Brexit, Four Months On: How Will It Affect Employees?

Posted in Employee Benefits, Employee Engagement, Employee Discounts

by James Malia on Oct 21, 2016 12:00:00 AM

How will the EU Referendum affect employees? 

The vote to leave the European Union has set off momentous changes for the UK’s economy, but the full reality of what’s going to happen will still take a long time to become clear.

The government hasn’t yet begun the formal process to leave the EU – the full procedure of which can take two years or more – let alone set out goals for the negotiation of exit terms.

So the short answer is, it’s still impossible to say exactly what impact Brexit will have. However, this uncertainty is having impacts of its own, and it’s important to ensure employees that you are considering this, as well as what the coming changes will bring – particularly if your organisation is foreign-owned, or if your team contains EU nationals.

The value of the pound

The value of the pound is plummeting, at a six-year low of €1.10 against the Euro as of October 17th, and occasionally falling to $1.18 against the dollar. HSBC have predicted that the pound will be worth €1 and $1.10 by the end of 2017.

For employers, this isn’t all bad news – particularly if they have assets abroad. But remember the impact on employees – devaluation of the pound can increase inflation, and raises the price of imported goods in particular. Taking holidays in the EU or US will also become far more expensive.

Essentially, when the pound’s value falls, your staff have less in their payslips at the end of the month, relatively speaking, even if the number stays the same. Rising fuel and transport costs could make getting to work more expensive, for example.

It’s well documented that finances are a major point of stress for people in the UK – the impacts of Brexit could make things worse. For more information on ways you can help your staff with financial stress without incurring the cost of pay increases, look at our pages on discounts and salary sacrifice programs, which can definitely make a positive impact.

EU nationals working in the UK

For the three million EU citizens living in the UK, the uncertainty over their futures has been described as unbearable. With the government discussing plans to force firms to reveal the number of foreign workers they employ – whether they are put in place or not – the atmosphere is rather hostile to employees from other EU countries at present.

With the fate of EU nationals currently being used as a ‘bargaining chip’ by the government, there is a chance that the very unfortunate scenario of people being forced to leave the UK could happen. Of course, it’s impossible for you to give members of your team who could be affected guarantees, but it’s still important to ensure staff that nothing will change in the short term – and that you have their best interests at heart.

It’s an unfortunate fact that there has also been a rise in racism in the UK since the Brexit vote, and employers absolutely need to address this in the workplace. The TUC advises that employers should:

  • Adopt and promote zero-tolerance anti-discrimination policies, such as Transport for London’s well-publicised policy of prosecuting those who abuse staff.
  • Have a system so that staff can report discrimination at work easily, and have confidence employers will take it seriously.

If you are interested in reading more about reviewing your anti-discrimination policy in the wake of Brexit, HR Grapevine has some excellent advice. However, even if your policy is already very robust, simply reminding staff of its existence can go a long way to discouraging abusive behaviour and reassuring employees from EU countries that you support them.

Free ebook: Maximising Employee Rewards in the Current Economic Climate  Find out how benefits and rewards make a big difference when belts are at  their tightest in our free ebook.

Businesses based outside of the UK

Many large overseas organisations that employee thousands of UK workers are uncertain as to the future of their British operations. Meanwhile, a KPMG survey of 100 UK CEOs in July found that 76% were considering moving their headquarters or operations outside of the UK as a result of Brexit to continue receiving the benefits of EU membership. Currently, two in five of the 250 largest companies with European headquarters are based in London, and a move abroad will take UK jobs with it.

Regardless of your organisation’s plans, your employees will be having concerns about their job security or a potential need to relocate abroad – so it’s important to ensure you communicate effectively with staff to make them aware of any changes that will affect them, or to reassure them if nothing is planned.

Travel

We’ve already discussed the rising financial cost of taking holidays abroad post-Brexit, but what about the impact on business travel? First of all, depending on the terms of our exit from the EU, British workers travelling to Europe on business may need to apply for a Business Schengen Visa, which creates extra hoops to jump through and may limit the frequency at which travel to Europe is possible.

The weakened pound will also see an increase in fares, hotel rooms and the daily costs of business travel. There’s also a good chance that roaming data fees will go up too, making remote working increasingly difficult.

When flights are delayed, passengers are entitled to claim quite high levels of compensation – but this right is provided by EU laws. The Telegraph speculates that British airlines will lobby to reduce the amount of compensation you can claim back, as well as entitlements to food, drink and overnight accommodation, providing further costs for businesses funding their employees’ work-related travel.

Conclusions

Many of the factors we’ve discussed here are largely unchanged since the day after the vote – the main exception being the continued fall of the pound’s value. It really is impossible to predict the full range of changes that Brexit will bring.

But it’s well documented that uncertainty causes more stress than something negative that will definitely happen, as people need time to adapt and plan for big changes. It’s clear that the most important thing you can do as an employer is to maintain consistent and reassuring communications with your staff.

Maximising Employee Rewards

SIGN UP FOR REGULAR UPDATES

RSS feed

Add our RSS Feed to stay up to date with the latest Sodexo news and content.

Add our RSS feed

Search our blog

Click to refine your search

Categories

View more categories