On June 23rd Great Britain voted to leave the European Union (EU) by 52% to 48%. To no one’s surprise this decision sent shockwaves through the stock market and has employers questioning how this might affect global mobility and business. The good news is that nothing will happen immediately, as this process takes up to two years, but it is wise for employers to be prepared for global mobility impacts within international operations that include Great Britain.
So how does Brexit impact global mobility programs? There is no immediate impact. Great Britain never joined the Euro so payments in Pound sterling will still be the standard. If the Pound continues sliding against other currencies, employers will enjoy the ensuing cost savings. The real issue is visa requirements and the freedom of movement within the EU. With the Brexit, Great Britain can pass whatever laws it chooses to limit the flow of immigration and the free movement of labor within the EU. The EU could in turn require visas for all Great Britain nationals to travel and work within the EU. However, this possible scenario is too early to predict.
What issues do global mobility leaders have to recognize with the Brexit vote? First, as previously identified, are visas. If EU citizens are living and working in Great Britain, they may have to apply for visas in order to continue working there. The same may be true for Great Britain nationals living and working in the EU. Mobility leaders need to plan ahead to avoid any disruption of management and operations because of these possible new requirements. These restrictions in the labor movement will have major impact on global talent issues, including rising costs. If access to talent is restricted, the talent pool will be limited, thus creating recruitment issues for Great Britain operations.
Second, simple transactions such as the movement of household goods may be affected. If an organization wants to move an EU employee to Great Britain or a British national to the EU, there may be delays or a regulatory impact on items in transit. Those items may be met with greater scrutiny by customs or border control, or even be stalled by the uncertainty around how to address the transition period and new bureaucracy.
Third, employment laws may be impacted. Brexit will likely affect Great Britain wage and hour laws. The EU Working Time Directive introduced the regulation of working hours, which complicates calculations for determining hours worked. Great Britain follows this law with some exceptions: British employers have long relied on employees signing waivers or opt-outs to working hour restrictions. Great Britain has had to harmonize their employment laws with EU requirements which have resulted in greater employee rights (e.g., requirement for employees on long term sickness absence to accrue vacation, the inclusion of commissions and guaranteed overtime in the calculation of vacation/holiday pay, etc.). However, Great Britain could return to more employer friendly employment laws.
In the long-term, Great Britain will have to determine how they relate to the EU. One option is to be a member of the European Economic Area (EEA), like Norway is. Norway agreed to contribute to the EU’s budget and allow the free movement of people. Although, this possibility is not likely at this time. A Swiss model could take hold with a series of bilateral agreements governing the relationship, or it could take the stance of a Turkish model by negotiating to remain part of the Customs Union without full membership of the EU. Another alternative is to opt out entirely, trading with the EU under the rules of the World Trade Organization as any other country like the United States or China does.
How the Brexit vote eventually impacts global mobility is unclear. However, global mobility leaders should evaluate the assignee population to identify which employees are likely to be affected by the Brexit vote. Communicate with key stakeholders regarding any assignments that are in the planning or early pre-departure stages. These employees could be affected by Brexit, resulting in additional time needed for immigration matters. Finally, global mobility needs to connect with legal counsel to create a checklist of laws that may be impacted by the Brexit to understand the holistic costs of the assignment.
Source: The Economist 6/23/16; Corporate Counsel 6/17/16; Brookfield Global Relocation Services
ASE is hosting a Selected Insight Series (SIS) on Brexit issues, Monday, July 18th. Click here for more information or to register.