Countdown to Brexit: a business’ guide to tackling uncertainty
In a diplomatic drive to save her divorce agreement with the EU, Theresa May is heading back to Brussels to continue talks with the President of the European Commission, Jean-Claude Juncker. Meanwhile, eight politicians have quit the Labour Party and three have left the Conservative Party to form their own group in protest of their respective leaders’ positions. These are just the latest events in the omnishambles that is Brexit; the ongoing saga that has been begging for a decisive conclusion since the outcome of the vote was announced.
Two years of chaotic negotiations, appointments, resignations and internal squabbling within the major political parties have left the British people feeling bemused, betrayed and downright bored with Brexit as we hurtle towards our official exit date with little clarity or confidence on the future of the country. Regardless of whether you were an ardent Brexiteer, a staunch remainer or somewhat of a fence-sitter at the time of the referendum, most of us would agree that this is not what we had in mind when the question was put to the public in 2016.
Now, with only six weeks to go until March 29th, UK businesses are still waiting to hear whether the cliff-edge no-deal scenario will play out and what the ramifications will be to their operations. Naturally, such unpredictability makes it harder to plan ahead. With tariffs, taxes and immigration all still up in the air, companies are left to speculate on the impact of Brexit to their staff, supply chains and finances.
However, while the full effects of Brexit on SMEs may be largely unknown, there are still certain steps that business leaders can take in preparation:
Assess the risks
The UK’s impending exit from the EU will bring change for organisations of every size and sector. Whether or not Article 50 will be extended remains unknown, but for businesses seeking to forecast ahead of the new financial year, the need to undertake a risk assessment of all possible scenarios is critical. No matter the industry you operate in or your position in the market, conducting a ‘Brexit audit’ will allow you to gain insight into which areas of your business could potentially be impacted.
This should include identifying any contracts with EU companies and assessing how they would be affected by a post-Brexit economy; analysing your supply chain and whether that will change once the UK leaves the EU; determining the potential changes to regulation, taxation and VAT and measuring future skills needs in light of a potential no-deal scenario.
Audit your supply chain
The recent closure of the Honda plant in Swindon serves to illustrate how geopolitical events can cause ripples throughout a company’s entire supply chain. While 3,500 people lost their jobs at the factory itself, it’s estimated that a further 10,000 people’s jobs could now be at risk due to the knock-on effects on their supply chain. While Honda may not have attributed the closure to Brexit explicitly, the headlines are a warning sign for all businesses reliant on intercontinental trade of the potential headwinds to come.
Paramount to preparation for our departure from the EU is the need for businesses to audit their supply chains, identify the potential obstacles and make provisions for all potential scenarios. If this means striking new partnerships with suppliers, contracts will need to be hastily secured to ensure minimal disruption to operations.
Consider current and future staffing requirements
Under the proposed arrangements, EU nationals who legally enter the UK prior to 29 March 2019 will be permitted to remain but must make an application to evidence their right to live and work in the UK. If these terms are accepted, the deadline for EU nationals to apply for settled status would be 31 December 2020. This might seem like ample time to prepare, but if your business heavily relies on the contribution of workers from the EU 27, understanding your legal requirements as an employer and ensuring all your records are current and up to date as early as possible is essential in preparing for impact.
While we are yet to get a definitive answer in respect to freedom of movement, HR departments would do well to identify all the skills gaps in the business along with staff shortages that could present themselves following our exit from the EU. Determining what your needs will be in the next few years and whether or not you will need to recruit talent from the EU will be essential in putting in place the necessary measures to address these issues at the earliest possible time.
Remember, if your company is to employ individuals from the EU after March 29th, you will require a UK visa sponsor license just as you currently would for employment outside of the EU. Already, the Home Office is facing a serious backlog in applications in anticipation of our imminent departure, so starting this process as early as possible is key in securing the talent your organisation needs in the years to come.
Brexit may close some doors, but it also may open up new ones: until the terms of our exit are clarified, the best defense against uncertainty is agility. Taking the time today to look at how your business is run and whether there is scope to scale up or down will ensure you are as prepared as you can be to take advantage of opportunities and avoid the potential pitfalls that could arise later down the line.
For more advice, simply get in touch with one of our business lawyers today on 0333 772 7736.
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