brexit

The UK's departure from the European Union will bring change for businesses of every size and sector. This blog contains a checklist to assist businesses with the various challenges and opportunities presented by Brexit, and to allow businesses to prepare as best as they can, whilst the terms of the exit remain uncertain.

The starting point is to ensure you have a thorough understanding of the commercial implications that Brexit will have on your business. In particular, you may wish to consider the following:

1.  Human Resources

Workforce

What percentage of your UK workforce is from the EU27? Do your staff know the next steps to take to register as an EU citizen working in the UK? If EU citizens, excluding the Republic of Ireland, want to stay in the UK beyond 31 December 2020, they and their close family members will need to apply to the EU Settlement Scheme which will open fully by the end of March 2019.

You may wish to utilise the Employer Toolkit published by the Home Office, as a method of supporting your staff who are applying for the Scheme. You can also signpost your staff to further information and regular email updates from the Home Office here.

Future skills needs

The British Chambers of Commerce is currently advising the Home Office on future changes to the UK's immigration regime. In the meantime, consider how immigration policy could affect your talent pipeline and understand how your skills and labour needs may develop over the next few years. You may wish to review bonus funding and pay budgets; engage with your employees and manage their expectations on their future reward packages; determine where your future talent needs will be fulfilled in all scenarios regarding the status of EEA/Swiss nationals and UK employees and consider the employment proposition for different talent groups including contingent workers.

Check the non-EEA visa requirements for the country you are visiting. Non-EEA business visitors to the UK currently require a Standard Visa which involves fees and processing time. If you transfer staff between businesses in your group, or run a graduate training scheme, restrictions may apply. Current non-EEA Intra Company Transfers fall under the UK's Tier 2 sponsorship arrangements, which require a sponsor licence and come with regulatory and record keeping requirements for employers.

2.  Cross-Border Trade

Customs checks

As a 'third country', UK exporters to the EU after Brexit may be required to make customs declarations. You may therefore need to consider what customs procedures you comply with for trade with non-EU market.

Tariffs on UK-EU trade

You should consider the potential impact of a situation where there are tariffs between the UK and the EU, based on the Most Favoured Nation (MFN) tariffs which would apply if the UK failed to reach an agreement with the EU. To classify your goods in the UK if there is no Brexit deal, click here and to understand trade remedies if there is no Brexit deal, click here.

3.  Contracts

Some of the terms in your existing contracts may no longer be appropriate post Brexit, or may raise legal or practical questions in future.

Have you considered the impact of potential delays? With potential customs checks between the UK and EU, consider how resilient your supply is to potential delays. Do any contracts you have include "penalties" for late delivery? Do you need to increase your inventory and/or buy additional storage space?

In what currency must payments be made? Who bears the risk of change in exchange rates during the term of the contract? Are the prices fixed in a particular currency and is there a mechanism to vary the charges in light of any volatility in exchange rates?           

Who pays tariffs? The possible impact of tariffs on each party needs to be worked through, taking into account the current delivery and payment arrangements. Where Incoterms are used, their provisions should be carefully checked. Consider adding wording to exclude any ordinary pan-EU tariff charge, which is not intended to be caught.

Who is responsible for customs clearance? Who will pick up the cost and expense of managing this process? Are sales subject to Incoterms and, if so, which Incoterm? Are those Incoterms still appropriate? What impact might customs control have on agreed service levels and delivery timetables?

Do personnel need to travel between the UK and the EU to perform the contract? How will this need to travel be affected by changes to rights of free movement when the UK leaves the EU?

Will Brexit result in tax changes? Brexit may result in changes to the tax treatment of payments under the contract. If you trade in services, post Brexit, the working assumption is that you may need to register for VAT/appoint a fiscal agent in every EU member state where you supply customers.

4.  Other Considerations

EU funding sources: Consider your sources of funding and whether they will have an effect on projects, cash flow and workforce post-Brexit. Have you considered alternative funding sources?

Identify short and long-term economic effects of the decision to leave the EU: For example; inflation, borrowing costs, exchange rates and consumer confidence.  

Regulatory Frameworks: Have you considered how leaving the EU will impact regulation of the sector in which your business operates? Click here to view the Confederation of British Industry's report which explains the implications for regulatory alignment and enforcement of sector-specific rules on business in all sectors.

Have you checked to see if your sector is included in the planning notices issued by the UK Government and European Commission? The UK Government and European Commission have published a batch of technical notices to provide businesses and citizens guidance in the event of a 'no-deal' Brexit in March 2019. To access the full list of notices, please click here and here.

Do you have any IP rights? It is unclear whether trademarks registered in the EU would be applicable to the UK in the future. Seek advice on how to protect your IP rights after March 2019. UK Government technical notices on IP if there is a 'no-deal' Brexit have been published on the following topics: Copyright, Exhaustion of IP rights, Patents and Trademarks and Designs.

If you would like more information on how Brexit may affect your organisation, or how to plan for Brexit, please contact us and we will ensure we put you in contact with a specialist from Ward Hadaway immediately. Call us on 0333 006 2929 or email info@esphr.co.uk.

 


This article has been drafted on esphr’s behalf by Ward Hadaway Law Firm. Ward Hadaway Law Firm are one of esphr’s strategic legal advisory partners and provide certain services to our customers through a range of different Legal and HR support services offered by ourselves to the Corporate market. The content of this article does not constitute legal advice and it should not be relied upon. Specific legal advice may be required to address your specific circumstance.

 

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