It will take some time for the dust to settle on the outcome of the EU Referendum. There are obvious, and less obvious ways in which the ‘leave’ result could affect employee benefits and reward.
While uncertainty creates opportunity, it also creates turbulence, and it’s often difficult to operate as a business amid so much uncertainty. Will employers elect to lock down pay and bonuses until the future is clearer? And, how long could that lock down last?
Many employers will be looking at their contingency plans this morning, and many of those plans could include restructuring - both Morgan Stanley and JP Morgan were rumoured to be moving thousands of workers from London at the time of writing. Employees may be taking a careful look at their contracts and terms of employment - and even those in companies without such intense contingency plans will need reassurance as soon as possible about their future.
Alternatively, are there opportunities available for those companies who benefit from a weakening of the pound - could they even generate new opportunities?
Employers with defined benefit (DB) pension schemes will be looking hard at their scheme deficits - the UK’s collective pension deficit leapt £80bn overnight on news of Brexit. That will also put additional strain on employers, particularly in the light of the recent pensions issues surrounding BHS and British Steel - and the government will be keeping a very close eye on the viability of the Pension Protection Fund, the safety net put in place to support DB scheme members, should their employer go into insolvency.
Members of all pension schemes will be nervous about how safe their savings are in the light of turbulent markets. HR, scheme managers and trustees will need to work together to communicate with their members to help allay fears and support members in deciding what to do.
Employees from other EU countries working in the UK will be feeling uncomfortable about their future today. Employers will need to consider what to do to support them and ensure they continue to feel supported and engaged at work. Companies that rely heavily on employing overseas workers will also be unsure of what the future will bring. We won’t know for some time yet how future talent acquisition from outside the UK might work - and whether there will be any limitations or quotas.
Conversely, employees who are unsettled by the outcome may be looking elsewhere in Europe or farther afield for new employment. Keeping them engaged will be critical for employers dependent on those staff.
No longer being in the EU means no longer being governed by EU employment laws. When and if, these will be revoked remains to be seen, but this would affect TUPE, amongst other considerations.
Within hours of the vote, UKIP Leader Nigel Farage had disowned the Vote Leave claim that the alleged £350m a week sent to the EU would be spent on the NHS. But what will the vote mean for the already over-stretched healthcare system? Will employers be encouraged to contribute more towards the costs through health-related products?
We are still waiting on timescales and next steps on the Budget 2016 announcement that salary sacrifice arrangements would be reviewed - could the Treasury cuts go deeper than expected?
There are already stark warnings about cost increases to daily essentials such as food and petrol. With the pound in employees’ pocket likely to go less far, any existing debt problems could increase - and with it, personal stress levels. Can employers help employees with financial education around what changes could mean for them?
In fact, the general uncertainty is likely to raise stress levels at work - helping to support employees across the board with managing their mental wellbeing will become more critical than ever.
What are your biggest concerns, as an employer? Let us know your big Brexit question HERE