 January 2021 can continue to work without needing to show settlement status until 1 July 2021.

Irish and UK citizens will be able continue to travel freely for business travel and to live and work between both countries under the Common Travel Agreement (CTA). Irish nationals currently working in the UK will not need to apply for settled status in the UK.

As highlighted in our previous article, when carrying out pre-employment screening, HR will also need to be mindful of changing data protection laws.

In terms of whether an employer may place an EU employee on secondment to the UK, until now the UK has enjoyed favourable agreements with most EU countries for taxation and social security purposes. Negotiations are still underway of whether such favourable arrangements may continue in future.

Webinar: HR Matters – Advice for UK SMEs

The people management landscape is ever evolving. As an SME employer, it is not always easy to keep up with changes in employment legislation and best practices while simultaneously stay relevant against competitors.

To address these challenges, we hosted a webinar in collaboration with the Finnish-British Chamber of Commerce, the Danish-UK Association and the Norwegian-British Chamber of Commerce. Presenters Jacqui Brown, HR Manager, and Anna Kuklinska, HR Advisor, both from Goodwille, focused on what you must do as an SME employer in the UK, but also other important considerations, such as being an attractive employer in the UK – what sorts of things will help you attract top talent, retain your talent, and generally improve your employer brand? The presenters also aimed to update the audience about the new employment legislation changes that recently came into effect.

Watch the full recording of the webinar and Q&A, or read some of the key takeaways below.

Recent Changes to UK Employment Law

Typically, every year there are changes to employment law applicable to all UK businesses – and this year is no exception. Though some have been postponed due to the COVID-19 crisis, there are still legislation changes that you must take into consideration as a UK employer now.

Contract of Employment – a Day 1 Right

From April onwards, employees are entitled to receive a statement of “written particulars” – the basics of employment terms and conditions – from day one of employment rather than after two months. There are also changes as to what must be included in the contract, such as benefits and mandatory training. If you fail to provide this as an employer, penalties can be as high as 2-4 weeks of compensation.

Pay Changes and Abolition of the Swedish Derogation

Agencies will no longer be able to avoid paying agency workers the same pay as employees for doing the same job, which provides increased stability and certainty for this employee group. Further, the reference period for establishing the average week’s pay has been extended from 12 to 52 weeks, in order to improve the holiday pay for seasonal workers.

IR35 Changes

The IR35 rules prevent contractors from working through Personal Service Companies (PCS), who are in similar roles to employees, to pay less tax and NICs than actual employees. Where it is concluded by the end client that IR35 applies, the fee payer will become responsible for accounting for, and paying, the related tax and NIC to HMRC.

Non-compliance as an employer is associated with fines, though the reforms have been pushed forward to 2021 due to COVID-19. Reviewing your work with contractors now is, however, a good idea in preparation for next year.

Flexible working

Flexible working is now a default scenario – you need to offer it and if you choose not to, you need to have a very strong business justification for not doing so.

Equality – Prevention of Discrimination and Harassment

Equality and Human Rights Commission have produced a set of guidelines that will now be used as ACAS Code of Conduct – although not a formal law, they will be acting as it in harassment and discrimination cases. Employers have to ensure that they are providing team members with training on harassment and discrimination; how to distinguish these, how to spot the signs and how to react to them.

Being An Attractive Employer – Why Is It Important?

It has never been more important to have a strong employer brand to attract key people and skills. A strong employer brand means your company is considered an attractive place to work, with distinctive values, work culture and career prospects.

Being an attractive employer can have many positive impacts such as the ability to recruit good quality candidates and retaining employees. Offering competitive benefits, taking care of your employees, and offering them training can be costly, though poor staff retention and candidate attraction leads to higher operating costs, low engagement and decreased productivity, which in turn affects your bottom line. Employer attractiveness will also give you a competitive reputation in the marketplace. Employer branding matters for customers as well – a loss of trust with consumers can have devastating consequences for your business.

How to Become an Attractive Employer

There are numerous things you can do to improve your attractiveness as an employer.

  • Additional benefits can be advantageous, though there are plenty of different routes to consider. Think about what your chosen benefits says about you and your company – if you want to be seen as a sustainable employer, focus on benefits in line with those values, such as offering healthy snacks and green business cards.
  • Training enables horizontal growth, which becomes especially important in a smaller organisation where everyone can’t be managers.
  • Corporate Social Responsibility initiatives are becoming increasingly common for businesses in order to make a good deed while creating a positive brand image.
  • Work/life balance and flexible working is, with the current COVID-19 situation, starting to become the new norm. For some employees, it is even a requirement, making it an important aspect when attracting talent.
  • Mental health care in the workplace, such as counselling services and the use of an Employee Assistant Programme, can be beneficial for not only its purpose, but also for how you are perceived as an employer.
  • Competitive family leave policies and retention practices, for example increasing days of annual leave, are other ways of boosting your attractiveness.

Employer Basics – the Musts

Apart from newly implemented legislation and employee benefits, there are some employer basics that you must adhere to if you are operating in the UK. Firstly, you absolutely need to have an employment contract compliant with UK employment law. Due to recent legislation changes mentioned before, already existing templates from a potential parent company pool will not suffice.

There are some HR policies that you must put in place. As a minimum, you need to have a clear, accessible guidance on the company processes and procedures for Disciplinary and Grievance. If you have five or more employees, you must also have a Health and Safety policy. As per GDPR 2018, a Data Privacy Policy should be in place for review and agreement with employees.

Though not required by law, other policies which you may want to consider for a slimmed down policy offering are Equal Opportunities, which can include Equal Pay, and Sickness-, Holiday- and Company Benefits. As for the latter benefits, these external policies give employers a better chance at varying or withdrawing from them, in comparison as if they were stated in the employment contract. It is important to note that SMEs entering the UK from overseas are not required to have all policies in place from day one, but often build them over time.

Employee benefits – what should I consider?

Before introducing, revising or removing a benefit, it is important for the Organisation to consider:

Why the organisation is introducing/offering the benefit.
How does it support the organisation’s business goals?
How does it reward the values and behaviours that the employer needs?

Mandatory Insurances & Benefits

Employers liability insurances is the absolute minimum if you have employees. For most UK businesses, it is a legal requirement and can lead to significant fines if the cover is inadequate. Further, it is a legal requirement to offer a compliant Workplace Pension scheme in the UK, with strict guidelines to follow.

Other than this, there are no other mandatory benefits in the UK unless you consider minimum sickness pay and paid holiday allowances.

What is Important to Employees Today?

Today’s and tomorrow’s workforce consist largely of millennials. These individuals generally value recognition for their work, growth opportunities, career training and development programmes, and self-improvement. Millennials are tech savvy – so access to benefit information around the clock is a definite plus. Personalised rewards and a wide range of different options are also important.

Work/life balance is important, so flexible schedules matter when choosing their employer. Of course, now with the recent pandemic and the many business that have trial run working from home successfully, it will be harder to refuse flexible working requests in the future. Therefore, businesses need to think about how to keep a ‘workable’ structure when considering work/life balance and communication challenges.

Apart from demographics, also consider other characteristics of our employees. If you are hiring salespeople, for example, they are likely to place more value on a good bonus or commission scheme rather than Private Medical Insurance or free food.

Q&A – Your Questions Answered About Benefits and Employment Law

After the presentation, Anna and Jacqui answered the attendees’ questions regarding benefits and employment law.

From an employee point of view, what is better – a variety of benefits, or a more tailored selection? According to Jacqui, it depends on the company’s lifecycle. Sometimes, you have a wish list of benefits but are not financially capable to support them, which might be the case for early stage SMEs. Consider employee benefit services such as Perkbox, which provides variety yet cost effectiveness. Some things like PMIs is a direct cost, but there are “softer” benefits such as office fruit which doesn’t necessarily have to be very costly but be of great value.

Summary of HR Legislation changes for 2016

Gender Pay Gap Audit:
Employers need to start preparing. Initially the ruling was that at ‘sometime’ during 2016, companies with employees of more than 250 would need to run a gender pay audit and publish the results! Now this has been pushed to 2018 (recent development) however a snapshot of the data must be taken in 2017. Look out for the government’s response to the ‘Closing the Gender pay Gap’ consultation which will determine the final policy.

The National Living Wage:
Set to come into force in April 2016, starting at £7.20 and rising to £9 p/h by 2020, the National Living Wage is already proving divisive. 54% of employers expect their pay bill to rise when the NLW is introduced, almost 1/3 are planning to improve efficiency and productivity in response. This will no longer be a voluntary option for employers for those 25 years and older. Some suggestion (CIPD) is that employers may look to employ more under 25’s to combat the increase……some diversity and discrimination issues may be on the horizon!

Sunday Working Hours:
From this Autumn, local authorities and city mayors in England and Wales can extend Sunday trading hours, allowing shops to stay open for longer than the current 6 trading hours. Workers will be able to opt out of Sunday working by giving one months’ notice (rather than 3 months which they currently must give when opting out).

Not legislation, but issues HR should be aware of:
Stress related absence and mental illness in the organisation. CIPD has found that a continued lack of manager training (a stressed employees first point of call is their boss) is contributing to the ongoing issue along with increased workloads and 24 hour access to technology leading to employees becoming unable to switch off. According to the Health and Safety Executive, 9.9 million days were lost to work related stress, depression or anxiety last year, therefore this should be a focal area for HR to look at more mental health initiatives catered for more organisational wellbeing packages and a more supportive corporate culture (as well as signposts for employees to access appropriate help). CIPD have also suggested a policy on stress.

Cyber security – Increasing the organisations cyber security. There have been some high profile data breaches recently (Morrison’s facing a legal claim from 2000 employees whose data was leaked from a disgruntled employee, in 2014 Sony Pictures was also involved in a huge hacking scandal).

For more information on how this might effect you, please get in touch and our HR Department will assist you.