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Deal or no deal: An employers' guide to preparing for Brexit

19 Sep 2019

With less than 6 weeks to go before the UK is due to leave the EU, it's still frustratingly unclear exactly what will happen.  We still don't know whether Article 50 will be revoked or extended, whether the Withdrawal Agreement will be approved by Parliament and whether a no-deal shock awaits the economy.   Currently, Parliament has been prorogued for five weeks until the 15th October and the Supreme Court is hearing a legal challenge by the campaigner Gina Miller on the legality of this. In the meantime,  the Government has indicated it will seek to renegotiate the Withdrawal Agreement to remove the 'backstop' intended to avoid a hard border in Northern Ireland, something EU negotiators insist is impossible. 

Many multinational businesses have already activated Brexit contingency plans, relocating parts of their business to other EU states or elsewhere.   But all businesses need to consider the practical impact a no-deal Brexit would have on their operations and their staff.  Although the continued uncertainty makes planning much more difficult, businesses urgently need to consider some key practical issues.

1. What should I do about current staff who are EU nationals?

EU nationals will be entitled to apply for settled status and pre-settled status if there is a no-deal Brexit.  However, as there would be no transition period if we exit with no deal, the deadline for doing so would be 31 December 2020 (rather than 30 June 2021).   Employers will not have to conduct retrospective right to work checks on EU staff but should ensure that affected staff are aware of the deadlines and the need to compile evidence of having lived in the UK for five years (for settled status). 

The Government published a new Code of Practice on preventing illegal working in January 2019, available here.

2. Can I still transfer workforce data between the UK and EU?

Businesses which transfer data from within the EU to the UK will need to put in place extra data protection measures in the event of a no-deal Brexit, as the UK will be treated as a third country to which data cannot be transferred without such measures.  Their options include binding corporate rules (for intra-group transfers) and EU-approved contractual clauses for transfers between businesses.   This will particularly affect corporate groups with EU and UK entities, which will likely transfer data relating to staff and customers between group companies and will need to have suitable measures in place by 31st October 2019. 

3. What effect will travel disruption have on staff?

A no-deal Brexit is likely to mean significant travel disruption at least in the short-term. The Eurostar is unlikely to run, border checks will likely cause long traffic delays at Dover and other ports and air travel may be suspended.  If staff are unable to attend work due to travel disruption, employers are not obliged to pay salary for those days, but this is likely to cause friction; encouraging staff to work from home where possible may be preferable.

Businesses dependent on imports (including supermarkets, manufacturers and pharmaceutical businesses) may face very serious disruption to supplies and may need to consider short-term lay-offs if they are effectively unable to function. Unless staff contracts provide for unpaid lay-off, this will normally be on full pay (and even unpaid staff may be entitled to a guarantee payment).  Employees laid off for 4 weeks continuously (or 6 weeks in a 13 week period) will be entitled to claim a statutory redundancy payment.

In the longer term, businesses may need to consider cost-cutting measures such as large-scale redundancies or changes to contractual terms.  Businesses should ensure they understand the procedural requirements, including the need to elect employee representatives when proposing to dismiss 20 or more employees in a 90 day period. 

4. Do I need to worry about food and medicine shortages?

A no-deal Brexit could result in shortages of certain medicines.  If employees with chronic conditions are unable to access their regular medication, they may be unable to work as a result (or will need adjustments to their working arrangements to enable them to work).  Employers will need to deal sensitively with these issues and ensure that they comply with their obligations under disability discrimination law. 

Leading retailers have warned that a no-deal Brexit could affect certain food supplies.  This may result in hospitality businesses having to close temporarily or offer a more limited menu, which may require short-term lay-offs (which will need to be paid unless otherwise provided in the employment contract).  Even for businesses in unrelated sectors it may be a source of considerable anxiety for employees and could result in increased requests for time off. 

It is also possible that no-deal Brexit could result in shortages of chemicals used for water purification.  Employers are legally obliged to provide clean drinking water at work: if it becomes impossible to do so, employers may need to close their premises temporarily (in which case short-term lay-offs may be necessary). 

5. Will a no-deal Brexit mean my staff can't work in the EU?

If the UK leaves the EU without a deal in place, from 31st October 2019 UK nationals' rights to live and work in EU states will be subject to the national laws of those states, including visa requirements.   Businesses whose staff travel between the UK and EU states should ensure they are aware of any visa requirements and restrictions (for example, a visitor's visa may only permit limited business activities) and ensure that adequate health insurance is in place, as European Health Insurance Cards held by UK citizens will no longer be valid.

Another issue is professional qualifications. The Withdrawal Agreement provides that UK professionals whose qualifications are recognised in other EU member states will be able to continue to rely on that recognition (and new applications for recognition can be made until the end of the transition period).    However, this would not apply in the event of a no-deal Brexit, meaning that UK professionals working in the EU may no longer be able to carry on their profession.  Unless those staff can be redeployed to work in the UK, employers may have little option but to terminate their employment.  Such dismissals would be for a potentially fair reason, but employers would need to follow a fair process and consider any viable alternatives to dismissal in order to defend any claims for unfair dismissal. 

A no-deal Brexit is likely to impact the majority of businesses and their staff. It is therefore essential to consider the potential impact and make any necessary preparations to ensure your business is protected.  If you have concerns or would like advice on any of the points raised above, please don't hesitate to get in touch.

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