The Impact of Deal or No Deal Brexit for Recruitment Companies

  • December 16, 2019
 

The Impact of Deal or No Deal Brexit for Recruitment Companies

Written by - Wis Amarasinghe - Finance Director at Langley Search & Interim

Leave – don’t leave… Deal – no deal… It’s certainly an ‘interesting’ time to be in recruitment. But with the outcome of Brexit still hanging in the balance what does it actually mean for the industry here and now?

We’re not going to bleat on about uncertainty - that’s a given. D-day is only a couple of weeks away (perhaps), right now it’s all about short-term and the immediacy of issues that are likely to rear their heads depending on what’s about to unfold.

While job opportunities within the UK continue to remain buoyant, this may change should we leave without a deal. It is unlikely to be immediate, as the private and public sectors have continued to recruit, despite the turmoil of the last three years. However, without a deal the UK may well be regarded as a less attractive location for global business, therefore less investment and, ultimately, fewer employment opportunities – especially at the mid to high-level.

Immediate challenges

Post 31 October, deal or no deal, a number of implications will become immediately apparent, in particular

  1. Worker’s rights
  2. Freedom of movement
  3. Data flow
  4. Invoicing
  5. Recognition of professional qualifications

This list is by no means exhaustive, but until events unfold it’s impossible for anyone to crystal-gaze all possible scenarios.

But one thing is certain. Recruitment will not stop, and we as agencies will need a dynamic approach to work and adapt with the reality of what happens.

Worker’s rights

Currently the existing legislation will be converted to British law, meaning that in the short-term this shouldn’t cause any major ripples. However, moving forward, these rights are likely to change. But to what extent we’ll have to wait and see, and will be highly dependent on which political party remains or comes into power.

All EU nationals already in a UK-based position should be urged, if they haven’t already, to sign up to the EU Settlement Scheme. For those who meet the stated criteria the deadline is 30 June 2021. But if we leave without a deal the deadline is 31 December 2020.

Freedom of movement

It’s almost certain that the UK will move away from the freedom of movement model that’s currently enjoyed by all EU citizens. This has already made us a less attractive proposition for the EU workforce and this is likely to impact further. With a deal or not it’s more than likely that they’ll be some kind of transition period, with a new immigration system coming into place from January 2021. This is still a work in progress, and something recruitment companies need to monitor as it evolves.

For agencies that place UK nationals into EU positions this is currently a grey area. Two years ago we, as in Langley Search & Interim, followed our own advice and strengthen our business within Europe. Having a presence in EU member states should provide the ability to continue trading within the EU and all the benefits this brings. It will also cut down on the inevitable red tape whatever the post-Brexit scenario.

Data Flow

Any EU trade, including those with business partners, cloud based services, European operations and outsourced functions have data that flows back and forth. If we leave without a deal then the UK will no longer benefit from the current recognition of uniform standards of handling data.

Our Government has said that it will allow outgoing data to continue to flow without the need for additional measures. But data from the EU to the UK will be affected, so companies are well advised to consider the necessary steps to prepare for this. The Information Commissioner’s Office has put together a number of guidance plans to assist with this should we leave with no deal.

Invoicing

Invoicing to EU member states will be impacted regarding VAT in the event of no deal. Currently the recruitment industry benefits from zero rating, where UK VAT is not charged at the point of sale. This is likely to change, although exactly how remains unclear. Apart from this there’s a chance that not much will alter in the short term, even if there’s a no deal Brexit.

Recognition of professional qualifications

Currently there’s a mutual recognition of professional qualifications within the EU member states. No deal will put an end to this, something that has a strong chance of causing various headaches for candidates, recruiters and employers alike.

The government is to put a new UK recognition system in place for incoming EU nationals, and for those with UK qualifications it’ll be necessary to check on the policies of the host country. This is something that recruiters who place candidates into Europe are going to have to deal with immediately following a no deal scenario

Heading into an uncertain future

If we leave with no deal, ambiguity and confusion will undoubtedly be the case. However, recruitment will continue – we as an industry will have to adapt but it’s certainly not an insurmountable challenge.

For companies such as Langley Search & Interim, who’ve already put as much pre-planning into place, not to mention reinforcing our global offering, the foundations are in place to face Brexit head on.

Recruitment will, and always has, adapted to change. Although, just that this time it’s a little more fundamental than simply riding out a recession or global slowdown. But we’re a resourceful bunch and if any industry can adapt it’s ours. In a landscape currently overshadowed by Brexit gloom, the future is – whilst not exactly rosy – perhaps not quite as bad as the media might have us believe. We’ll await the next few weeks with bated breath…