A major conversation has emerged around the overall value of M&As in the UK since it (officially) leaving the single market earlier this year. The substantive privileges the UK formerly enjoyed as a European Union (EU) member state meant Britain has long been a gateway for business expansion into Europe. However, many have started to question the impact of Brexit on the UK workforce. Are we feeling somewhat nostalgic to the perks it was once afforded as a EU member state? Or are we embracing emerging benefits after Brexit? Let us explore both views.
Understanding the Business Climate After Brexit
Since the 2016 Brexit referendum, UK government officials have been negotiating with the EU and other trade groups over post-Brexit trade deals and agreements. With high-profile companies like Nissan, Dyson and many other reputable and global brands moving investment away from the UK, or concerned about the long-term economic impacts, it has left behind what seems like an uncertain climate.
Businesses choosing to remain in the UK are making critical decisions on the future of their trading relationships with the EU, the EEA (European Economic Area) and non-EEA countries. Cross-border relationships are value-driven not solely for conventional trade opportunities, but also due to the possibilities offered regarding talent, skills, and capabilities available to global companies. However, as many predicted, the likes of visas and other residential papers permitting right to work in European countries are subject to increased bureaucracy post-Brexit; employers should bear this in mind as these longer processes may potentially affect expanding operations.
How Has Brexit Affected M&A Activity?
Considering the increased challenges faced in the reduced movement of people from the UK to Europe, M&As can form part of a feasible strategy for entering new markets in Europe, as well as strengthening a company’s global positioning.
There was in fact a recorded increase in global M&A activity between October and December 2020. The UK in particular has benefited from certain factors potentially increasing its attractiveness to foreign investors, such as the lowered value of Sterling against other currencies; the ongoing negotiation and ratification of trade agreements; and, the common use of English corporate law for international transactions. As such, the UK continues to be an interesting area of economic activity after Brexit, and one to watch.
Navigating Legal Changes
No two workforces are the same but adhering to the legislation is imperative to mitigate any employer risk. Below are some key considerations an employer may need to consider:
1) Data Protection post-Brexit
Data protection is a key thought on everyone’s minds post-Brexit. As the UK is no longer afforded the protections of being an EU member state, the ICO (or Information Commissioner’s Office) is no longer a lead supervisory in the EU.
The adequacy decisions for the UK have now been approved by the EU, however, the guidance in place at the time of writing this on 30 June 2021 is yet to be updated. As such, organisations looking to expand into the EU should for the moment ensure that data protection adheres to UK data protection laws as well as EU data protection rules.
2) Employment Law Post-Brexit
Since the beginning of 2021, the UK is not bound by EU directives nor required to follow decisions of the Court of Justice of the European Union (CJEU). There is an agreement in place between both the UK and the EU, however, that employment protections forming part of UK law as of 31 December 2020 (when UK law was very much based upon EU Employment Law Directives) cannot be lowered.
Going forward, therefore, it will be even more important for employers to pay attention to UK Employment Law changes (generally introduced in April and October of each year), as well as emerging trade deals and decisions from the UK High Court and the Employment Appeals Tribunals.
3) Commercial Contracts Post-Brexit
For commercial contracts that involve employee services as part of the agreement, employers could consider engaging an HR professional familiar with the legal requirements for each respective country. There are many nuances to consider depending on the host country and the length of the trip, so it’s advisable to consult a specialist to ensure compliance with local labour codes and immigration requirements.
4) Employee Benefits Post-Brexit
There is on-going debate regarding the overall effects of Brexit on employment, and one of the key areas of focus is common benefits, such as holiday pay.
While EU and UK law share many similarities, changes to the law post-Brexit could affect employers headquartered across both the EU and the UK. If you have acquired a company in the EU, ensuring compliance with all markets you operate in is critical.
It may be worth restructuring employee benefits as new changes may impact existing benefit packages. For example, employees that previously enjoyed the flexibility of working across multiple EU locations and across various subsidiaries, might no longer be cost-effective. Our Compensation and Benefits consultants can help employers in identifying alternative benefits where it makes sense.
5) Immigration and Right to Work
Depending on the industry, the job role, and the individual’s settlement status in the UK and/or Europe employers may need to secure right to work permits for employees entering Europe. This may be more time consuming than before and will require planning to ensure that talent is in the right place, at the right time.
Partner with IRIS HR Consulting
Working with a HR team who can provide expert guidance in complex European employment legislation requirements, contracts, immigration and benefits could ensure that you remain compliant with EU law.
Experts in navigating global labour laws, IRIS HR Consulting can help your business – whether through specialist guidance regarding your workforce, or for support on M&A deals. From functional advice to strategic planning, we can help your business transition into a global force. Get in touch today to find out how we can support your business.