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Brexit news: how will the trade deal affect recruitment agencies?

The Brexit news we had all been waiting for was finally delivered on Christmas Eve. The EU-UK Trade and Co-operation Agreement (TCA) signalled the start of a new relationship, so how will the trade deal affect recruitment agencies?

Marie
14/01/2021

The Brexit news we had all been waiting for was finally delivered on Christmas Eve. The EU-UK Trade and Co-operation Agreement (TCA) signalled the start of a new relationship, so how will the trade deal affect recruitment agencies?

Although the dreaded ‘no deal’ scenario was averted, there will still be challenges ahead. Here, we cover the most important areas:

Did the Brexit deal cover recruitment?

Much of the TCA framework focused on goods or products, rather than business services which account for around 80% of the UK economy. This means that much of the detail affecting the recruitment industry has yet to be ironed out.

The Brexit deal has been described as a framework, with Chancellor Rishi Sunak revealing the need for deals on financial services to be added in the future.

Can UK firms continue to trade in the EU?

There is plenty of scope for operating on the continent without the need for an office in an EU state. For example, rules around travelling as a business visitor appear generous, as long as stays do not exceed 90 days in any 180-day period.

Multi-national agencies may require staff to work for extended periods in EU states, so they will have to record this time to avoid the 90-day threshold. It won’t be as easy as simply transferring staff to a European arm.

The TCA bans temporary stay provisions where a contractor has been ‘parachuted’ in by a UK company. Workers needs to be employed for 12 months before being parachuted, or to be engaged on a self-employed basis. Stays can only last as long as the project, up to a 12-month time limit, and workers must possess a minimum amount of experience.

How will EU workers in the UK be affected?

All EU nationals currently in UK-based employment are being urged to sign up to the EU Settlement Scheme. For those who meet the stated criteria the deadline is June 30, 2021. The UK Government has committed to protecting workers’ rights, both for EU nationals in the UK and for British workers on the continent.

Essentially, right to work rules remain the same until July 2021. Recruitment agencies will need to prepare for changes when the deadline expires.

To find out more about workers’ rights in post-Brexit Britain, read our blog: Workers’ rights post-Brexit: what will happen?

Can UK firms still hire EU staff?

Employees of an overseas service supplier and self-employed contractors from the EU can work in the UK if they comply with the following:

  • Any work is under a contract to an UK sponsor.
  • The service is covered by the trade agreement with that country (TCA for EU).
  • The service supplier or independent professional has no commercial presence in the UK.
  • The work must be in line with a genuine contract not exceeding 12 months.
  • Workers must have been employed by the sending business for at least 12 months.  

To find out more about how freedom of movement will change, please read our blog: Freedom of movement: what will happen after Brexit?

What other areas are covered by the Brexit deal?

As you will have seen during coverage of the Brexit news, the framework leaves as many questions as answers, but here is what we know so far:

  • Data: nothing changes immediately as there is a four-month period from January 1, 2021 when the UK will not be considered a "third country" for the transmission of personal data. A long-term solution needs to be arranged. We cover post-Brexit data flow and GDPR in our blog: Brexit: How will it affect data flow and GDPR?
  • Payments: nothing to fear over sending payments to EU states, although expect there to be changes to procedures such as invoicing.
  • Professional qualifications: this is a sticking point which needs to be addressed quickly. Not recognising the training and qualifications of workers arriving from overseas will inevitably be a barrier for industries such as construction, healthcare and education.
  • Employment rights: the TCA sets out reciprocal commitments to maintain the level of protection for workers. Much of our existing employment law is handled by UK courts.
  • VAT: rather than making a single claim via HMRC for VAT incurred in all EU member states, businesses will have to claim to the authority for  each individual country where VAT is incurred in that country’s official language. To read more about VAT and invoicing, read our blog: Brexit guide: What happens to invoicing and VAT?

What next?

If you have any questions surrounding any Brexit news, the UHY Hacker Young Recruitment Business team are always on hand. We are specialist accountants who offer recruitment and employment businesses dedicated expertise in area such as accounting, finance, taxation and business growth.

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