Tania Bowers, Legal Counsel and Head of Public Policy at the Association of Professional Staffing Companies (APSCo) Gets Brexit back on the agenda

The last nine months have certainly been difficult for the recruitment sector. We’re all operating in increasingly uncertain circumstances and while Covid-19 has understandably dominated business concerns, there are a number of other challenges that staffing companies must prepare for. The end of the Brexit transition period is fast approaching, and recruiters need to be ready.

While there are still key points to be agreed before any Brexit deal (or not), recruiters can prepare based on what we know now.  Given the administrative burden that comes with some of the preparations, starting as early as you can is certainly advisable. The Government has set up a “Check, Change, Go” online tool that will help staffing companies prepare, but here are some of the steps that recruitment firms need to be taking now in order to be Brexit ready.

Review your international footprint

There will be restrictions on UK national employees moving into and around Europe and there may be restrictions on the ability for UK nationals to run and own businesses in the EU. This will be dependent on the member state in question and recruitment companies tapping into European markets will need to take a country by country approach.  The rights of UK nationals to continue working in EU states will need to be assessed on a country by country basis, but action on your own employees must be taken now to avoid disruption in January.

You should prepare for changes such as additional requirements on nationalities, or residency of senior managers and directors and there may be limits on the amount of equity that can be held by a non-EU national.  You can find more information on the Government website.

Requirements for reporting and auditing will change after 31st December 2020, with the financial period starting from 1st January 2021.  UK incorporated companies who are currently required to use IFRS will need to use a UK adopted international account service. If operating in an EU regulated market, you will need to check reporting requirements in relevant jurisdictions and may need to comply with both UK adopted international accounting standards and IFRS.

Know how the immigration points system will impact you

European candidates and contractors you deploy are affected. As of 1st January 2021, free movement of EU nationals into the UK will cease and vice versa. As a result, there are actions that your contractors may need to take if they are EU nationals working in the UK from the end of the transition period or UK nationals working in an EEA country.

EU nationals can remain living and working in the UK as long as they have obtained a Settled or Pre-Settled Status visa under the EU Settlement Scheme. While the deadline to apply for this is 30th June 2021, it’s important to ensure individuals begin applying now to prevent any disruption to their current job and future assignments.

Concerns over the immigration points system have been raised by APSCo for some time now. In particular, the limitations of the post-transition visa options for EU nationals has the potential to impact skills availability, particularly for those roles on the Shortage Occupation List.

For those sectors that rely on EU talent due to a short supply of in-country resources, the changes to how employers and recruiters can hire from across Europe post-transition present a real challenge, particularly for those hiring flexible workers. The details published so far on the points-based immigration system provide a disappointing lack of detail around the movement of and access to highly skilled independent professionals across Europe.

Under the Skilled Worker route an individual has to have a job offer and be sponsored by a licensed sponsor to gain access to this – an option that isn’t viable for independent professionals seeking to work on multiple projects. The Tier 1 Global Talent visa is also very limited in scope and, as a result, is not suitable for most independent professionals. While the document shared by the Government references a broader unsponsored route within the points-based system which will allow a smaller number of the most highly skilled workers to come to the UK without a job offer, the Home Office has made clear that this will not open from January 1st 2021.

Time is running out for those applying for visa sponsorship. For recruiters, it is essential that your clients are registering as a visa sponsor now before it’s too late in order to prevent any placements being deferred or terminated. Unfortunately, the Skilled Worker scheme requires fees for employers and visa holders which are amongst the highest in the world.  Nevertheless, without access to EEA talent through umbrella company, agency worker or personal service company (PSC) routes, visa sponsorship is the only option.

Review your data transfers

This is a particularly pertinent point for recruitment companies with any international data touchpoints. The legal framework that governs the transfer of data between EU companies and UK businesses will change from next year unless the UK’s Information Commissioners Office (ICO) has an agreement in place for data adequacy by the end of 2020.

The ICO has indicated it will permit the sharing of data from the UK to the EU on the basis the EU adequately protects data, but any personal data coming into the UK from the EU will require an alternative legal basis for processing, and the ICO recommends the use of model terms. This will affect any European branch or associated company of your recruitment business that is sharing data on your system hosted in the UK, any suppliers processing data in the EU, websites attracting clients and candidates from the EU and any clients or candidates that are sharing data with your UK teams from across the EU.

This particular challenge is unlikely to be resolved quickly as the Commission has stated that the decision on data adequacy cannot be made until the UK is a third country, although the ICO is working towards an agreement. For any staffing companies that have data transfers from the EU into the UK, you will need to identify a legal basis for these – in most instances this is likely to be through standard contractual clauses with each party. The ICO has developed an interactive tool to build a model contract which is available on its website.

It’s important to add that if you are operating from the UK and offer services to an EEA state that you aren’t based in, you will need to appoint a representative in the EEA to comply with EU rules. This can be a law firm or accountant who will act as your local representative with individuals and data protection authorities in the EEA. Note, though, that this person or company will be separate from your Data Protection Officer’s (DPO) obligations and your representative cannot be your DPO or one of your processors.

Be aware of the in-country requirements

As recruitment businesses export a service rather than goods to the EU, firms can continue to deliver recruitment solutions to Europe after the end of the transition period without obtaining an EORI customs number. However, there hasn’t yet been a services deal agreed and unless this happens, recruiters won’t be able to automatically deliver services to the EU under EU law as they have since article 55 was invoked. Instead, a UK organisation’s ability to provide work to a member state will be determined by the national laws of the country engaged with. One country where disruption may occur is Germany where it is unlikely that UK owned businesses will be able to obtain labour leasing licences, commonly known as the AÜG.

There may be changes needed to your contracts with clients and contractors, particularly if you can no longer deliver the services and APSCo is preparing model clauses for use by its members.

Getting ahead of Brexit while we can

The above are just a few of the steps that recruiters need to be taking to get ahead and prepare for the end of the transition period. However, it is not a comprehensive list and there will be nuances in requirements for each business. What we have certainly seen during the transition phase so far, though, is an increasing number of staffing companies opening an EU hub as part of their preparations, and we’re expecting this to continue for the immediate future.

While Covid-19 will remain a significant influence on the recruitment world for the coming months, we cannot let Brexit drop off the radar. For staffing companies, preparation will be key to manage the change from 1st January 2021.

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