The employment landscape is certainly changing, but as always businesses will adapt and find new solutions. Labour supply and fluctuating workforce demands present a real challenge to UK employers. Many employers are concerned about how much harder it will be to recruit the right talent post-Brexit and are looking for alternative ways of working. Employers who stay well informed, plan ahead and are prepared to diversify will inevitably find themselves in a stronger position.
Although labour supply may be a concern at present, once the political climate becomes more certain the flow of EU nationals back to the EU should stabilise. In the meantime employers should prioritise workforce planning to ensure they stay one step ahead.
- What does the future world of employment look like?
- What rights will EU citizens have post-Brexit?
- What impact will the Taylor Review have on UK businesses?
We will look at some of the key issues facing UK employers and highlight proactive steps which can be taken now to ensure a labour shortfall does not impact on your business.
EU citizens’ rights post-Brexit
Following the initial post-Brexit shock it was anticipated any settled EU citizens living in the UK would automatically be entitled to remain. After repeated demands for assurances, the Government set out its plans back in June outlining a new UK “settled status” (for further details please click here). Essentially all existing EU migrants could apply for “settled status” or “leave to remain” once they had met certain continuous residency requirements, however no guarantees were given. The assumption has always been that there will be a reciprocal arrangement between the EU and the UK when it comes to freedom of movement. As yet no reciprocal arrangement has been forthcoming from the EU and so no deal is on the table.
Whilst no firm plans are in place, Amber Rudd addressed MPs in October confirming that the registration of three million EU nationals will begin by the end of next year with a default position of accepting applications. Staff and funding have been provided to assist with the new registration process which will be “completely different” to previously criticised systems in place.
Although the Government is taking action and offering what assurances they can, times are still uncertain and this is reflected in the slowing of EU migrants coming to the UK and an increase in those leaving. The Office for National Statistics produced a report in August which highlighted that a total of 51,000 non-British citizens emigrated to return home to live in the year ending March 2017 (up from 34,000); these were mainly EU citizens (44,000 up 20,000 from year ending March 2016).
So what action can employers take now to put themselves in the best possible position for a post-Brexit labour market?
- Look at your workforce and identify those who will need to regularise their immigration/settlement status in the future. This will not only be EU nationals but also other employees under various visas under the UK’s Points Based System (PBS). Carry out an audit and ensure up-to-date records are in place.
- Proactively explore options that may be available for those staff i.e. possible pre-Brexit citizenship for qualifying EU nationals, indefinite leave to remain applications for PBS employees. Put in place staff support programmes to assist in securing settlement at Brexit or during the transitional period.
- Consider alternative resources for labour provision – Certain talent pools are commonly overlooked including: disabled people (making full use of Access to Work), apprentices students, ex-offenders and those in retirement.
- Review working practices to ensure there is maximum efficiency and best use of labour. Can processes be streamlined? Can new technologies help reduce the need for labour supply?
The Taylor Review
With uncertainty surrounding labour supply in a post-Brexit era employers understandably have been considering alternative ways of working. Matthew Taylor was challenged to review the working practices in the UK and consider how “good work” could be created for all, described as “fair and decent” and with “scope for development and fulfilment”. For a detailed analysis of the Taylor Review please click here. Workers in the so-called gig economy, agency workers and zero hours contracts all came under the spotlight and a number of recommendations were made.
What are the key Taylor Review recommendations impacting on labour supply?
Codify the test for employment status and the introduction of the dependent contractor
One of the primary focuses of the Review was to ensure basic employment protection for individuals who have been categorised as self-employed within the gig economy. The Review recommended the introduction of new legislation to distinguish those workers who are eligible for workers’ rights from “legitimate” self-employed contractors who are not – “Ultimately, if it looks and feels like employment, it should have the status and protection of employment”.
The Review also introduces a new concept of “dependent contractor” to replace the definition of “worker”. The aim of this new classification would be to set out legal parameters clearly defining when an individual would be a “dependent contractor” (with the ensuing basic employment rights), with an increased focus on control. It is worth noting that recent case law seems to have been doing just this job, with a flurry of employment status cases finding that those previously classed as “self-employed” are in truth “workers” and in turn should receive National Minimum Wage and holiday pay.
The Review makes a number of recommendations for agency workers including the removal of the “Swedish Derogation” provision which allows agencies to opt-out of certain equal treatment rights with regard to pay providing they pay the agency worker between assignments. The Review also recommends greater transparency on rates of pay, the right to request a written contract after 12 months’ work and the extension from one week to one month for the relevant break for continuous service purposes.
Zero hours contracts
The Review recommends those on zero hours contracts should have the right to request fixed hours after 12 months’ work. Employers should be forced to disclose how many requests for regularised hours they have received and acceded to and those who have non-guaranteed hours should receive a higher NMW.
So what should employers be doing now?
The Review was certainly ambitious with its scope and recommendations and has received a mixed response from both sides of industry. Those representing businesses have argued it goes too far and trade unions have said it falls short. In the short-term at least with Brexit to contend with, commentators have questioned how soon the recommendations will work their way through Parliament. However, the pressure is certainly on with draft legislation being laid before Parliament by the Work and Pensions Committee and the Business, Energy and Industrial Strategy Committee. The draft legislation reportedly introduces a new presumption of “worker by default” (requiring companies to prove that they are self-employed), the possibility of higher fines for non-compliant companies and would close the “Swedish Derogation” loophole (which allows employment agencies to pay agency workers less than directly employed staff). The Chair of the Work and Pensions Committee, Frank Field MP, has urged Theresa May to fulfil the promises she made on her first day in office. Although no immediate action might be necessary, employers would be wise to use this time to review the potential impact of the recommendations on working practices.
Want to find out more?
We understand the benefits of a flexible workforce and that resourcing your staff appropriately is not an easy task. To overcome this challenge we can offer you the DWF employment status audit. To find out more visit our employment status – the barometer hub >
Discuss these issues further at our Brexit Blueprint: Labour Supply events on 21 and 23 November > where we will help you develop your Brexit focused labour strategies. In addition to DWF experts our events will feature the former MD of Iceland Foods. In London we will also be joined by Mark Harper MP (former Immigration Secretary) and a Director from Michael Page Recruitment (London) and in Manchester Sean McGuire – Director of CBI, Brussels will join the panel.
For more information please Get in Touch