By now you are undoubtedly familiar with the term Brexit, coined by the media as shorthand for the June vote by the UK electorate to leave the 28-nation European Union (EU). In my last article in, I outlined the exit process and the possible options for the UK’s future trading relationships with the EU and other nations.

Leaving aside the economic effects of the decision to leave the EU, which have already been felt around the globe, any organization operating within the UK or doing business with the UK will need to keep a close eye on any changes to laws and regulations that may affect their business.

It will likely be at least two years before the withdrawal takes effect, during which time the UK remains bound by European law, including the right to freedom of movement for people, goods and services. But following a formal exit, the UK will have to devise new rules for a future as an independent trading nation, and will have the opportunity to repeal or amend those existing laws that do not work for the UK.
For businesses supplying and using contingent labour the areas that will be susceptible to change are:

  • Immigration to and from the UK. Who will be affected by the removal of the right to free movement within the EU?
  • Employment laws. How many rights derived from EU law will be repealed or amended?
  • Data Protection. Will the UK choose to implement the more stringent rules adopted by the EU in the form of the General Data Protection Regulation due to come into force in 2018?
  • Restrictions on Services. The freedom of staffing firms to charge temp-to-perm fees has been affected by European law. Will this change in the future?

At this stage nothing is certain, and any change to existing laws will likely involve public consultation with a backdrop of the economic conditions at the time. However, in this two-part series I look at each of these areas in a bit more detail and try to predict what the future might hold for contingent workforce risk management.

Immigration. EU leaders have made clear that if the UK wants to retain its access to the single market it must accept the right of citizens from all remaining 27 nations to live and work freely within the UK. As the perception of “too many immigrants” was one of the reasons many voted to leave the EU, it is widely expected that freedom of movement will cease. As a result, there will need to be changes to the immigration rules and the re-introduction of visa requirements for EU citizens who want to live and work in the UK, and vice versa. This will have implications for the availability of labor and will add cost to the recruitment process.

Under current immigration rules, non-EU citizen workers must be sponsored by an employer for a skilled job that cannot be filled by someone already living in the country. Applying this system to EU migrants will affect the availability of contingent or temporary workers in the engineering and healthcare industries where workers are in short supply.

However, many industries rely on low-skilled workers who would be least likely to qualify to migrate to the UK once free movement is eliminated. According to a report by the Migration Advisory Committee in 2014, some 800,000 low-skilled jobs are filled by EU-born workers. In 2015, 13% of people in the lowest skilled jobs known as “elementary occupations,” also often low paid, were born in European Economic Area countries. The food industry, construction, healthcare and hospitality are some sectors which would be hardest hit by the lack of resident temporary workers.

Many of these workers are engaged by and sourced from staffing agencies. Temporary staffing agencies are not permitted to sponsor workers coming from outside the UK, who will be supplied to a third party as labor. Therefore such workers must be employed directly by the end-user. The cost of a sponsor’s licence for an employer is £1,476, with additional costs of a further £1,200 often borne by the employer, to recruit a worker from outside the UK.

Of course leaving the EU would also mean that UK citizens would be restricted in their ability to move and work freely around the EU, which may impact on businesses expanding within Europe and seeking skilled labour from the UK.

In my next column, I will address the ramification of Brexit on employment laws, data protection and restrictions on services.