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Over the next few years, changes to where businesses need to be and what they need to do, and to where people are free to work, are likely to have far greater impact on HR than change to UK employment law. For most UK HR practitioners the real challenge is not to get up to speed with the fiddly detail of domestic legal changes, but with the practicalities of cross-border mobility.
In this, the first of a short series of articles focused on global mobility basics, we look at the likely practical impact of Brexit on people, and at why employers should take steps to quickly develop stronger in house global mobility capabilities.
Brexit will, inevitably, affect different workforces differently. For example, Brexit may trigger:
As economists know, expectation can be as powerful as reality in driving change. The impact of Brexit is already complex, with many businesses experiencing different effects at the same time. A business forced to relocate activities abroad for regulatory reasons may see redundancies and transfer issues at home, at the same time as new start up challenges and quick growth abroad. Not to mention a host of transitional arrangements, such as temporary cross-border working arrangements for senior executives, hiring of contractors to plug short term skills gaps or engagement of commercial agents to open new markets abroad.
All of the above raise HR and employment law issues, and most of those are already “bread and butter” work for in house HR teams and lawyers. But cross-border mobility is different: different skills are required and those skills are not currently available within all HR teams.
Cross-border mobility is not new for UK HR. Employers have been helping people move for work for centuries. Most large multinationals already employ in house global mobility specialists and consult lawyers when hiring from abroad or sending people overseas. The good news is that London is already the centre of excellence for global mobility. What is new is the scale of growth in activity.
The trend to complexity and higher volume started long before Brexit seemed a possibility. Complex working arrangements are driven by a wide variety of factors. Some of these, like developments in technology and the increasing need to accommodate working partners and children’s schooling, have little to do with the legal context or business need. Statistics typically show an increased variety of jurisdictions involved in international assignments, more assignments to and from the developing world and a growing variety of shorter term working arrangements. Brexit will inevitably accelerate these trends, making cross-border mobility more complex to manage and will, most likely, bring with it a more stringent compliance regime. At its simplest, large numbers of EU nationals previously engaged in the same way as “local hires” will need to be managed as expats. Even HR teams working for “domestic” businesses must improve their skills in this area, and keep learning, if they are to help their workforce navigate the challenges ahead.
Global mobility is multi-disciplinary
First and foremost, we need to accept that global mobility is multi-disciplinary. Relocation from the UK to, say, Germany, is, at the very minimum, likely to involve consideration of employment law, tax and immigration in both jurisdictions. For each move between new jurisdictions the technical and people issues, paperwork and compliance obligations will be different. No one can know all the answers and we need to work in teams to get good results. And to work well in a team we need to understand what the other team members do and what our own role is. For HR, and employment lawyers, this means venturing outside our normal comfort zone to learn new skills.
Let’s start with tax. Every time somebody moves into or out of the UK, we need to think about corporation tax, VAT, payroll taxes and social security contributions. A quick look at French employer social security rates helps us understand why: getting tax and social security wrong in a global mobility context can cost a lot of money. Of course, employment practitioners do not need to understand the detail of cross-border tax laws or the intricacies of international payroll or tax return compliance. But we do need to understand why the identity of the employer, the structure of the employment arrangements and the delivery of remuneration, benefits and expense reimbursement can make a difference to the bottom line. And we need to know when to ask for help, who to ask and how to keep the costs of that advice down. Reasonably-priced quality international social security advice, for example, is unlikely to be found in a UK law firm: in this area, mid-sized and larger accountancy firms have the edge. For getting documentation right and risk management, it’s hard to top a lawyer. We’ll look more closely at what you can do to manage advisers, ensure your paperwork works, and keep costs down, in later articles.
The importance of immigration compliance is fairly obviously, particularly in the current climate. If an employee does not have a legal right to work in the place where he works, then the business, the employee and the employee’s family may be exposed to fines, deportation etc. In practice, proposed new cross-border working arrangements are unlikely to happen at all if immigration criteria cannot be met.
Getting immigration support right is, of course, not just about compliance. Local hires with EU passports who can currently work lawfully work in the UK without extra clearance, may still need reassurance if they are to continue to work productively through the anticipated changes. Even staff with UK passports may be worried. Families do not always have the same immigration status as employees, and employers will not know which employees are affected simply by looking at their current immigration compliance records. Even if the business chooses not to provide specialist immigration support to staff, HR have a role to play in helping employees help themselves. More importantly, HR have a role to play in assessing future workforce needs, managing future risk - and ensuring that the employer does not fall foul of equality and data protection laws in the process.
Employment laws are important and, in this context, the laws of more than one jurisdiction may apply, but in many cases employment law has less commercial significance than tax, immigration and other areas. This is why an HR practitioner’s awareness of other issues is so important. Line managers who are not aware of the potential tax consequences of failing to address intellectual property issues up front or who do not understand the potential cost implications of saying “yes” to a request to “work from home” if “home” is not in the UK, are a liability. Many HR teams will find the process of getting up to speed challenging – and bringing the rest of the business along with them even more so. We’ll offer some practical tips for encouraging compliance through the business in later articles.
Getting international moves right is not just a question of getting the technicalities right. There is a vast array of practical people issues to address, from finding a home to schooling for children. Many common stumbling blocks are obvious, with hindsight, but people are not experiments and hindsight won’t help a child who is due to sit exams or a team that is already committed to an assignment that will blow their budget. Tapping into the experience of others who have gone before is invaluable. Much of that experience is freely available online, at professional seminars and through networking groups. Global mobility specialists are good at sharing (they need to be!). But the intellectual effort and time commitment getting up to speed requires should not be underestimated and the pool of genuinely experienced specialists available for hire is finite. The sooner HR teams focus on developing relevant expertise in house, the better placed they will be to meet new challenges with confidence.
This series of articles aims to help. In our next article we will look at why the identity of the employer is so important; at the, potentially very expensive, consequences of getting that wrong; and at some of the practical things businesses (and employees) can do to get this right.
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