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12 Jul 2016
by Tony Nevin

What is HR's role following Brexit?

Brexit may not have been the expected outcome and no one is clear about where it leaves the UK but, what we do know, is that the run up to the referendum brought to the fore very strong opinions from both sides. Brexit has led to some difficult and possibly unhealthy debates across the country and these same discussions, from those on both sides, may well enter the workplace.Whatever your view, the country has voted to leave the EU so these sort of debates are unhelpful in terms of moving the process forward in an effective way and are likely to hinder it. 

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HR professionals understand the psyche of employees and now more than ever need to use all the skills available to keep the workforce happy, engaged and focussed on getting through what will inevitably be a tough time for businesses. People will ensure the success or failure of businesses during this difficult time and the best HR teams will ensure the former prevails. 

A number of questions are being asked by employees and whilst some of the answers are clear, others are not and will not be for a while yet. We all know that uncertainties and distractions such as these disengage workforces so HR's role will need to ensure that:

  • there is a forum for healthy debate;
  • answers to questions, that are known, are given;
  • support is provided to their concerns and if you have EAP they access it; and
  • any derisive debate or behaviour is dealt with quickly and effectively.

It is important that businesses take professional advice and support on all matters where needed as this is a tricky time and the more you know the better position your business will be in to cope.

Business reaction

The UK Institute of Directors has conducted a snap business reaction survey after the referendum, receiving results from 1092 members. Key points are:

  • 64% think the result is negative for their business.
  • 23% think it is positive.
  • 9% say it makes no difference.
  • 32% say hiring will continue at the same pace.
  • 24% will put a freeze on recruitment and 5% will make redundancies.1 in 5 (22%) are considering moving some of their operations outside of the UK.
  • 1% say they will bring operations back.

 What happens next?

The process begins with the invocation of Article 50 of the The Treaty of Lisbon, a five-point plan any country should follow should it wish to leave the European Union. It stipulates negotiations of no longer than two years to exit (with a possibility of extending to seven if all parties agree). The deadline may expire without a final deal. There is only one precedent, when Greenland left the EU in 1985 after two years of negotiation.

To begin the process, the UK has to formally invoke the article. Parliament has to “green light” the invocation of the article by simple majority. Once invoked, the UK "shall not participate in the discussions of the European Council or Council or in decisions concerning it” but will continue to pay in to the budget and enjoy the full privileges and obligations of membership.

Once Article 50 is activated the UK is cut out of EU decision-making at the highest level. The salient point is that the article puts the leaving party at a time disadvantage, as the negotiation might end without a final deal. According to Andrew Duff, a former Liberal Democrat MEP, who helped devise article 50:  “We could not allow a seceding state to spin things out for too long. The clause puts most of the cards in the hands of those that stay in.”

It will take a carefully picked negotiating team, political unity and clear objectives for the negotiation to start and the outcome to be a positive one. As long as the UK does not invoke Article 50, the timetable is not in effect. During the process, the UK will have to renegotiate 53 existing trade deals. According to the Lords EU Committee, trade deals between the EU and non-EU states take between four and nine years on average.

In conclusion

To survive this everyone who works for you needs to be one team, going in one direction together and HR are best placed to make this happen.

Tony Nevin is director of employee benefits at Mazars.

This article was provided by Mazars.

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