Brexit, the ‘British Exit’ from the European Union, has finally occurred. As of 1 January 2021, the transition period is over, and the United Kingdom now sits outside the European Union (EU). This means that there are new restrictions in place with respect to UK businesses that operate in the EU. Here we set out five key human resources challenges for UK businesses operating in the EU post-Brexit, and explain how a Global PEO can help manage those challenges.
The Key Elements of Brexit
Following a referendum on membership of the EU in 2016, the UK formally left the EU on 31 January 2020. As part of transition arrangements, it continued to be treated as part of the European Single Market and EU Customs Union until 31 December 2020.
On 1 January 2021, this transition period ended, and the relationship between the United Kingdom and the EU is now governed by a range of co-operative mechanisms. The most significant of these is the UK-EU Trade and Cooperation Agreement (the ‘free trade agreement’ or ‘FTA’).
Perhaps the most significant consequence of this agreement is the absence of tariffs or quotas on the movement of goods between the UK and the EU.
Another key element of the FTA is the trade arrangements for Northern Ireland. The Northern Ireland/Republic of Ireland border is now the de jure (i.e., ‘legal’) border between the EU and the UK. However, a new de facto border will be created over the Irish Sea, negating the need for a ‘hard border’/customs checks between Northern Ireland and the Republic of Ireland. Border checks and customs documentation will instead be applied at the Irish Sea border (with a range of exceptions).
Another significant element of Brexit is the end of free movement of people between the UK and the EU. From now on, movement between the UK and the EU will only be available under the usual visa and visa-waiver arrangements.
So far, much of the discussion about Brexit’s impact on UK businesses has focused on the impacts on trade in goods. For example, the application of VAT and excise duties on certain products being imported from the EU, and the requirement to comply with customs formalities when importing and exporting.
Our focus in this guide, however, is on the people impact for UK businesses operating in the EU, such as those doing business in Germany or France. We explore how Global Professional Employer Organisation (‘Global PEO’) solutions might be utilised to rise to these human resources challenges.
Five HR Challenges for UK Companies Post-Brexit
The image below summarises these Global PEO benefits:
Five Ways Global PEO Can Help with BrexitOne option for dealing with the HR issues created by Brexit is to engage a Global PEO. A Global PEO is able to recruit and hire staff for UK firms, in Europe (or pretty much anywhere else in the world). This means that the Global PEO takes over compliance and tax responsibilities in Europe for the UK company. Sometimes a Global PEO is known as a global employment organization or ‘GEO’. Find our more about what a Global PEO can do at 8 PEO Benefits That Will Help Your Business Expand Quickly, Compliantly, and Reliably Below we consider the five ways in which a Global PEO can help with all the HR challenges listed above.
Given that 80 percent of the UK economy is made up by services, rather than goods, it is unfortunate that relatively little attention has been paid to the HR issues that inevitably arise when trying to export services after Brexit.
For a UK company continuing to operate in the EU, engaging a global PEO is of enormous benefit. A Global PEO can ensure that all EU staff are employed in full compliance with UK and EU laws and regulations. This is usually a more efficient and cost-effective option than setting up separate legal entities in each EU state that the UK enterprise wishes to operate in.
Horizons specialises in EU employment solutions for UK clients. They recruit, hire and onboard EU staff, and provide expert advice on support on visas and applicable regulations. This ensures that the business activities of a UK enterprise in the EU are fully compliant with both UK and EU law.