University Report: Impact of Brexit on HR Practices in the UK

This report provides a comprehensive literature review on the impact of Brexit on Human Resource (HR) practices within the UK, particularly concerning EU and non-EU employees. The study examines the changes in employment laws, migration policies, and the overall workforce dynamics following the Brexit referendum. It explores the challenges faced by businesses, including potential labor shortages, modifications to employment strategies, and the need to adapt to new regulations. The report analyzes workforce data, highlighting the significant number of EU migrants in the UK and the implications of their potential departure. It also applies Herzberg's Two-Factor Theory to propose strategies for employee motivation and retention in this context. The study offers recommendations for HR departments, emphasizing the importance of efficient recruitment, communication, and technology implementation to manage the evolving landscape. The report concludes by underscoring the crucial role of HR in navigating the transition period and building a resilient workforce in the post-Brexit era, emphasizing the need for proactive measures to address immigration, skills gaps, and overall economic stability.

Running head: IMPACT OF BREXIT ON HR PRACTICES
Impact of Brexit on EU/NON EU employees
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1IMPACT OF BREXIT ON HR PRACTICES
Impact of Brexit on the HR policies in the organizations of UK
Literature review
Brexit is the common term for Britain’s exit from the European Union (EU). On June 23,
2016, the citizens of Britain voted in the referendum for leaving the EU. 51.9% voted to leave
the EU and 48.1% voted to remain in the EU (Goodwin and Heath 2016). This historical decision
had a big impact on the global economy, and caused the British pound to decline to its lowest
level in the 30 years. It also led to change of Prime Minister in Britain as David Cameron
stepped down and Theresa May took charge. The formal exit process started in March 29, 2017
as Theresa May triggered the article 50 of the Lisbon Treaty. This process of negotiation for new
terms of business with EU would take two years (Dhingra et al. 2016).
Brexit has impact on every aspect of the economy. Among the economic and
demographic factors, the migration of the skilled and unskilled labor would be affected badly.
Similarly, the HR practices in the organization would also be affected due to Brexit. Immediately
after the referendum, there was uncertainty among the businesses regarding the migrant workers.
Majority of the businesses were not prepared for this result and hence, they did not plan for
contingency (Kierzenkowski et al. 2016). After the referendum, the business sector must modify
their employment strategies and resource planning. According to Pisani-Ferry et al. (2016),
firstly, there would be changes in the employment laws on anti-discrimination rights, family
leave entitlements, transfer of the undertaking regulations, collective consultation regulations, or
working timing regulations. Number of nationals to be employed and rules regarding that would
also change. Secondly, the migration laws would now become more strict. More than millions
migrant workers might have to leave Britain in future if they do not qualify for the new

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migration laws and the Points Based system for EU and NON EU workers. The process of
selection for the EU and NON EU workers will be very selective and technicality, seniority,
relevant experience, rate of pay, citizenship of UK and skills would matter the most after the
Brexit (Wadsworth et al. 2016).
The uncertainty of Brexit has led to employment of more part time and temporary
workers than the full time workers. Economic and political uncertainty or instability results in
people leaving job and country, reducing level of investments and expenditures, and reducing
hiring in the organizations. It could also affect the ability of the organizations to access the
required skills. There might be highly skilled migrant workers but the British organizations
might not be able to hire them due to new rules. All the economic sectors of the country would
face this problem. Moreover, many financial businesses might relocate to EU from UK to avoid
the rules and employ skilled labor without any problem. This would cause huge losses to UK
(Portes and Forte 2017).
According to a report by PWC, Brexit’s impact would be most visible in trade and supply
chains, financial policies, FDI, regulatory policies, labor market and sector specific issues. The
change in migration policies will affect the entire business operations and performance of the
company. Hence, the HRM of the organizations must prioritize the short and long term issues.
The short term issues include communication, leadership, motivation of the current employees,
data and technological expertise, and long term issues include the maximization of efficiencies,
impact of migration policies on the immigration in the labor market, regionalization of
businesses and political and trust issues. Thus, it can be said that, the HR of the organizations
now have more responsibilities and pressure to get the best leaders, motivated and skilled
workforce, and modify the employment policies as per the new rules (Pwc.co.uk 2016).

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In this context, the workforce data is important, as this would help in evaluating the labor
market status before and after the Brexit. According to ONS, 11% of the total workforce in
Britain, i.e. approximately 3.4 million are migrants from EU and NON EU countries, and among
them 7% are from the EU and 4% are from other countries (Ons.gov.uk 2017). It has been found
that around 2.37 million EU migrants work in UK. Since, this is quite a large population; the
impact of Brexit on these people would be quite significant. The organizations that have migrant
employees would to change their policies as well as the workforce due to the new rules.
In the year ended in March 2017, UK had a net migration of 246,000. The net migration
is calculated by subtracting the emigration value from the immigration value.
Table 1: 2017 data for Net Immigration in UK
(Source: O'Leary 2017)
It is found by ONS that, after the referendum, the immigration of EU has been
significantly low. In the last year, the fall in net EU migration was by 51,000, which is quite a
large number. The number of the EU citizens, especially from the Eastern Europe, leaving
Britain, has increased post referendum and this has contributed in the fall in net EU migration
(Ons.gov.uk 2017). The rate of emigration to the EU countries has fallen too. It is also found
that, 18 specialist British industries have EU migrant workers, comprising of more than 20% of
the total labor force. Hence, this workforce leaving the nation would leave these industries
bereft. According to The Guardian, 47.6% of the migrant employees from EU work in the fruits

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and vegetable processing and preserving industries, 44% work in meat processing sector, 37.6%
in the fish processing and 35% work in the agricultural sector. There are many specialist sectors
in UK, such as, stone cutting and manufacturing, which are heavily dependent on the migrant
workforce from EU. This is due to the reasons like cheaper migrated labor and lack of required
skills among the UK nationals. When the free movement of labor would be restricted due to
Brexit, the UK businesses would be hit hard (Doward 2017).
(Source: Migrationwatchuk.org 2017)

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Majority of the immigrants come to UK from Poland. As per the statistics of ONS,
almost 1 million immigrants are from Poland, followed by Ireland and Romania, although the
numbers are quite less compared to that of Poland, with only close to 400,000.
(Source: O'Leary 2017)
This above graph shows that, EU nationals migrate to UK for definite jobs, while the
NON EU nationals mostly come for higher studies.

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(Source: Migrationwatchuk.org 2017)
(Source: Ons.gov.uk 2017)

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Theoretical framework
In this context, the Two Factor theory by Frederick Herzberg can be applied. It is a HR
motivational theory, which says that there are two factors, namely, motivators and hygiene, that
help the employees to get the job satisfaction. Hygiene factors are those, which are necessary to
get the satisfaction in the workplace. These are external attributes that generate satisfaction for
the employees. Salary, employee status, fringe benefits, working conditions, interpersonal
relations, company policies are the hygiene factors. Motivational factors are the internal or
personality attributes that yield satisfaction in the workplace. Recognition, sense of achievement,
growth and promotions, responsibility, and meaningful work are the motivational factors
(Alshmemri, Shahwan-Akl and Maude 2017).
The HR of the British organizations must anticipate the impact of Brexit on the
workforce. Post Brexit, there would be dissatisfaction and uncertainty among the employees, and
the HR can apply Herzberg’s theory to handle the obstacles from the Brexit. It can improve the
pay structure, fringe benefits, roles and responsibilities, working conditions and career growth
opportunities to motivate and retain the employees.
Recommendations
The HR of the British companies would face challenges while recruiting and maintaining
the workforce after the Brexit. The priority of the HR would be to build a more efficient,
production and stronger labor force with workplaces consisting of responsible and sustainable
practices and critical matters. It must keep the workforce motivated to maintain the business
operations. If they have to cope up with the labor leaving the UK, it must find out the skilled

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workers in their own country and must keep them motivated to retain them for a longer period
(CIPD 2017).
 The HR of the British organizations must be creative and efficient to find out the
resources with necessary talents and must be confident about the nation’s own workforce.
 It must make a lucrative career growth path, so that, the skilled people prefer to stay in
the country. People emigrate when they do not get enough scope for career growth in
their own nation. Hence, it is important for the country to create adequate job
opportunities, as well as career growth scopes to prevent the brain drain (Frith 2016).
 The HR must incorporate simplicity, stability and agility in its technology plan to manage
the sudden changes in the work force. At the same time, investments in HR should be
made carefully to avoid any kind of risks, and proper HR capabilities can make the
businesses more flexible and efficient management of complex recruitment process and
mobility challenges. Agile systems would help the HRM to manage the regionalization of
businesses (Gurchiek 2016).
 Communication with the employees is a must for the HR of the organizations to motivate
the workforce. It has to be supportive and must make the employees feel confident even
if there is uncertainty in the economic and political scenario.
 Recruitment processes should be planned for a longer time as the processes become more
complex. To cope up with the recent changes, organizations need more time and the HR
must act accordingly.
 HR should create a task force for bringing together the required skill set for the industry.
Hence, it is a tough responsibility of the HR post Brexit to replace the migrant workforce
from EU and NON EU countries (Pwc.co.uk 2016).

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The issue of immigration would take time to develop and implement the solutions post Brexit.
The economy of UK wants to thrive without the single market access and be open for
international businesses. Over the next two years, it is a transition period for the UK economy
and the HR would be playing a very responsible role to handle the crisis that would arrive due to
the changes in the migration laws.

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References
Alshmemri, M., Shahwan-Akl, L. and Maude, P., 2017. Herzberg’s Two-Factor Theory. Life
Science Journal, 14(5).
CIPD, 2017. Brexit and HR implications. [online] Chartered Institute of Personnel and
Development. Available at: https://www.cipd.co.uk/news-views/brexit-hub [Accessed 2 Nov.
2017].
Dhingra, S., Ottaviano, G.I., Sampson, T. and Reenen, J.V., 2016. The consequences of Brexit
for UK trade and living standards.
Doward, J., 2017. EU migrants make up over 20% of labour force in 18 British industries.
[online] the Guardian. Available at: https://www.theguardian.com/politics/2017/jul/29/eu-
workers-fifth-labour-force-18-sectors-britain-economy [Accessed 2 Nov. 2017].
Frith, B., 2016. What Brexit means for HR. [online] Hrmagazine.co.uk. Available at:
http://www.hrmagazine.co.uk/article-details/what-brexit-means-for-hr [Accessed 2 Nov. 2017].
Goodwin, M.J. and Heath, O., 2016. The 2016 Referendum, Brexit and the Left Behind: An
Aggregate‐level Analysis of the Result. The Political Quarterly, 87(3), pp.323-332.
Gurchiek, K., 2016. How HR Can Prepare for Brexit's Impact. [online] SHRM. Available at:
https://www.shrm.org/resourcesandtools/hr-topics/global-hr/pages/brexit-fallout.aspx [Accessed
2 Nov. 2017].
Kierzenkowski, R., Pain, N., Rusticelli, E. and Zwart, S., 2016. The Economic Consequences of
Brexit.

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Migrationwatchuk.org, 2017. Migration Watch UK | Statistics-net-migration-statistics. [online]
Migrationwatchuk.org. Available at: https://www.migrationwatchuk.org/statistics-net-migration-
statistics/#create-graph [Accessed 2 Nov. 2017].
O'Leary, J., 2017. EU immigration to the UK. [online] Full Fact. Available at:
https://fullfact.org/immigration/eu-migration-and-uk/ [Accessed 2 Nov. 2017].
Ons.gov.uk, 2017. International immigration and the labour market, UK. [online] Ons.gov.uk.
Available at: https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/
internationalmigration/articles/migrationandthelabourmarketuk/2016 [Accessed 2 Nov. 2017].
Pisani-Ferry, J., Röttgen, N., Sapir, A., Tucker, P. and Wolff, G.B., 2016. Europe after Brexit: A
proposal for a continental partnership(Vol. 25). Brussels: Bruegel.
Portes, J. and Forte, G., 2017. The economic impact of Brexit-induced reductions in
migration. Oxford Review of Economic Policy, 33(suppl_1), pp.S31-S44. (PAID link)
Pwc.co.uk, 2016. Brexit – A key role for HR. [online] Pwc.co.uk. Available at:
https://www.pwc.co.uk/eu-referendum/po-summary-of-brexit-and-hr-related-issues-september-
2016.pdf [Accessed 2 Nov. 2017].
Wadsworth, J., Dhingra, S., Ottaviano, G. and Van Reenen, J., 2016. Brexit and the Impact of
Immigration on the UK. Centre for Economic Performance. LSE, pp.34-53.