18 February 2019
The clock is ticking on the UK’s exit from the European Union on 29 March 2019. But we still don’t know the terms of its departure or what impact Brexit will have on employment both in the UK and the 27 remaining EU member states. Faced with this level of uncertainty, HR and payroll teams need to start their HR Brexit planning right now.
HR teams must first make sure they have a clear overview of their company’s workforce. This clarity is currently missing in many companies, according to a recent survey by SD Worx, a leading global HR and payroll services provider, and 3Gem, a global research company. The survey of 1,000 HR and payroll professionals from seven European countries found that over a quarter (27.5%) of respondents do not know how many British employees they have working in the EU. A slightly smaller proportion (25.9%) do not know how many EU employees they have working in the UK.
To find out exactly who works where, HR needs to literally make a list identifying which employees fall into each of the following three scenarios:
Employees in all three categories should be classified as working “cross-channel”, as opposed to “cross-border”, suggests Sven Reynders, Regional Manager, Tax and International Employment, SD Worx. “The first thing that companies should do as part of their contingency planning is to prepare an inventory of where they have people working cross-channel,” he says. “The question is, ‘do we have any staff that fit the EMPLOYEE A, B or C scenarios? If so, how many? And where are they currently?”
The impact of Brexit on each type of cross-channel employees will depend on how the UK ends up leaving the EU. If the UK Parliament votes for a version of the Brexit deal hammered out between Theresa May’s government and the EU, transitional arrangements will kick in on 30 March 2019. These will protect the existing rights of EU citizens in the UK and vice versa, and allow the free movement of people to continue until the end of 2020. Employers will have almost two years to prepare for new post-Brexit immigration rules in both the UK and the EU.
If, on the other hand, there is a hard Brexit and the UK leaves the EU without a deal, UK citizens would immediately be treated like those of other non-EU states and vice versa. People in the Employee A category – those who currently work in several different EU states – are likely to be hit especially hard. For example, a UK citizen based in France who regularly travels to Belgium and Germany on business might find it difficult to do so after a “no deal” Brexit. He might get permission to continue working in France but that would not necessarily cover his trips to the other two countries.
With or without a deal, the end of free movement will inevitably reduce the flow of workers between the UK and the EU. So, to meet their business objectives after Brexit, companies with cross-channel employees must develop plans to ensure they have the right people in the right places. And there is no time to lose. As Sven Reynders says: “Emergency legislation is being drafted all over Europe. But if you wait to see what that legislation looks like before you start preparing, it will already be too late.”
HR and payroll professionals are aware of the scale of the challenge they face. The SD Worx/3Gem survey found that 63% of respondents believe preparing for Brexit will be difficult, and 18% believe it will be very difficult. The biggest difficulties for respondents are understanding changing legislation (44%), moving staff and/or headquarters (35%) and finding in-house skills to manage changes caused by Brexit (29%).
However, help is at hand. Well over half (60%) of business without the necessary HR and payroll skills to adapt to the changes that Brexit will bring are turning to third-party providers for expert tax and legal advice.
No business should attempt to unpick the complexities of Brexit alone. There is a myriad of other employment issues to consider before, during and after Brexit: dual nationality, remote workers, whether to recruit local or international staff. SD Worx can support and guide companies through each step.
SD Worx provides insights, legal advice, guidance and consulting to address the key HR, payroll and workforce management issues impacted by Brexit, such as the post-Brexit immigration landscape, visas, work permits and residency. We can even provide an audit assessment to see if you have systems that can cope with international HR and Payroll compliance changes as a result of Brexit.
Visit SD Worx to accelerate your Brexit planning.
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