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Will Freedom of Movement Be Restricted Post-Brexit?

Posted on: 28 Jul, 16

In this week’s blog, Clark is worried about the impact Brexit will have on the movement of goods and people. Oury, puts his mind to rest and reminds Clark that as one door closes, another one opens…

Oury, what will happen to businesses if Brexit results in restrictions being placed on the freedom of movement of workers from the EU? Is there anything UK employers can do to protect their European employees?

Clark says...
Oury says...

Hmm, good question Clark but remember;

  • Its early days and nothing has been formally decided yet!
  • Free movement won’t end until Article 50 has been triggered and this could take up to 2 years.

So there’s no need to panic just yet. And, if you ask me, it’s likely that during negotiations, the government will accommodate EU workers who already hold permanent residence in the UK (although they’re holding their cards close to their chest at the moment on this!).

What can employers do whilst waiting for Article 50 to be triggered?

Clark says...
Oury says...

It would be wise for employers to formalise their relationships with all workers and ensure their EU workers have the necessary evidence to register as UK residents.

Click here to view the rest of my next steps for employers following the EU referendum.

Thanks Oury, you’ve put my mind at rest. With all this uncertainty surrounding Brexit, should UK businesses continue to hire talent from European countries?

Clark says...
Oury says...

Good question Clark! The time to act is now as a cut-off date for hiring European workers is yet to be set. I predict that there will be no issue of deportation for properly employed workers due to the huge impact it would have on businesses across Europe.

The worst case scenario is… EU workers will have to return to Europe.

UK businesses could turn this into a positive by expanding into Europe. If staff do get deported, they will need work in their country of origin. They already understand and are invested in your business so a European set up could be a win-win situation.

What are the downsides to Employing in Europe?

Clark says...
Oury says...

Compared with the UK, ending employment in European countries is much harder for employers.

In the UK, employees are only able to bring claims if they are unfairly dismissed after 2 years of service.

As you can see, in Germany, Netherlands, France, Spain, Norway and Sweden, employers must always state a reason for terminating employment.

Qualifying Periods for Bringing Unfair Dismissal

If Brexit does result in restrictions on hiring EU workers, what other options do UK businesses have?

Clark says...
Oury says...

That depends on what you class as a restriction.

To answer your question Clark, if the government do place restrictions on employing people from Europe, they will likely make changes to the laws on hiring talent from outside of the EU and they even may re-introduce the highly skilled migrant program.

But, wasn’t that abolished in 2008?

Clark says...
Oury says...

Yes it was, due to uncontrolled immigration from Europe. However, when Article 50 is triggered, I predict this will be reintroduced in one form or another.

Remind me Oury, how does the highly skilled migrant program work?

Clark says...
Oury says...

It allows young and well educated individuals from around the world to come and work in the UK.

Under this system, talent from Australia, India, Canada and even Brazil can live and work in the UK

if they have enough points to be considered and have reached certain levels of fluency in English.

I’m fully in favour of this system and have seen evidence of its success for both Oury Clark and our clients. Plus, it means businesses will have access to a wider talent pool making British businesses better equipped to compete in the global market place. Contrary to popular belief, there currently are no free movement of services, this is just a directive which hasn’t been properly implemented.

Consider these two examples of its inconsistency, Oury Clark can’t offer professional services in France or Germany as our professional qualifications aren’t relevant however, we could move goods, provided they are unrestricted, around Europe.If our predictions are correct, and freedom of movement is restricted, this could impact goods as well as people.

If you’re right, this will have a big impact on our overseas clients who have set up in the UK to access the free market. Do you think there is a chance that the EU will introduce duty and tariffs on UK goods exported into Europe?

Clark says...
Oury says...

Who knows for certain, but yes it is possible!

Any client dealing in goods to any serious level, should already have a set-up on the continent

because shipping across the English Channel is not efficient from a cost or logistical perspective. All you need to ship goods around Europe without restriction, is VAT registration in a European country.

Setting up a simple business base on the continent to bring in goods is straightforward. With VAT registration in place, goods can be moved, VAT can be reclaimed and duty applied according to the country the goods came from.

Currently the UK has some not so favourable tariffs with Commonwealth countries, I predict that by severing our ties with the EU, we will be able to agree more favourable tariffs with Commonwealth countries.

Sorry Oury, you’ve lost me, what do you mean by more favourable tariffs?

Clark says...
Oury says...

Favourable tariffs would mean that many goods, from Butter to Desk Lamps can again be imported efficiently into the UK from outside of Europe.

Meaning that many global businesses will find they can do business again with the UK competitively without also having to consider Europe. This, combined with the possibility the UK will get favourable tariffs within Europe means that the UK can then on-ship goods into Europe at much better rates.

Key Points
  • In regards to Brexit, nothing has been formally decided yet?
  • The government will accommodate EU workers who already hold permanent residence in the UK
  • Ending employments in European countries is much harder for employers
  • If freedom of movement is restricted, this could impact good as well as people

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We are but two fictitious characters throwing out ideas and comment to stimulate debate and collect information. As professional service firms, we are open minded people and think independent thought and debate is essential to help understand, as well as navigate, complex problems. By joves – doing business across Europe (and the world) is set to become a whole lot more complex in light of recent seismic political events. As businesses - we provide information and hopefully some wisdom - and we see this blog and its caricatures merely as a much more fun, perhaps slightly controversial way, of stimulating debate and collecting ideas. We’re searching for some true pearls of wisdom, and as we find them, we’ll share them with you.

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