Implications of Brexit for employment and contingent workforce

Published on 13th Aug 2018

Is any new EU legislation expected to come into force and effect before the end of the transition period?

No. We are not expecting any new EU legislation concerning or contingent workforce before the end of the transition period.

Is a new regulator needed, or do additional powers to be given to an existing regulator?

No. Enforcement of employment and contingent workforce regulation is carried out at a national level (for example, by HMRC in relation to tax matters), so will not change following Brexit.

Is there an existing "equivalence" or "recognition" regime for recognising Third Country regulatory regimes?

No. There is no equivalence or recognition mechanism for employment law or the regulation of contingent workers.

Does current UK government policy mean that (subject to the terms of a future trade agreement between the UK and the EU) material changes to regulation or enforcement are likely post-Brexit?

We do not anticipate material changes to regulation or enforcement impacting on employers or staffing companies/platforms as a direct consequence of Brexit. The UK government seems likely to leave any EU-derived laws unchanged – at least in the short term. The Prime Minister has indicated that she does not have any intention of reducing worker's rights.  Whilst we may see some changes to legislation as a result of the consultations coming out of the Taylor review into modern working practices, for example to the Agency Worker Regulations and the Working Time Regulations, these are not anticipated to be material.

In relation to immigration, there are current plans for how applications must be made post-Brexit that have been laid before parliament. These set out what applications can be made, when they can be made and who they will affect.

What should businesses be doing now to prepare for Brexit?

  • Identify how many EU workers you have in your workforce and make sure that you understand their rights and status. Watch out for exchange rate fluctuations where you are paying workers in a different currency to that which you are paid in. This has always been a risk area, but the risk of fluctuations is increasing.
  • Understand what applications will need to be made by your EU workforce, when and how – there could be right-to-work implications after December 2020.
  • Identify the potential for labour shortages and the impact of increased labour costs:
    • make sure your business is able to look outside the UK and EU for skilled workers, for example, by obtaining a sponsor licence; and
    • if you are using UK contractors and agency workers in roles across Europe, and vice versa, they may cease to have the right to work if they are not employed and you may need to consider employing them. This may add to the growing trend of staffing companies moving closer (for various reasons, including tax efficiency) towards an outsourcing/consultancy model in which an element of responsibility is taken for the output of the workers.
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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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