Payroll Services and Brexit

It’s over a month now since the UK voted to leave the European Union, and much has happened in that time, not least the arrival of a new prime minister. Theresa May is committed to activating Article 50 – the formal process of exit – in early 2017, and we know that the process will take 2 years, so nothing will actually happen until early 2019. Politics aside, however, here are a few things to look out for when it comes to payroll changes that might be caused by Brexit.

Who will be allowed to work here?

Immigration was at the centre of the referendum debate. The outcome of this debate depends on what sort of relationship with the EU is negotiated. We are not making any predictions, but the possible outcomes are:

  • If a Norwegian style relationship is negotiated, it is likely that free movement of citizens with EU member states would continue, with little or no impact on employers’ recruiting from the EU.
  • If a looser agreement is made, where we come out of the single market (often called the Canadian model, then that would almost certainly see an end to the automatic right of EU citizens to live and work in the UK.

Plenty of discussion and negotiation will take place, of course. It’s perfectly possible that a compromise between the two options mentioned above could happen. In this case, EU nationals might be allowed to work in the UK for a specified period of time, after which they would need to obtain a visa or residence on the same basis as people from outside the EU. It’s a case of watch this space.

There is of course the question of what will happen to migrant employees from the EU who have been here for less than 4 years and are not eligible for permanent residency.

The outcome of all of this will have an effect on payroll and you can be sure that we at JLP will be fully prepared and ready when the changes are implemented.

What areas of law affecting Employment and Payroll Might be Changed?

Again, nothing will actually happen until Article 50 is invoked and the negotiations are complete. It is inevitable, however that the UK will have the power to repeal or reshape employment legislation as it stands. It’s a case of what and how much.

A good deal of our workplace law is EU-based, and it might well be that a root and branch abolition of all of these laws is unlikely, because:

  • Abolishing some workplace law might be politically difficult domestically
  • International political pressure might inhibit the abolishment of some rules
  • The way UK judges interpret what was previously the dominion of EU Court rulings will change the law over time, but it is likely to be a slow process.

Some of the Employment Laws that Might Change include:

  • Working Time Regulations
  • Agency Workers Regulations. Currently this requires agency workers to be paid the same rate for a job as permanent staff after 12 weeks.
  • HRA, Unions and TUPE
  • Bonus Payments in the Financial Services Industry
  • Data Protection

Some of the Employment Laws that Might be Harder to Change are:

  • Discrimination – Although leaving the EU gives more scope for the Government to look again at this area of the law, it wouldn’t be popular and there is little political desire.
  • Family Friendly policies – Changes in the working patterns of UK employees, and the demands of customers, means a more flexible workplace is unlikely to be reversed any time soon. Smaller businesses could see exemptions or adjustments around rights to maternity leave, but again political or popular desire is lacking.

How our Outsourced payroll Service can help

Whatever the outcome of the exit negotiations, there will be changes to payroll. As an outsourced Payroll Services provider we get all of the updates from HMRC as they are implemented, plus advance warning, so that we know what the implications and likely affects on payroll are. This means that if you use us for your payroll you will be prepared for every eventuality, because we already will be.

Contact us or call us on 0121 422 0550 for help and advice on payroll.

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