How could the Brexit deal affect contractors?

How could the Brexit deal affect contractors

A little over a month after the Brexit deal was finalised, the effects are already being felt. As the government rushed to avoid a no deal scenario, the end result was a thin deal that left out critical details to be finalised. Here we take a look at what might impact contractors and why.

Free trade

While the deal secured continuation of tariff free trade, new border controls with the EU have wreaked havoc on business models across the continent. Many UK ports are struggling with delays and complications after Brexit. This and the disruption at ports caused by Covid-19 is already resulting in many businesses remodelling their supply chains to source more domestic product. For example, Statiflo, a maker of static mixers used in the water and other industries, has switched its warehouse to supply countries outside the EU from Germany to its Macclesfield base. As well as an increase in manufacturing work, this could see a rise in demand for supply chain workers, from managers to warehouse operatives.

Service sector

With the emphasis on preserving tariff free trade, the service sector, which accounts for 80 percent of the UK economy, was largely left out of the deal. Professional services firms, City banks, insurance companies and accountancy firms are among thousands of businesses that face restrictions on EU trade. The aftermath has seen billions of pounds worth of transactions disappear from London’s Finance district. TheCityUK, the lobby group for the financial services industry, said that there were up to 40 treaties affecting cross-border activities in the financial services industry that needed to be renegotiated. While there’s a high demand for those working at consultancy level to help navigate the new financial landscape, this may have an impact on general demand within the sector, particularly in the short term.

Freedom of Information

Meanwhile, EU leaders have also blocked an agreement on data rules that allow firms to keep information on their customers and the loss of access to the EU’s Internal Market Information system could create problems for contractors who rely on the ability to use data freely. There’s also no more automatic recognition of qualifications for professionals such as doctors, nurses, accountants, solicitors, architects, dentists, pharmacists, vets and engineers. Practitioners will now have to seek recognition from the member state they work in, which could mean renegotiating work assignments outside the UK.

Freedom of Movement

From 1 January 2021, the end of the free movement agreement means that EU nationals wishing to work in the UK are now subject to the same visa requirements as their non-EU counterparts. However, if any EU nationals took up residence in the UK by 31 December 2020, they will have the option to apply for Settled or Pre-Settled Status, under the EU Settlement Scheme by 30 June 2021.

From 1 January 2021, most EU nationals who are not eligible for Settled/Pre-Settled Status will require a work permit in order to work in the UK. In order to access the work permit visa route for EU national contractors, the hiring company will need to obtain a Sponsor Licence. The key route of entry for contractors will be the Skilled Worker route, a reciprocal arrangement that facilitates “short-term business trips and temporary secondments of highly-skilled employees”. A contractor would need a minimum amount of relevant specialist experience – usually around six years – in order to qualify as a skilled worker, while the offer of work must meet the following criteria:

  • The job offered must be at skill level RQF3 (equivalent to an A-level)
  • The worker must speak English
  • A salary of £25,600 or the going rate for the job (whichever is higher)
  • Salary can be reduced to a minimum of £20,480 if it’s a ‘shortage occupation’ or if the individual has a relevant PHD.
  • The permission to be in-country under the “contractual services” and “independent professional” rules will generally only last as long as the relevant client project, with a 12-month time limit.

The immigration rules generally only allow employment agencies (which includes employment businesses and umbrella companies) to apply for a Sponsor Licence for their own staff. This will mean that many agencies will need to rethink how they deploy UK contractors and consultants into EU states depending on their business model and sector. The IR35 reform, scheduled for April, will also need to be taken into consideration when drawing up a contract.

What can contractors do now?

  • Build their UK business network and contacts
  • Renegotiate or end long-term EU contracts
  • Ensure IR35 compliancy with the reforms due in April

Amaze Umbrella’s service gives you a fully compliant IR35 solution. Our service also offers benefits of employment that permanent staff receive as well as Perkbox* benefits, insurance cover and a seamless onboarding experience from our first-class customer service team. To speak to a member of the Amaze team see here or for information on the sectors to watch in 2021 see here.

*Perkbox services are available to contractors paying the qualifying service fee. Please contact us for information.

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