What does the Brexit deal mean for HR?

5 Jan 2021 By Francis Churchill

People Management looks in detail at what the last-minute trade agreement says – and doesn’t say – about changes to employment practices

The last-minute Brexit deal, agreed just days before the transition period came to an end on 31 December, came as a welcome relief to many businesses and employers. The 1,000-page trade agreement covers everything from fishing rights to financial services and much more.

Many business leaders and people professionals were hoping the document would give more clarity on what employers can expect beyond what is already known about the UK’s new relationship with the EU, including – perhaps most critically – future immigration policy. 

People Management asked a number of experts about what the specifics of the deal will mean to HR.

The UK will be able to change EU-derived employment law – if it wants to

Under the agreement, the UK government will be allowed to change EU-derived employment rights, but with some caveats. “This agreement says there’s a principle of non-regression, so you won’t sweep away employment rights where to do so would impact trade and investment,” explains Stephen Ratcliffe, partner at Baker McKenzie.

“You can debate what that means, but ultimately it probably means that we’re not going to lose TUPE or provisions of holiday pay case law or other issues that have been derived from EU rights,” he says, adding that the government has not shown any intention of making material changes to employment rights in the near future.

However, Gerwyn Davies, senior labour market adviser at the CIPD, says there is “every possibility” that some legislation could be looked at. “The overriding feeling among employers is that the UK has struck the right balance in terms of employment regulations so they’re very happy with the status quo,” he says, But, Davies added, a number of employers would like to see the Working Time Directive and the Agency Workers Directive in particular reviewed.

Social security provisions will become more complicated

Before the deal was announced, many employers were concerned about the implications of losing the previous social security framework. “What we’ve got is a replacement that is going to make things a little bit more straightforward and broadly results in individuals who are working in both the UK and one of the EU jurisdictions not paying double social security and not paying no social security,” says Ratcliffe. “That’s exactly what you really want in respect to social security.”

But, he adds, there will be additional complexity as some of the provisions in the deal will only apply where individual states choose to enact them. “We are going to see a little bit more complexity when it comes to employee mobility between the UK and the EU,” Ratcliffe says.

Short business trips to the EU are still on the cards

Short-term business visitors travelling to the EU won’t be subject to work permits, says Davies. However, he adds, this has not yet been reciprocated: “We hope that short-term visits from the EU won’t be subject to visa requirements, which is currently the case.”

Many of the immigration rules for employers looking to bring talent in from the EU have of course already been outlined in separate immigration legislation, which has not been impacted by this trade agreement. But Ratcliffe says employers need to remember freedom of movement ended at the end of December and any EU nationals now coming to the UK will now be subjected to the same points-based system as other nations.

“Also of course the corollary of that is that those wishing to send staff to work in the EU are subject to the local immigration requirements of the jurisdiction to which they’re sending them,” Ratcliffe says, adding that immigration policy is not handled at a European level. “There’s an individual set of rules in every jurisdiction you go to, so mobility is again going to become more complex – partly because of social security, but more significantly because of immigration restrictions.”

There was no mention of youth mobility schemes

One of the biggest omissions was a lack of any reference to the youth mobility scheme, says Davies. “We will wait and see whether the UK manages to agree something in the future or provide a route for young people to come to the UK as is the case for other countries such as Australia or Canada. But the hope was a reciprocal arrangement would allow young UK nationals to live and work in the EU for a period of two years without a visa but with a job offer, and vice versa.

“This would have provided a safety valve for many employers, which are very worried about the lack of a temporary or low-skilled route into the UK, albeit with a quota on numbers,” Davies explains. “So we hope that the Home Office is still considering this as a route and as an insurance for some.” 

Transferring data to and from Europe could get more complicated

The European Commission is still considering whether it will recognise the UK as providing an adequate level of data protection, says Ratclife. Practically, this means that for four months from 1 January, employers will still be able to transfer data between the European Economic Area and the UK and back without putting extra security in place. “But at some point soon the European Commission will decide whether that can continue or whether additional safeguards need to be put in place, as they have to be, for example, when you transfer data from the EU to the US,” he explains.

“The long and the short of it is that unless we get a finding of adequacy, there will be more of a compliance burden on HR and everybody else when it comes to transferring data between the EU and the UK.” 

European works councils will have to change

As part of the deal, European works councils will no longer be able to have their central management control in the UK, says Ratcliffe. “So anyone who has their central management control in the UK or who has UK participants in their European works council will want to take some advice,” he says.

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