Brexit for employers, whats it all about?

As 23 June 2016 draws ever closer, the debate continues as to whether Britain should stay or exit the European Union (EU). Has enough information been provided with regards to staying in versus opting out? What would happen if we did leave the EU and more specifically, what would the impact be on employers?

A major impact of being a member of the EU is its influence on employment matters. Many UK employers have viewed employment regulations as a burden with legislation decided on broad terms and then left to individual countries within the EU to interpret in line with domestic employment laws.

The most recent example of this relates to holiday pay and whether overtime and commission payments should be included when calculating holiday pay. Various judgements have caused immense confusion for employers as they seek clarity in terms of how to go about implementing these changes. The increased burden is not only limited to the administration but more importantly comes at a time when employer budgets are already being squeezed by the introduction of the national living wage and auto-enrolment. The introduction of the working time directive and the agency worker’s directive has also caused issues for some employers. For many, not being saddled with the restrictions of EU inclusion would be a welcome relief.

In contrast, employees have welcomed the increased employment protection that being part of the EU has brought, particularly around discrimination, increased rights for part-time and fixed-term workers and the right to paid holiday leave. This means the campaign to stay in is strongly supported by trade unions and employee groups that would view an exit as a major risk to employment rights.

The other employment issue in debate is freedom of movement. Being in the EU allows employers to employ workers from other EU countries without the need for sponsorship and visas. For many industries, such as manufacturing and hospitality, EU nationals now make up a significant part of their workforce. Traditionally known for being low-paid industries, a restriction on being able to employ workers from across the EU could significantly affect the way in which they operate.

As the campaigning starts to enter its final stages, one thing that does seem certain is that an exit is unlikely to have any immediate impact on the legislation currently in operation or on workers’ ability to move or work within the EU. A decision in favour of leaving will almost certainly mean that any changes will be slow to materialise and employers will need to continue to operate within the existing frameworks as the government decides how an exit will operate in practice.

Whether the UK stays in the EU or leaves, employers will have to watch with interest to determine the impact and the steps that may follow. Please contact us for more information.