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Brexit: Now What?

As the U.K. looks at an unprecedented time for employment, one expert offers tips on how to handle workforce issues.

By The Editors

With the recent Brexit (British exit) from the European Union (EU), HR teams and employers in the U. K. now have to determine how to handle multiple issues with their employees. Similarly, HR teams in other parts of the EU need to handle any changes that will affect them as well.

Gary Crockford, technical services manager at the knowledge and research centre at Xerox HR Services in the U.K., spoke with HRO Today Global Magazine about this event, and offers tips on how to begin to work through the change.

When it comes to pensions and benefits, policies will remain status quo -for now, “The message in the U.K. is business as usual,” he says. “The legal obligations on employers to support their pension schemes remain unchanged following the referendum. Nothing changes either in respect of their employee benefits programme generally. It’s only if sponsoring employers find their ability to support their pension plan (or provide other employee benefits) has diminished following t h e referendum that there is an issue.”

“It’s possible some employers will struggle more than they would have done due to market volatility following Brexit or loss of business where they trade in other EU Member States,” Crockford continues. “From a legislative perspective, the impact (which is still to be determined) will largely depend on whether law is U.K. or EU derived. For example, one of the big pension issues in the U.K. at the moment is the automatic enrolment of eligible employees into a pension plan. (It) is a U.K. initiative and nothing to do with the EU. The same could be said of the new state pension and defined contribution pension flexibilities.”

There are implications of the Brexit however: It may impact pension plans, employment law, data protection, and healthcare benefits. Crockford says: “In the U.K., the sponsoring employer’s legal obligation and financial ability to support a defined benefit pension scheme now and in the future is called the employer covenant.” Trustees are expected to keep an employer covenant in mind when considering the funding defined benefit schemes. According to Crockford, Brexit may affect a sponsoring employer’s covenant in defined benefit plans, and trustees who see a reduction in their employer covenant may look to the employer for additional security. Trustees of defined benefit plans that have to disinvest to meet pension and other liabilities should take advice from their investment advisers on the appropriate asset classes to disinvest from.

“Defined contribution plans, providers and trustees, particularly those used as default funds for automatic enrolment should consider the appropriateness of those options post Brexit,” Crockford says. “All trustees and providers should be looking to communicate with members to reassure them as there must be some concern that members may make inappropriate decisions in the short term if they are not properly informed.”

So what can HR professionals do now to ensure smooth transition for their employees? Communicate with members to reassure them,” he says. “Emphasise the fact that this is largely a ‘wait and see’ issue at present.”

There has been discussion of how work visas will change. As of press time, the answer is not known yet. “It’s too early to know how and if free movement of people across Europe will change,” Crockford reports “Whilst much of the law surrounding employee benefits has its origins in European Law, it is now largely enshrined in domestic law. We cannot see any desire to start unpicking it and any attempt by a government to take rights away would be politically unacceptable.”

HR departments should lean on their resources to navigate these new times. Crockford recommends utilising training systems and speaking with specialists about Brexit issues. He also emphasises the importance of remaining on course and not making any sudden decisions.

“For the foreseeable future, the U.K. is still in the EU and our message is remain calm and continue on as usual. There are issues to consider, some of them in the short term, but any knee-jerk reactions are unnecessary and likely with the benefit of hindsight to be proved inappropriate.”

Tags: global-autumn-2016

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