No-Deal Brexit: The implications for cross-border staffing suppliers

As the deadline for “Brexit” approaches, there is a real risk that the UK government will be unable to reach an agreement with the EU over the terms of leaving the European Union on Oct. 31.

With less than three weeks to go until that deadline, staffing firms based in the UK or within an EU27 country supplying cross-border services need to be aware of the impact of a no-deal Brexit on their business operations.

Provision of Services

From the date the UK leaves the EU, UK businesses providing services in the European Economic Area, or EEA, which includes Iceland, Liechtenstein and Norway in addition to the EU Member States, will be regarded as originating from a “third country.” The exact effects on businesses will likely vary depending on sector and EU country.

EEA businesses supplying services into the UK may face additional legal, regulatory and administrative barriers as a result. In the future, UK regulators will have the choice to impose more restrictive requirements on EEA service providers. However, this is unlikely in the short term.

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Temporary Work Agency Registration and Licensing

If you are a UK business owner looking to expand into Europe or you already operate in Europe, you may no longer meet requirements based on EEA nationality. These may include the criteria for ownership of a business or property or being a responsible person for the purposes of holding a temporary work agency license in EEA countries.

The system for checking VAT status will also change. EEA businesses will no longer be able to use the EU’s VAT number validation service, to check the validity of a UK VAT number. Refunds of VAT incurred in the UK will have to be processed manually rather than through the EU VAT electronic refund system.

Business Travel

For directors and managers who travel to meet clients or conduct business in EEA countries, you should check the immigration rules that will apply in each country from Oct. 31.

The UK government has stated it will allow EEA citizens the right to enter, work and stay for up to three months, after which they must have European Temporary Leave to Remain if they wish to stay longer.

For EEA citizens who travel to the UK on a frequent basis, Sasha Schoenfeld, an immigration specialist and partner with City law firm Fox Williams, advises that those individuals should consider applying under the UK’s EU Settlement Scheme for pre-settled status. This is not dependent on residence and will entitle the individual to enter and work in the UK for up to five years.

Placing workers. Staffing firms placing individuals with professional qualifications gained in the UK should be aware that the automatic recognition of UK professional qualifications within the EU27 countries will end. This could mean that lawyers, accountants, doctors and other professionals will be prevented from working in an EU country until they obtain recognition of their qualification.

If placing other UK workers, staffing firms will need to check the immigration rules applicable to each country once the UK leaves the EU single market.

Contracts. Staffing firm suppliers and managed service providers providing services in EEA countries should as a matter of priority audit their contracts. The wording should allow for unforeseen changes in the event of a no-deal Brexit including fluctuations in in the exchange rate between the Euro and Pound for pricing of cross-border services.

The contract should also provide for any new tariffs, additional checks and authorisations and other requirements for operating in the EU, or supplying workers eligible to work in the EU, is a potential risk which can be provided for in the contract.

Data Protection. In particular, any cross-border processing between controllers and processors in the EU and UK will need to be authorized by the inclusion of “standard contractual clauses” or SCC as approved by the European Commission. These guarantee a standard of protection for EU citizens’ data that is considered adequate under the GDPR.

If data is collected directly from individuals in an EEA country and transferred to the UK, the individual must give their explicit consent to the precise details of the restricted transfer. The UK’s Information Commissioner provides guidance on how to get explicit valid consent.

Preparing for No-Deal

There are still intensive efforts on all sides to get a withdrawal agreement but as the clock counts down to the end of October, businesses would be wise to prepare for the consequences of the UK leaving without a deal.

Scenario Planning. The outcome of Brexit remains unpredictable but introducing workflow documents outlining different scenarios is an effective way to identify the most significant risks and mitigate these as far as possible.

Existing Employees. With Brexit approaching, many EEA citizens may have queries about their ongoing status and ability to work as the end of October approaches. You will not be able to provide all the answers, but reassurance and providing proactive support with the EU Settlement Scheme to current employees can help allay fears.

UK and EU Workers. You should keep up to date with the immigration advice and information issued by the UK and EU Member State governments. Continue checking right to work of prospective employees in the same way as now but prepare for a new, points-based scheme from Jan. 1, 2021.

Data Protection. Review your current processing of personal data and consider whether it is necessary to appoint an EU representative and identify an alternative lead supervisory authority. Review all documents, including your privacy notices to amend the wording as it relates to the UK and the EU. If you are a US company doing business in the UK, you will need to amend your Privacy Shield commitments.

Commercial Operations. Audit your existing contracts to assess whether the terms of the contract are flexible enough to protect you against price increases, additional charges and potential operating restrictions.

For further information and links to useful information download SIA’s report: No-Deal Brexit – Implications for Contingent Staffing.

Fiona Coombe

Fiona Coombe
Fiona Coombe is Director, Legal & Regulatory Research at Staffing Industry Analysts She can be reached at fcoombe (at) staffingindustry (dot) com

Fiona Coombe

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