The EU Referendum: Pros & Cons for UK Human Resources and Recruitment Industries

May 3, 2016 2:56 pm

As arguments for and against Brexit are gaining pace ahead of the national EU Referendum on June 23rd 2016, consideration needs to be given to UK employers, the effect on them, and the knock on effect on UK Human Resources Departments and the Recruitment Industry. Whichever way the EU referendum goes, it will have consequences for UK employers.

Take a Look at History

A dominant swathe of those eligible to vote in the EU Referendum in June were not eligible voters back in 1973 when the UK entered the European Union. This has two-fold power. Firstly, this age group of voters are the current working generation, many responsible for business and with it recruitment and employment law and regulations. Secondly, these voters mostly won’t remember what Britain looked like on the outside of the EU looking in.

To understand the implications of Brexit and the EU Referendum now it is important to look at it within the social, political and economic political climate of the pre-EU days. In the heart of the Thatcher era, private business was king. With the entry in to the EU in 1973, the effects weren’t just apparent directly on the economy and trade, but also in a more subtle and slower way through the legal effect of EU treaties gradually making their way in to EU law.

Europe: The Issue for Employers, Human Resources and Recruitment Industries

The biggest implications of the EU on UK employers and therefore their Human Resources departments and the wider recruitment industry needs to be looked at within two key contexts: Employment Law and The Job Market.

Europe and Employment Law

Without a shadow of a doubt, the UK’s Employment Law landscape would look enormously different without the direct influence and implications of being part of the EU. The main Employment Law areas covered by EU legislation include:

• Working Time Regulations 1998 – whilst the UK negotiated various Opt-Outs and Exemptions, the UK is still largely subject to the weekly maximum hours, rest break and holiday entitlements, as dictated by the EU. One of the key reasons the UK negotiated the Opt-Outs and Exemptions was precisely because of UK business concern that such restrictions would hinder UK businesses, damage their profitability, and make working environments too restrictive. However, we were able to negotiate the Opt-Outs, and long-term our competitive edge hasn’t been affected.
• Equality Act 2010 – the EU is largely responsible for bringing the UK fully in line with the rest of the Western World when it comes to discrimination. The Equality Act protects individuals from discrimination on the grounds of sex, race, religion, belief, disability, age, sexual orientation and gender reassignment, marriage and civil partnerships. Without a shadow of a doubt, this Act has made the workplace one that is fairer, and brings in valuable talent previously overlooked due to discrimination.
• Agency Workers Regulations 2010 – these regulations give Agency workers in the UK the right to equal treatment as that of their permanent counterparts. This obviously has a knock on effect for Recruitment Agencies looking to fill temporary agency positions.
• Part Time Employees (Prevention of Less Favourable Treatment) Regulations 2000 – regulations to ensure that part-time employees’ employment rights are protected enabling UK businesses to benefit from more flexible working patters, especially making it possible to make the best possible business use of women returning to work after having children, bolstering the economy overall.
• Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 – similar to the Part Time Employees Regulations, these regulations brought in from the EU help to ensure the UK workplace is fair for all.

On top of the above laws and regulations, the reach of the EU is completely intertwined with UK Employment Law. Europe is responsible for bringing us Maternity Leave Rights (protecting both the individual and the employer) Parental Leave rights, further pay equality than the UK’s own previous laws, Data Protection, Redundancy Consultation, TUPE (Transfer of Private Undertakings), Health and Safety, and Human Rights. All these areas of law are governed by, or largely affected by, EU directive.

All the while the UK remains in the EU then UK business has a voice in the shaping of these regulations. A worrying scenario would be if the UK went down the Norwegian route and the UK was still governed and restricted by these laws, but without the power to influence them going forward. At present, UK business has a strong voice in the EU. Remove this and UK business could find itself hindered.

Europe and Jobs

The Office of National Statistics tells us that 942,000 Eastern Europeans, Romanians and Bulgarians work within the UK. However, these figures can’t be looked at in isolation. The UK plays host to a further 791,000 western European workers. But this figure still pales in comparison to the number of workers the UK has from outside of the EU – a whopping 2.93m, from places such as China and India. These figures need to be considered as a whole, and why the UK economy is currently reliant on non-UK workers.

Working in Human Resources or Recruitment yourself, you have likely been faced with skills shortages from within the UK market alone which you can more easily fill from abroad. This ability to recruit from beyond our own borders gives us economic power. Professor Adrian Favell, from the London School of Economics, says that limiting freedom of movement and employment would deter the brightest and the best that enter the UK from the EU.

Without this freedom of movement the UK employers may have to move to other lower cost, more competitive EU countries. The car manufacturing industry has already hinted at this possibly knock-on effect of leaving the EU. In a slightly different vein, UK farmers would struggle even further if EU subsidies were removed.

Europe for Recruiters: To Stay or Go

There are pros and cons for both camps. The reality is that even if we exited Europe, we aren’t operating in the political and economic climate of the 1970s. We’re now in the digital age, and it seems to remain competitive then we have to utilise Europe to the best of our advantage, whether that’s staying in or getting out. We’d love to hear your thoughts in the comments section below.