How Brexit Could Affect US-Based Employers

road signs EU and BREXITThe UK’s surprising vote last month to leave the European Union caused concern on both sides of the Atlantic with its potential implications resonating on a global scale. Multinational employers are now questioning what Brexit means for their business and what, if anything, they should do to prepare.

Despite the fact that there is no immediate change, several companies have expressed
concern about their UK operations
 and are delaying plans to expand their operations there. In particular, the UK’s pending departure figures to have its greatest impact in the US on banks and the financial services industry. In fact, Goldman Sachs International indicated that some of its UK staff may be moved to a location outside the UK.

Meanwhile, global recruiting efforts in the UK may also come to a halt. The Institute of Directors, the UK’s longest running organization for professional leaders, conducted a survey of 1,000 of its members and found that one quarter of UK-based companies will institute a hiring freeze after the UK’s decision to leave the EU.

However, global employers should not panic or make any impulsive decisions. Most experts say the exit process could take up to two years or longer while the UK negotiates the terms of its withdrawal.

Dan Waldman, partner and member of FordHarrison’s Global Employment Services team said, “Britain leaving the EU will not immediately impact employment law in the UK. Once the UK leaves the EU, European employment laws will remain in place, as they have been adopted into local law in the UK.  We do expect some of these regulations will eventually be modified.” Nevertheless, it is suspected that certain employment laws may be changed, such as holiday pay and a cap on compensation in discrimination claims, which are currently governed by EU law, but this too could take several years.

According to Waldman, the most interesting and unresolved issue will be how the UK will handle “foreign” European workers. “What is even less clear,” he said, “is how Britain will handle future migration of European workers.”

The movement of employees is not just a local issue. US employers should also consider how Brexit will impact their employees who are on a long-term assignment in the UK that may last beyond the official Brexit. Terms of the assignment, costs and contract terms are all issues to be considered.

Global employers based in the UK who have assigned employees to other EU countries should also consider the impact. Thus, employers need to start preparing now to ensure as little disruption as possible occurs with these assignments.

Although employers cannot predict with certainty the impact that Brexit will have on its UK workforce, HR professionals should take this time to offer reassurances to staff.  Workers may not only be worried about the risk of losing their jobs, but the economic impact of Brexit as a whole. HR professionals should be careful when communicating with staff and focus on the now rather than the uncertain future.

Since this topic is top of mind for many UK workers, it may lead to discussions in the workplace. As a result, global employers should reiterate their anti-discrimination and anti-harassment policies. Waldman said, “We are advising clients to sensitize their human resource professionals and people managers to pay very close attention to the nature of discussions among employees about issues involving nationality, ethnicity, and immigration.”

The FordHarrison employment attorney added, “The nature of the debate surrounding Brexit creates fertile ground for employees to make comments that could be perceived by their co-workers as discriminatory or harassing.” Thus, employers need to be on guard.