How can Recruiters Advise Contractors on Brexit?

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After three years of negotiations, speculation about another referendum and political and business uncertainty, the United Kingdom left the European Union on 31st January. 

The story of Brexit has been a long and confusing one, to say the least. Still, even after officially leaving, the UK won’t truly experience what life is like outside the EU until the 11-month transition period ends on 1st January 2021.

During this period, the current rules on trade, travel and business between the UK and the EU will continue to apply. In other words, nothing will change this year - not from a legislative perspective anyway. Until then, there is a lot still to be decided. However, with trade talks between the UK and the EU imminent, over the course of the year, we are sure to get a better feel for post-Brexit Britain. 

For the time being, however, there are a number of predictions we can make with some confidence. In this article, we’ll explore how the UK’s long-awaited departure from the EU could impact the contractors that you as a recruiter, place. 

Can contractors continue working in the EU?

Given tens of thousands of UK contractors work on projects in the EU, how much freedom they will have to continue operating in Europe is a big talking point. In response to this, the government has said in ‘The Future Relationship Between the UK and the EU’ that it will aim to allow ‘temporary entry and stay of individuals, so that both EU and UK nationals can undertake short-term business trips to supply services.’

Exactly how long contractors will be allowed to reside in an EU country, however, remains to be seen. This is likely to be dependent on the deal the government is able to strike with the European Union. 

While this offers little certainty, as a recruiter, you can at least assure contractors that freedom of movement will remain active until the transition period has ended in 2021.

Less or more competition for contracts?

Boris Johnson has vowed to introduce an ‘immigration points system’ to replace freedom of movement. This proposed system is based on Australia’s current policy and would take into account factors such as the person’s skill level and English language competence. 

While it seems likely that this approach would favour better-qualified EU citizens, such as contractors, there’s no doubt that it will be stricter than the current policy of allowing workers to move freely across Europe. 

With this in mind, competition from overseas for UK-based contracts could well decrease - something that should, in theory, offer UK contractors an advantage. 

Will there be hiring hesitation?

Granted, there is still an element of uncertainty, given the UK will leave the single market and trade deals are yet to be agreed. However, the fact that Brexit has now happened at last does offer businesses some clarity.

In 2020, speculation is likely to continue as to whether global businesses will relocate to Europe or not, which would have an impact on the demand for contractors here in the UK. 

Importantly, the government has said it will put measures in place ‘that reduce unnecessary barriers to trade in services.’ This suggests the Prime Minister will do everything he can to ensure the UK retains its reputation as a global business hub.

Is IR35 reform still going ahead?

IR35 is UK tax legislation, which doesn’t apply to contractors whose personal service companies are registered overseas. The incoming reform is not tied to Brexit and it seems very unlikely that the government will delay changes due to negotiations with the EU. As a result, recruitment agencies must themselves prepare for IR35 reform and advise contractors to do the same.

When it comes to Brexit in 2020, the key takeaway for recruiters is that it is business as usual for contractors. While the full effects of the UK leaving the EU will be felt when the transition period concludes on 1st January 2021, this year, contractors will be free to work in the EU and have some certainty with regards to tighter immigration rules in future.

With you all the way

At Parasol, we're with you all the way; so if you're a recruiter who has questions from your contractor clients about how the future of their career looks for them with the UK leaving the European Union, please get in touch.