The Exit of Britain From European Union

Introduction

The forces of globalization are string forces that have a strong impact on employment relationships and labor laws. One of the trending topics of today is the exit of Britain from European Union. The result of the referendum about Great Britain leaving from the European Union triggered a wave of comments and predictions about the possible economic effects, including those related to the labor market. Before no concrete decisions will be taken, when and on what basis the leaving process will be carried out, it is difficult to identify what awaits this country, but representatives of the business and HR leaders are trying to determine what Brexit can mean for employers and employees (Lansbury, 2016). HR professionals need to prepare for the stream of information, analyzes and forecasts from the government, various institutions and experts. Companies need to keep an eye on, keep track of news and try to take advantage of the legal possibilities for actions, which will be most favorable to themselves and employees. Areas that need special consideration include labor law, the provisions related to the migration of the population and the labor market.

When the exit from the European Union will become a reality, many companies in the UK market will lose specialists and skilled workers. Searching for new employees in this situation is also associated with additional costs and it is not only because of the necessity of training of a new employee but also the whole process of implementing them in the new position (Slater, 2016). The objective of this paper is to discuss the impact of exit of Britain on two European nations of Britain and Germany. The initial research suggests that both Britain and Germany are convinced that they can handle any financial or economic hurdle that can come wit this decision. Berlin worries particularly about anti-EU sentiment in the union’s western heartland, including France and the Netherlands. Decades of integration could be put into question.

Background

With Brexit coming up this may be the biggest challenge of the century for HR’S in the UK depending on what would be the final deal with the EU. Free movement of people may be banned and this will have an impact on recruitment for skilled and unskilled staff. A major external factor coming up in the next few month and may affect HR is the BREXIT. Employers were not prepared for an Exit vote and the uncertainty over what might happen is a fact. Depending on what is going to be negotiated in relation to freedom of movement within the EU, if it is going to be a complete out of the EU the consequences are going to affect current legislation which is linked to current European laws, one example is the EU directive Acquired Rights Directive 2001/23 EC and implemented in the UK with the transfer of undertakings (protection of employment) regulations 2006 (TUPE). It transfers employees’ rights related to their contracts of employment (including their statutory rights and the employer’s liabilities) when there has been a transfer of undertakings or a service provision change. The implications are the interpretation in courts or tribunals since they won’t be able to refer to previous EU and apply them. This is a fragile situation and a burden on HR departments as this may lead to legal action being taken against companies (Kirsch & Keller, 2016).

It is believed that it was not an easy step for Britain to leave from European Union. However, the country was not able to bear the financial burden of the European crises. Among all the major nations of European Unions, Britain and Germany are the most developed nations (Sadowski, 2013). Therefore, these countries would be able to sustain the financial challenges. However, there could be problems in terms of labor laws and employee engagement. It is for the time to tell that how the existing employees react to this exit. However, it is expected that the employee engagement can have some impact for Britain and Germany.

Aim

The aim of this paper is to discuss the impact of exit of Britain on two European nations of Britain and Germany. The paper would discuss the general impact of exit of Britain with the specific focus on Britain and Germany.

The aim of the paper is to use the secondary research methods and provide a descriptive study of the research question.

Analysis

After Britain voted to leave the EU, the future of the country has been uncertain; this is rife within businesses as many ‘did not undertake any contingency planning for this eventuality’ (Frith, 2016) and are now dubious about the implications of Brexit on HR and Employment Relationships. Below is a quick list of different influences that may impact HR that is found within an interesting article by Frith (2016) whilst researching the topic.

Wide Level impact areas of Brexit

The impact areas of Brexit could be observed in various areas around employee relationships. The wide level impact areas of exit of Britain from European Union can be discussed as:

Employment Law

A number of employment laws are in place due to Britain’s membership of the EU so Brexit could mean that these change. In addition to the Acquired Rights Directive, experts have predicted that the Working Time Directive and Agency Workers Regulations have a high chance of change as a result of Brexit. Other employment laws are being speculated for change but are deemed unlikely, as they are so widely accepted and valued; such as anti-discrimination rights, transfer of undertakings regulations, leave entitlements and collective consultation obligations.

Germany is also set to change its employment laws, if required (Slater, 2016). The government of Germany has not declared any significant changes in the employment laws till now. However, the government and organizations are all set to deal with the change and the government is ready to modify the employment laws based on the new business dynamics.

Migration/Job Market

It has been suggested that the ‘decision for the UK to leave the EU could see the introduction of costly policies for organizations that employ EU workers’ (Frith, 2016). In addition, EU workers may fall under UK Points Based System; aimed at attracting skilled migrants only. This could mean a smaller pool of potential recruitment candidates, which could pose problems within the laboring markets, as many workers within this field are immigrants. As a result, organization’s ability to access the skills they require may be severely impacted by the changes Brexit could bring forth. It is also predicted that the number of graduate job vacancies may decline drastically, despite the increased university costs.

Germany always used to take the benefits of the migration market within European Union. Germany is the manufacturing hub in the EU market. However, the cost of labor is high in Germany as compared to some other nations in EU. This is the reason that a lot of migration worker works in Germany (Sampson, 2016). With the segregation of European Union, Germany would have a much larger role to play. With Brexit, there could be impact on the migration job market and it is expected that Germany would take care of this, as Germany is not one of the biggest power in European Union.

Pensions

The future of the UK’s economy is volatile and experts have warned that defined benefit and defined contribution pensions could become unstable and unpredictable (Piano, 2016). HR may face many questions from employees regarding their pensions that they are yet unable to answer. The value of the pound is changing daily so it is uncertain what the end result for pensions will be.

There should not be much impact on the pensions given with Germany. However, the exchange rate can have an impact on the value of the money given as pension (Piano, 2016). The German government and corporations are all set to create a stable financial structure so that the effect on pensions could be minimized.

Other influences

There are numerous influences on HR that could arise as a direct result of Brexit; it is down to HR to keep on top of the changes and keep the workforce informed in order to keep the business running efficiently. The referendum result brings uncertainty and significant impacts on investment banking sectors, especially on its HRM. For example HSBC and Morgan Stanley, which both set the Europe headquarter in London. This could force it to restructure the business, that lead to job relocation, which affect its current HR strategies; HSBC’s chief executive said could see 20% of the jobs move from London to Paris since UK leave the single market (Lynam 2016). Additionally, Neate (2016) referred Brexit decision lead to its UK based staff could not access to the “passporting” system that allow banks to sell services freely across the EU; which affect its current staffing plans. However, Germany should not have any of this impact and it is expected that the country would continue to get the talent from the nations in European Unions and entire world. With Brexit, there are chances that there would be less British people in the job market of Germany. However, Germany should be able to manage that as Germany is a developed economy and people always like to go and work in Germany.

Discussion

Since the article 50 of Lisbon treaty will not be triggered in this year, which means there could be more than 2 years before the actual exit take place. Sheffield (2016) mentioned the spokesman of Morgan Stanley said there are no immediate plans to make change, HSBC said there are no immediate plan to move operations out of UK. Although the referendum result will not bring immediate effect on cut jobs and headquarter relocation, this could leave the HRM in investment banking sector expose to uncertainty risks for longer period of time; which could be more difficult to plan for staffing in coming years. Therefore Morgan Stanley said they will keep monitor the development and adapt accordingly. Since when would Britain exit EU and what will be the change in immigration policies are uncertain at the moment, I think HR unit in investment banks are reasonable to continue monitor the development at this stage. 

Ford S. (2016) States that “leading representatives of the UK’s care industry have warned that the vote to leave the European Union could have serious consequences for workforce in their sector.” There is this feeling that thousands of overseas nurses who have been drafted into the NHS to ease the severe staff shortage may feel unwanted and therefore change their mind about coming to the UK as the referendum result has raised a lot of uncertainty about their future should thy decide to come to the UK. There is also uncertainty regarding the statues of the EU citizens in the UK, majority of them in the care industry (Colvin, 2015). This has prompted the Home Office to put out a publication on 11 July 2016 to assure the EU nationals that there have been no changes to their right and statues in the UK as a result of the referendum.

Another issue is recruitment, if EU members can no longer work in the UK, this may imply more employment for UK nationals but would HR fulfil their requirements for specific jobs if non-UK nationals cannot apply or remain under the immigration point system. For example there are many jobs in the UK, which are language related, and HR may not able to find suitable candidates. This was not the issue when the entire European Unions was an integrated body. However, this issue should not effect the operations of companies in Germany. It is expected that people would continue to visit Germany for employment opportunities.

Conclusion

The above paper discusses the exit of Britain from European Union. The exit of Britain from European Unions proves the fact that nothing is constant in the current business environment. Britain was always considered to be the center point of European Union and Germany was also considered to be an integral part of EU. These two nations set the basic foundations of EU and these are the nations that used to come in mind when people talk about EU. However, Brexit was a big change and the HR professionals must be very well versed in the constantly changing employment law to reduce the company’s liability in all aspects of HR operations. According to Cumming & Zahra (2016) Brexit will bring about significant changes in working time directive (WTR), Human right act, Unions and TUPE. With the above discussion it can be said that the exit movement can have a positive impact on the employee relations of Britain and Germany as the government can increase the wages for the employees of these two countries. It can happen, as the government would have more funds in hand to utilize for this purpose. It is important that the government of Britain and German should make the necessary adjustments in the labor laws of these two nations. With the above discussion it can be said that Although the referendum result will not bring immediate effect on cut jobs and headquarter relocation, this could leave the HRM in investment banking sector expose to uncertainty risks for longer period of time; which could be more difficult to plan for staffing in coming years. Other than the impacts discussed in the above paper, there could number of other impacts that have not surfaced till date. It is expected that these impacts would be clearer in the coming years. The relative comparison of Britain and Germany would tell that the impact of exit of Britain from European Union has more impact on employee relations in Britain as compared to the impact on employee relations in Germany.

References

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[Accessed 30^th August 2016]

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Sheffield, H. (2016) Morgan Stanley denies moving 2,000 London jobs to Dublin and Frankfurt. Online at:http://www.independent.co.uk/news/business/news/morgan-stanley-brexit-eu-referendum-jobs-dublin-frankfurt-a7100911.html [Accessed 15/08/16]

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