Yvonne Gallagher of Harbottle & Lewis considers the possible effects of Brexit on the profile of the UK workforce
As the reality of Brexit draws closer, the potential impact on staffing and recruitment models will be uppermost in many minds, particularly in industries that have come to depend upon a supply of highly educated migrants as a core part of their workforces. The possibility of a significant reduction in the ability of businesses to hire EU or other migrants will lead employers to look at the shape of their future workforces and their options to ensure that their businesses remain sustainable.
One consequence of this may be that employers will have to tap into a wider pool of workers and to consider flexible working structures, which may in turn lead to more diverse workforces, and changes in working patterns. While this will undoubtedly create challenges, it may also offer opportunities to achieve greater diversity in the industry.
A few key statistics serve to highlight the potential scale of the issues.
1) The unemployment rate in the UK for the three months to February 2017 was 4.7%. The rate is marginally lower for women than men, and is at its lowest level since the 1970s.
2) In economic terms, an unemployment rate of between 3% and 6% is regarded as the "full employment" rate, since there will always be a proportion of individuals unemployed, principally due to a mismatch between worker skills and job requirements/locations.
3) In the last quarter of 2016, there were estimated to be 2.24 million EU workers in the UK and a further 1.24 million workers from outside the EU working in the UK.
4) In the first quarter of 2017, there were 767,000 recorded job vacancies, an increase of 16,000 on the previous quarter, and the highest number of vacancies recorded since records began in 2001.
From these numbers, it is clear that if the high number of EU migrants in the UK workforce is to be curtailed as a result of a withdrawal from the EU and the single market, there will be a significant shortage of labour in the UK.
Of course, it is entirely likely that Brexit and related negotiations will include steps to minimise a sharp reduction. A current proposal to create a two-year working migrant visa for young EU nationals is one possibility. Also, it is reasonable to expect that other countries the UK enters into trade deals with will seek some free movement of people/enhanced working visa status for their nationals, such that overall migrant numbers may not decrease as sharply as expected. At present, however, there is little certainty as to any of these outcomes. Exploring whether increased diversity in workforce recruitment might assist employers in reducing any negative impact of Brexit on their workforce will therefore be a useful exercise.
The legal background
Employers are forbidden from discriminating in employment terms or on the basis upon which they offer employment on a number of grounds: sex, age, race, disability, religion or philosophical belief, pregnancy and maternity, sexual orientation, transgender status (the so-called protected characteristics). Discrimination on an indirect, as well as a direct basis, is unlawful. Indirect discrimination arises where an employer introduces a "provision criterion or practice" that is applied to all workers or candidates but puts individuals with a particular characteristic at a disadvantage when compared with persons who do not have that characteristic, in circumstances where employers cannot justify the need for the provision, criterion or practice. When the concept of indirect discrimination first entered UK legislation in the 1970s, the examples typically given related to demands such as a need for physical strength or height (discriminating against women), a minimum of a high level of English language (discriminating against ethnic minorities) in roles for which such qualities were necessary.
So called positive discrimination in favour of groups who are under-represented in a workforce is permitted only in limited circumstances, and it is important for employers to keep in mind that a protected characteristic should not form the sole reason for less favourable treatment of any individual, no matter how well intentioned the overall aim.
Full time vs part time working
In the 1990s, the UK Employment Tribunal courts were inclined to accept that a requirement of full time working for any role could amount to indirect discrimination on grounds of sex, on the basis that a smaller proportion of women were free to work full time, taking into account caring responsibilities for children, elderly and other family members.
More recently, this analysis has been questioned, as the number of women in the workforce has grown. The most recent statistics published by the Office for National Statistics indicate that the employment rate of women with dependent children is now slightly higher than the rate for women without children, and that older mothers have a higher rate of employment than younger mothers. The percentage of single mothers who are economically active has grown steadily year on year, and now stands at approximately 62%. Nevertheless, while high proportions of women are economically active, they also represent a significant proportion of the UK part-time workforce, and this may be one area for employers facing challenges with recruitment to review. ONS figures show that 41% of women work part time, but only 11% of men.
The right to request flexible working now applies to all employees who have worked for their current employer for 26 weeks or more. New applicants have no right to insist on a reasonable consideration of a request for flexibility. Anecdotally, it appears that while many employers are willing to allow a formerly full time member of staff to work fewer hours, or to work from home, part time or flexible roles are not frequently advertised for new applicants.
The combination of the potential reduction in migrants post-Brexit in addition to a shortfall in those seeking work, an ageing population and a significant increase in longevity in recent decades, together with reduced employee participation in generous pension schemes, means that the current starting point of recruiting young full time workers may need to shift. Diversity may be a beneficiary as employers find an advantage in reaching out to people, such as those with disabilities or from ethnic or social economic groups, who have not typically been represented in their industries.
Recruitment outside the usual network of tried and tested paths is likely to come with a need for increased training and investment in developing required skills, and that brings additional costs and responsibilities to employers. Careful recruitment processes and performance management will be essential if allegations of unlawful discrimination are to be avoided. Even the necessary task of gathering data on current workforces must be carefully and sensitively approached. Necessity may, however, be the mother of invention in finding ways to recruit and retain in a tighter market.
Yvonne Gallagher is partner, Harbottle & Lewis LLP solicitors.
Harbottle & Lewis is the leading law firm for the UK publishing industry. Working with publishers, authors, agents, retailers and technology providers, its lawyers advise on a broad range of commercial, corporate, employment and intellectual property matters.
Harbottle & Lewis will host BookBrunch's Breakfast Briefing - the second in a series of prestigious, off-the-record briefings with guest speakers from outside the industry - on Tuesday 16 May, when joint editor Neill Denny will be in conversation with Darren Henley, ceo of Arts Council England (ACE). Henley is a leader in promoting the Creative Case for Diversity, and this spring unveils ACE's Creative Talent Plan.