Brexit hasn’t gone away as a key agenda item for businesses – the UK left the EU in January and the impact of the end of the transition period on December 31 will directly affect people and their operations.
The government is urging businesses to ready themselves with a checklist of considerations and has put £705 million towards infrastructure, staffing and IT to prepare the UK for the end of the transition period. We outline the key issues for businesses ahead of the deal being finalised and what they can do to prepare.
Overshadowed by coronavirus
Brexit has been put on the backburner of headline news during the pandemic, but now it is crucial to think about how this will affect your business. As the UK negotiates and clarifies the finer details of the deal, it is almost as if news outlets have recognised that people have a certain bandwidth in terms of what they can cope with and focus on. Equally, reward plans have taken a back seat whilst businesses deal with the immediate impact of coronavirus.
Labour and skills shortage
The primary effect of Brexit is anticipated to be its impact on resourcing across organisations. Employers we work closely with have said that the key HR impact is in relation to their access to the right talent and labour supply. There is a high contingent from Europe impacted by Brexit and this will be compounded by price increases and fluctuations affecting operational costs. Staff will need to be able to practice and provide services to clients in the UK from January 2021. Many employers have been encouraging and supporting their employees through the process of applying for settled status.
The government has issued guidance around how employees can continue to live in the UK if you are an EU, EEA or Swiss citizen. The UK government issues ‘permanent residence documents’ to those who have lived in the UK for five years but employees need to obtain this before 31 December 2020; otherwise they have a period of grace to leave before 30 June 2021. After this point and for those who have not been living in the UK for five years, only an EU Settlement Scheme or successful application for British citizenship will allow EU, EEA or Swiss citizens to continue to live in the UK from next year onwards. Potentially exacerbated by the strain of coronavirus on operations, it is now critical to take stock of how to best protect the workforce and key talent beyond Brexit. Particularly for international business owners, they should consider the documentation and requirements associated with visiting Europe from the beginning of next year when the free movement of people under the EU framework comes to an end.
Proactively meeting new trade and customs regulations
The UK’s trading relationships in light of Brexit will involve new import and export rules. Regulations such as registering with the relevant Customs Authority in EU countries and securing an Economic Operators Registration and Identification number for exports are processes that organisations are best advised to complete early, in order to allow time to secure these. This avoids a scramble to meet potential barriers to international trade at the end of the year.
Imports and exports of certain food and drink will have to meet EU requirements. As a result of coronavirus, new border controls on imports from the EU are set to be staggered until 1 July 2021 to give businesses more time to prepare, particularly for the UK Global Tariff arrangement. The changes coming into force at the end of the transition will vary in their impact across various manufacturers, such as wine exporters, who faced regulations that were already complicated pre-Brexit. This UK industry has sought to future-proof themselves by developing alcohol-free, sparkling wines with full transparency on the bottle labels to help ensure that they are fully operational after the transition and comply with any new regulations about what needs to be detailed on products. By checking the extra tariffs and charges early, businesses can ensure they’re as prepared as possible.
Operations may not only be impacted in terms of increased prices, but in delays along the supply chain. Plans for managing congestion around border controls are currently being put in place to avoid notable disruption to the movement of goods. However, if each organisation plans for delays, the impact of any border chaos will be minimised further. Wine exporter Thomson and Scott have already ordered the required levels of bottles they need for production until spring next year to store in their warehouse ahead of any disruption to their supply chain.
The complexity involved in the negotiations in relation to the specific operations of particular industries, such as fishing with its long history of treaties governing the processes involved, cannot be underestimated. Equally, in some sectors the onus may be on the UK importer to show that imports from the EU and EEA have been legally harvested. This may involve planning for greater due diligence along the supply chain, as advised by the Timber Trade Federation. Equally, if your business uses personal data from the EU for business, make sure you are aware of new rules on data protection governing this. Familiarising yourself with the new rules on EC type approvals, procurement arrangements and trade remedies process will ensure your business is poised to deal with the new system.
Prepare in order to make transition smooth
Get in touch so that we can help you consider and outline how Brexit will affect your operations. We can support you in building revised contingency plans to accommodate a range of outcomes so that your people are ready to deliver business as usual for customers.
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