How does Brexit affect the UK recruitment sector?

With no extension to the Brexit transition period, the UK will leave the single market and customs union on 31 December 2020. 

Yet, according to a recent survey by the Institute of Directors, only one in four companies are prepared for the UK’s full departure from the EU.

What is the impact of Brexit on the recruitment sector?

Our lead international partner, Simon Hart, explains the key Brexit issues facing recruitment businesses:

1. Passporting – freedom of establishment 
Under the current rules, once a company is established within one EU country, it can sell its products or services to all other EU states without the need to have a branch or subsidiary there. This could prove a challenge in the event of a no deal. In order to assess the potential impact on your business, it is worth mapping out where your client base is across the wider European Economic Area (EEA) to identify what might need to change in 2021.

2. Fly in/fly out – travel to client meetings in EU countries
There may be an impact regarding business travel for client purposes in EU countries. In the event of a no deal, the UK might fall back on Mode 4 temporary movement of people criteria under GATS (General Agreement on Trade in Services). This gives some access to movement of people on a temporary basis to do work in a particular jurisdiction, but it is not as accessible as being in a single market. The EU has already said the UK cannot default to continuing with fly in/fly out protocols as other EU27 countries can. However, Covid-19 has changed how we work, with far more emphasis on remote working. So, the impact may become more of a people, tax and employment regulation issue.

3. Mutual recognition of professional qualifications and equivalence status 
The UK is negotiating for equivalence status similar to Canada’s CETA (Comprehensive Economic Trade Agreement). The EU’s position is that there is no guarantee over whether mutual recognition will apply. The European Commission statement said that the recognition of UK professional qualifications will be governed by the individual policies of that member state. This has been heavily lobbied by professional bodies. 

4. Data and privacy 
Movement of data/GDPR is a key issue in the recruitment sector. There is no clear guidance on what will happen post Brexit. At the moment, we have alignment with the EU through GDPR. This is something to keep an eye on so we don’t fall foul of any GDPR divergence. The UK may create its own version of these data privacy requirements, but we have not seen anything so far.

5. The indirect impact 
Business uncertainty continues as the negotiations with both the EU and US carry on and many business leaders are understandably concerned about the impact of this. We will keep you up-to-date with the latest developments, and you can find insights on taxation, strategic business planning, talent and people matters, as well as regulatory impacts and trade deal announcements at our Brexit insights page.

Contact us

To discuss the impact of Brexit on your recruitment business, contact Neil Thomas or Simon Hart.

Brexit - into 2021

There is no doubt that Brexit will have far-reaching impacts, with reverberations felt across every sector. Many in the business world will understandably be concerned.

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