Chapter 7

Employing EU Citizens in the UK (And Vice Versa)

IN THIS CHAPTER

Bullet Looking at the wider implications of Brexit for UK employment law

Bullet Understanding how Brexit affects your existing European employees

Bullet Providing support for employees (European and otherwise) through uncertain times

Bullet Ensuring continued access to the labor you need after Brexit

Bullet Sizing up changes for British citizens working in Europe

Bullet Tackling short-term business trips to Europe

Ask a group of business leaders to list their company’s core assets and you may get some very different answers. Some may focus on tangible business assets, such as buildings, land, cash in the bank, equipment, stock inventory, and so on. Others may prioritize less tangible assets, like patents, customer data, brand recognition, and so on. What one business considers valuable may be less vital to another business.

But there’s one asset that pretty much all business leaders agree on — one asset that’s extremely critical to the value of any business, regardless of its size or industry. That asset is people. From frontline employees to the leadership team, people are what makes a business work, grow, and succeed.

That’s why Brexit has many business leaders concerned. Some may be worried about the potential loss of individual European employees and the valuable skills they bring to the company; others who are absolutely reliant on workers from abroad face potentially huge staffing headaches as the free movement of people between the UK and Europe comes to an end.

In this chapter, I look at the impact of Brexit on employees, access to labor, and bigger-picture employment issues in the UK.

Looking at the Big Picture: How Will Brexit Affect Employment Law?

Much of the UK’s existing employment law is borne out of EU regulations. Some Brexiteers suggested that Brexit would trigger a “bonfire” of regulation, with pesky EU rules and red tape being ripped up left, right, and center, but it’s highly unlikely that’ll play out in real life.

Remember Although Prime Minister Theresa May promised Parliament a say on which EU employment rules to keep in the UK, in reality, UK employment law will most likely stay broadly the same, at least in the short and medium term. For one thing, UK employment law is enshrined in UK regulations or Acts of Parliament, and immediately undoing all that would be a bureaucratic nightmare.

Sticking with the EU on most areas

Even in the longer term, most areas of UK employment law that abide by EU rules are unlikely to change drastically, and the UK will probably end up largely complying with EU employment law.

Remember That’s because any trade deal that’s agreed between the UK and EU as part of our “future relations” negotiations (see Chapter 4) may contain stipulations that the UK will abide by certain EU employment law.

It’s also worth remembering that there are some areas of UK employment law that go above and beyond the EU’s position — maternity leave and annual leave being two prime examples.

Where might the UK disagree with EU law?

After Brexit, it’ll be up to Parliament to decide whether certain aspects of employment law and employment rights will change. This has some people concerned that the UK government may move to restrict certain workers’ rights.

One area that may be a real bone of contention is the 48-hour week. Under EU law, workers can’t work more than 48 hours a week on average, which includes overtime.

This is one area where the UK chose to depart from EU rules, even before the Brexit vote. Under UK employment law, people can choose to opt out of this 48-hour limit, meaning someone who wants to put in more hours can do so legally. (Many would question whether it’s really the employee’s “choice” to opt out if he’s under pressure from his employer and worried about losing his job, but that’s another story.)

Remember Some sources predict that the UK government may look to abolish the 48-hour maximum workweek altogether after Brexit. This would mean that there would be no upper limit on working hours, and an employer could force employees to work, say, 50-hour weeks, whether those employees wanted to or not.

This would prompt a fierce battle with unions in the UK, so there’s no saying the move would definitely go ahead. However, it shows that the UK may look to distance itself from EU employment law in some areas. And if the UK did go ahead with such a move, it could become a sticking point in future negotiations between the UK and the EU.

There have also been suggestions that the UK government might look to change the rules on collective redundancies. At the time of writing, current UK employment law states that if a company wants to make 20 or more employees redundant, “collective redundancy” obligations are triggered, which means the employer has to go through a formal period of consultation with staff representatives. The government may look to increase this 20-employee threshold, making it easier for employers to make large numbers of people redundant without triggering consultations.

So British workers might end up with fewer protections?

In theory, yes. Although, the specifics will be dictated by the in-depth UK–EU negotiations that begin after Brexit. (Remember that Theresa May’s withdrawal agreement only covers the UK’s exit from the EU — almost every aspect of the UK’s ongoing relationship with the EU has yet to be decided. See Chapters 3 and 4 for more about this.)

Former Brexit Secretary David Davis made an interesting point about workers’ rights in 2016. Writing for the Conservative Home website, he said:

Empirical studies show that it is not employment regulation that stultifies economic growth… . Britain has a relatively flexible workforce, and so long as the employment law environment stays reasonably stable, it should not be a problem for business… . There is also a political or perhaps sentimental point. The great British industrial working classes voted overwhelmingly for Brexit. I am not at all attracted by the idea of rewarding them by cutting their rights.

Basically, Davis was acknowledging that many of the UK working class voted in favor of Brexit, so it makes no sense to deprive them of precious employment law protections. Many people voted for Brexit because they believed it would help Britons lead more prosperous lives. Taking away employment protections would hardly deliver that.

Managing the Impact on Your Existing European Employees

As of this writing, it looks very likely that Brexit will prompt a change in UK immigration rules, as, under the terms of Theresa May’s withdrawal agreement (Chapter 3) and political declaration on future UK–EU relations (Chapter 4) free movement of people between the EU and the UK will end. So, what does this mean for your employees who hail from Europe? Read on to find out.

Recognizing the contribution of EU citizens to the UK economy

As of 2017, there were 3.8 million people living in the UK who were born in EU27 countries (the 27 remaining members of the EU after Brexit). Many of them are gainfully employed and contributing to the success of UK businesses. (Many are self-employed, too.) In fact, EU citizens living in the UK are net contributors to UK public finances (see Chapter 2), meaning they pay more into the UK system through taxes than they take out in benefits, healthcare, and so on. And let’s not forget that certain industries in the UK are absolutely reliant on workers coming from overseas, especially from Europe.

Remember Given all this, it was always highly unlikely that the UK was going to “kick out” the millions of Europeans who have settled and built lives for themselves in the UK. The rights of EU citizens in the UK (and vice versa) was, therefore, one of the earliest things agreed in the withdrawal negotiations.

Making sure employees secure “settled status” in the UK

Under the terms of Theresa May’s withdrawal agreement, EU citizens already living in the UK prior to Brexit (and any who move during the transition period) will retain the right to stay on in the UK and have their existing rights and entitlements protected until the end of the transition period (currently set to end on December 31, 2020, but this may change as the Brexit date keeps being pushed back).

Remember However, EU citizens living in the UK will have to apply for settled status if they want to continue living and working in the UK after the transition period ends. Settled status is the name given to the government scheme that provides security for EU nationals living in the UK, allowing them to stay on indefinitely.

Therefore, your EU national employees will need to obtain settled status if they want to remain in the UK indefinitely. Here are the key points to note on obtaining settled status:

  • Eligibility for settled status applies to EU nationals who have been resident in the UK for five years.
  • Those who have lived here for less than five years needn’t worry. They apply for pre-settled status, which gives them the right to stay in the UK until they reach their five years’ residency. At which point, they’ll be eligible to apply for settled status.
  • As of this writing, the cutoff point to apply for the settlement scheme is June 30, 2021.
  • The scheme applies to EU workers and their families.
  • Those who already have a permanent residence document will still need to apply for settled status or pre-settled status.
  • Those who have indefinite leave to enter or indefinite leave to remain, or British or Irish citizenship (including dual citizenship), do not have to apply for settled status. They’ll be covered by their existing status.

You or your employees can find out more about the settlement scheme and apply for settled or pre-settled status at www.gov.uk/settled-status-eu-citizens-families. There’s also a helpful employer toolkit for the settlement scheme, available at www.gov.uk/government/publications/eu-settlement-scheme-employer-toolkit.

In the unlikely event that the UK leaves the EU without agreeing to a withdrawal deal (“no-deal Brexit”), then the transition period will no longer apply, and only those EU nationals already living in the UK prior to the exit date will be able to apply for settled and pre-settled status. At the time of writing, the deadline for applying is set as December 31, 2020.

Obviously, this may be a confusing and anxious time for employees who hail from Europe. It’s, therefore, vital that employers support their employees (European and otherwise) through Brexit uncertainty.

Supporting All Your Employees through Uncertain Times

Whether your company employs lots of EU citizens or none at all, Brexit disruption and uncertainty may have an indirect effect on employee engagement and performance.

Regardless of where they were born, your employees may be worried about their jobs, be concerned how processes and roles may change, or simply be unclear how the business as a whole may be affected by Brexit. This uncertainty can breed significant problems from a people-management perspective.

Considering the effect of disruption on the workforce

Writing for Personnel Today in March 2019, Brian Kropp, Group Vice President of Research and Consultancy firm Gartner, noted that two negative trends tend to occur during times of business disruption:

  • Employee engagement dips, and high-potential employees are more likely to quit.
  • Employees are more likely to demonstrate problematic behaviors, including lying, stealing, and cheating. In fact, “bad behavior” increases up to 33 percent during times of major disruption.

Remember That last point may surprise you. Many business leaders tend to assume that in times of disruption or uncertainty, employees will dig deep and “knuckle down” — that they’ll engage more deeply with the business and raise their performance levels in order to keep the business functioning and secure their own jobs. But Gartner’s historical analysis shows that the opposite is true.

Common sense says we should want to hang onto our jobs when times get tough, right? In theory, that makes sense. But humans are, well, human. We don’t always behave the way we should. (If we did, there’d be no crime, war, poverty, or X Factor.)

Warning Gartner’s historical data shows how assumptions of employee loyalty during difficult times are totally misplaced. If we look back to the financial crisis of 2008, observed cases of employee misconduct shot up by one-third between the first and third quarters of 2008. Theft, fraud, bogus injury claims, and generally unethical behavior can all spike when uncertainty strikes.

Problematic behavior in the workplace and reduced employee engagement have a drastic impact on productivity and performance:

  • In times of disruption and uncertainty, an “information vacuum” often develops, meaning employers reduce or close off the lines of communication between the company and its employees (often because the company feels unable to give definitive answers or reassurance). This is extremely dangerous. When you leave an information vacuum like this, people tend to fill in the blanks with their own assumptions and predictions.
  • If employees are unsure about the company’s future, they’re more likely to seek “secure” employment elsewhere. For employees from the EU, this may mean returning home. But even for those employees who are British born and bred, the temptation can be very strong to look for employment in a company that’s (seemingly) less affected by disruption.
  • In the wake of the 2008 financial crisis, employees’ need for recognition (be it through compensation, praise, or other means of recognition) rose significantly. In other words, when times get tough, employees want to know that their employer values them. If their employer doesn’t deliver that increased recognition, they can disengage, look for employment elsewhere, or demonstrate problematic behavior.
  • In addition to these reasons, Brexit brings an added layer of complexity, particularly for any employees from the EU. They may have huge concerns about their future in the UK, or they may feel like they’re no longer welcome in a country that voted to end free movement from Europe. Remember that the referendum was extremely divisive (see Chapter 2 for a recap of the key issues in the referendum) — instead of putting the issue of Europe “to bed,” it ended up igniting fierce division in society.

Taking practical steps to engage and retain your employees

If you want to avoid losing high-potential employees, maintain levels of engagement and performance, and nip the chance of problematic behavior in the bud, what should you do?

Tip The following strategies will help you support your employees through difficult times. They can be applied to pretty much any period of business disruption, beyond Brexit.

  • First thing’s first, you must monitor employee engagement closely. You can’t manage what you don’t measure! Regularly take the temperature of your staff so that you can spot any shifts in engagement levels and take swift action.
  • If you haven’t already implemented regular updates about the impact of Brexit on the business, now is the time to start. These updates could be in the form of a regular email, guidance document, or face-to-face briefing sessions. Even if there’s nothing much to say, or even if you don’t have all the answers at this stage, you must keep the lines of communication open. Be upfront about any uncertainties and gray areas, and reassure employees that you’re on top of the situation.
  • Communicate clearly with EU citizen employees regarding their rights and entitlements to remain in the UK. Reassure them that they’re welcome and valued. And if you have the means, offer them access to legal advice and/or support with completing the necessary paperwork.
  • Give employees a forum to ask their Brexit-related questions. Encourage them to talk to their line manager about their concerns. Have an anonymous question box or page on the company intranet where staff can pose questions and get answers. Or why not hold a regular company-wide Q&A session?
  • Be wary of leaning too heavily on key staff, letting star performers bear the brunt of disruption or business change. Expecting reliable, valuable employees to take on increased workloads, particularly if that’s not reflected in their paycheck, can spread discontent in the workplace.
  • Be on the lookout for signs of prejudice, discrimination, or friction between British and European employees. Get immediate advice from your HR team or adviser if you have any concerns about discrimination.
  • Reward your people for a job well done, especially if their job has become harder or their workload has increased as a result of Brexit. If financial rewards are out of the question, remember that simple praise and recognition go a long way.
  • Constantly reinforce the company’s values and the standards of behavior expected by everyone in the business. And remember that these values, best practices, ethical behavior, and so on must be modeled from the top down. In other words, “Do as I say” won’t cut the mustard; it’s a case of “Do as I do.”

Making Sure You Have Ongoing Access to the Labor You Need

So far in this chapter, we’ve looked at the impact on existing employees and those European citizens already living in the UK. But what happens if you want to take on new employees from the EU after Brexit? What happens, for example, if your business relies on seasonal workers coming from the EU for a few months at a time.

Understanding immigration changes after Brexit

Under the terms of Theresa May’s withdrawal agreement, freedom of movement will remain in place for the duration of the transition period. So, if that agreement is approved by the UK Parliament, then, in the very short term, the ability of UK businesses to recruit from the EU won’t change.

Remember However, after the transition period ends, according to the Conservative government’s plans, the process for EU citizens coming to work in the UK (and vice versa), will fall under new, more complicated immigration rules. (In the event of a no-deal Brexit, there’d be no transitional period at all, and EU citizens would be subject to new immigration rules right away.) Effectively, the UK’s new immigration approach means that skilled EU workers will be subject to the same immigration policy and rules as workers coming from the rest of the world. There’ll be no preferential treatment for those coming from the EU.

The UK government is currently talking about a skilled employment threshold of £30,000, meaning those coming to work in the UK, whether they’re from Europe or anywhere else in the world, must secure a wage of £30,000 or above to gain entry.

There has been a lot of backlash against this proposal, and it’s not yet clear whether the plans will go ahead. (If they do go ahead, the threshold could be adjusted depending on the specific skill sets required at the time.) One of the main objections is that certain sectors in the UK, including the National Health Service (NHS) and agriculture, rely on easy access to workers from the EU who don’t earn anywhere near £30,000 a year.

Remember That’s why the government has unveiled plans for unskilled workers from “low-risk countries” (likely to include all of the EU) to be allowed to come and work in the UK for up to 12 months without needing a visa. In theory, this means that care homes, hospitals, farms, and other employers who rely on easy access to European workers will still have access to the labor they need to survive. The idea is to avoid employee shortages wherever possible.

Workers coming to the UK on this 12-month, visa-free scheme will not be able to bring their families to live with them or access public funds (such as benefits) for the duration of their stay. The scheme will apply even if there’s a no-deal Brexit, and it’s scheduled to last until 2025 (after which point, it’ll probably be extended or replaced with something very similar).

Looking at wider trends in access to labor

Initial indications suggest that the proposed unskilled worker system would attract a similar number of EU workers as seen in the UK today. So, in theory, businesses won’t suffer negative consequences when it comes to attracting workers from the EU.

Remember However, in practice, it may not be that simple. Figures released by the Office for National Statistics in November 2018 showed that the number of EU nationals working in the UK had dropped at the fastest rate since records began (in 1997). There were 132,000 fewer EU nationals working in the UK compared to the same period one year earlier. In particular, there had been a massive decline in workers coming from eastern and central European countries, including Bulgaria, Romania, and Poland.

What’s more, sectors such as hospitality, healthcare, construction, and agriculture were reporting shortages in workers in 2018.

A number of factors contributed to this decline in EU workers coming to the UK:

  • Socially, the UK is seen by some as a less attractive destination, where EU workers are less “welcome.”
  • The weaker pound means workers sending money back to Europe will be worse off. As a result, many prefer to earn their money in other European countries, especially considering the lower cost of living in many European countries.
  • Ongoing political and economic uncertainty makes the UK a less attractive option compared to the remaining EU27 countries.

Therefore, if you’re recruiting regularly from the EU, you may need to work harder to attract EU nationals in the future. For many businesses, unfortunately, this means offering higher wages.

Employing UK Citizens in Europe

Although most of this chapter is focused on the impact of Brexit on employees in the UK, it’s worth taking a quick timeout to consider the potential impact on British citizens who are employed (or hoping to be employed) in Europe.

Remember At the time of writing, the intention of the UK government is that free movement between Europe and the UK will end after any transition period (see Chapter 3), but the flip side of this is that people from the UK will no longer have free, unrestricted access to the European labor market. Let’s unpack what this may mean for British workers.

What happens to Brits already living and working abroad?

Under the terms of Theresa May’s withdrawal agreement (see Chapter 3), UK citizens who are already settled in an EU member state before the end of the transition period will retain their residency rights in the country in which they’re settled. Depending on the country, they may have to reapply for their residency (just as most EU nationals living in the UK have to apply for settled status), but the chances of thousands of Brits being unilaterally kicked out of, say, Germany are extremely slim.

In the event of a no-deal Brexit, the picture is less clear, but many EU countries will simply create reciprocal arrangements with the UK, essentially meaning they’ll match whatever the UK does for European citizens. However, the arrangements will vary from country to country.

For example, in the event of a no-deal Brexit, UK citizens living in Germany will have three months to register for a new temporary residency permit. This may affect many Brits, as figures suggest there has been a significant increase in the number of British workers moving to Germany since the 2016 Brexit vote. (This phenomenon may be partly connected to the UK’s dependence on the German automotive manufacturing industry, or Germany’s strong financial sector.)

France, meanwhile, has no plans to impose a visa on British workers, and those already living in France will not need to acquire formal residency. However, this could change and is reliant on the UK government adopting a similar stance with French citizens in the UK.

When it comes to the Republic of Ireland, the “common travel area,” which ensures free movement of people between the UK and Ireland, will continue to apply after Brexit.

What happens to Brits who want to move to Europe in the future?

Remember Assuming the UK exits under the terms of a withdrawal agreement, then after the transition period has ended, any new arrangements (which have yet to be formally agreed upon) would come into play for Brits seeking work in Europe. We don’t yet know what these arrangements will look like, but, just as for EU workers coming to work in the UK, it’ll likely involve UK citizens having to apply for working visas before they can live and work in the EU.

Despite the fact that the EU is negotiating for all member states, we’re likely to see an array of separate arrangements between the UK and individual European countries. These agreements will also be reciprocal — or, to put it another way, EU countries may go easy on UK workers applying to live and work in their country if the UK goes easy on their citizens applying for employment in the UK. You scratch our backs, we’ll scratch yours… .

Understanding the broader disadvantage for British workers

Ultimately, UK citizens wanting to work in an EU country will have to apply for the right to do so. Assuming they’re granted the right to live and work in that European country, the terms of their residency will apply only to that one country. This means they won’t be automatically able to work in other European countries; they’d have to apply separately for the right to live and work elsewhere in the EU.

One potential consequence of this is that British candidates may find themselves at a disadvantage compared to European candidates, who are freely able to work right across Europe.

Remember In theory, candidates from the EU will be more valuable to certain employers because those European workers would have access to the whole EU market — as well as the UK market, if they apply for eligibility. So, a German with the right to work in the UK, has unrestricted access to 28 labor markets (the EU27, plus the UK), while a Briton working in Germany has unrestricted access to just two labor markets (Germany and the UK).

For some sectors, particularly technology and finance, the ability to move freely across the EU (and the UK, if granted permission) could make European candidates a much more attractive prospect than British candidates. The same goes for any multinational company with offices across Europe — the ability to live and work in any EU country may entice them to favor applicants from within the EU over an otherwise qualified British candidate.

Of course, the end of free movement is what many people voted for. Yet, the big-picture downsides for British workers received little attention during the referendum campaign.

What if Your (UK Citizen) Employees Need to Visit Europe on a Business Trip?

The UK and the EU hope to secure a close trading relationship for the future, one that ensures that trade is as hassle-free as possible.

The same is true for travel arrangements. Under the terms of the political declaration on the UK’s future relationship with the EU (see Chapter 4), the UK government and its counterparts in the EU are determined to introduce reciprocal short-term travel arrangements that are as smooth and easy as possible.

Ultimately, both parties want to avoid unnecessary bureaucracy for short-term stays. After all, they’ll have their hands full negotiating a trade deal and every other aspect of the UK’s ongoing relationship with the EU — the thought of introducing visas for business trips and vacations is a bureaucratic nightmare both sides can do without.

Remember Therefore, the plan is to allow visa-free travel between the UK and the EU (and vice versa) for up to 90 days at a time, totaling no more than 180 days in a year. That means any of your UK citizen employees visiting Europe on short-term business trips should be able to travel under this arrangement without needing to apply for a visa.

In other words, next year’s sales conference in Malta or Marbella or whatever sunny European destination you’ve chosen, can go ahead without added travel headaches. (Sadly there’s no such easy fix for the annual alcohol- and heatstroke-induced headaches, though.)

The same is true for European companies sending European citizen employees to the UK on short-term business trips — there’s no need for a visa under the current plans.

Warning Make sure your employees are covered by comprehensive travel and health insurance when they travel abroad. Relying on the European Health Insurance Card (that little blue card that entitles Brits to state-provided medical treatment in European countries) is no longer an option after Brexit.

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