UK businesses cannot reassure their employees over Brexit because they have been left in the dark over the government's plans, a top HR expert has warned.
Punam Birly, head of KPMG's immigration and employment practice, told IBTimes UK that her clients continually raise the "people issue" since Britain voted to leave the EU.
But with an "unprecedented" lack of information from Theresa May's administration, companies are left with uncertainty.
"They are not making announcements to reassure their employees – not because they don't want to, simply because they don't have the information," Birly said.
A top issue for business is immigration. The government has promised to reduce numbers and recommitted itself to David Cameron's "tens of thousands" target.
Brexit Secretary David Davis has revealed that the government will prioritise a curb to free movement of peoples as part of negotiations with the EU, while he expects the three million EU nationals in the UK to stay so long as Britons in Europe get the same assurances.
"It would be right for businesses to plan and consider what happens if there is a hard Brexit," Birly said.
"They do hear Davis when he says I would be very surprised if current EU nationals aren't allowed to stay, but they are concerned with the future.
"What happens with a business that relies on 60/70% of its workforce to be unskilled? Where are they going to come from?"
The uncertain environment could have real knock-on effects for businesses since employee motivation and engagement could drop.
"Whenever people feel uncertain about their position for whatever reason, and here it's a question of whether or not they will be able to stay in the UK and what the terms are, then that's going to impact their focus and engagement," Birly added.
"We have a generation of people who are used to moving around for work. If they feel they cannot stay in a particular location, then it is going to impact."
The comments come after the government U-turned over its plan to make businesses list the number of foreign workers they employ.
Elsewhere, a report from HR organisation the CIPD and Adecco Group UK found there was a downturn in hiring in the wake of the EU referendum.
The percentage of employers looking to recruit over the next three months had fallen from 40% to 36% in July, while there was no change in the proportion of organisations saying they would decrease staffing (19%).
"There is clear evidence some employers have become more cautious about hiring following the vote to leave the EU," said Ian Brinkley, interim chief economist at the CIPD.
"While many businesses are treating the immediate post-Brexit period as 'business as usual', and hiring intentions overall remain positive, there are signs that some organisations, particularly in the private sector, are preparing to batten down the hatches."