Home Features Leaving the European Union: How Might Brexit Affect Contractors in the UK?

Leaving the European Union: How Might Brexit Affect Contractors in the UK?

by Brian Sims

With 29 March 2019 edging ever closer and the politicians still arguing their myriad points in the House of Commons, everyone is waiting with baited breath to see what the effects of the decision to leave the European Union (EU) will be, both in the short and longer terms. For now, uncertainty reigns, asserts Richard Hepburn, with many contractors across the nation – security-focused individuals among them – speculating about what could well be potentially far-reaching implications.

If you’re a security contractor in the UK, you may be wondering whether Brexit will have a positive or negative impact on your host company, your own role and, indeed, how it will affect your pay. If so, believe me you’re not the only one. Given that the full implications of Brexit have yet to come to fruition, contractors in all sectors – including the security world – remain unsure of what really awaits them. For now, the job market appears to still be going strong, but this may not always be the case as we venture into the unknown.

What, then, might Brexit look like for freelance workers and contractors alike?

Working in Europe

UK contractors may find it more difficult to work in Europe post-Brexit. Around 45,000 UK contractors live and pay taxes in Britain, but work in mainland Europe. Others work on short-term contracts or commute to mainland Europe. Many of these workers worry that they’ll lose the opportunity to work outside the UK. After all, they’re eligible to work in Europe only because Britain is presently part of the EU.

It will also be easier for businesses in Europe to hire from other European Union countries, which means that many contractors working abroad may have to return home.

However, it’s also important to remember that, when we finally leave the EU, there will be a transitional period. This means that businesses and individuals alike will have the chance to adjust and prepare ahead of 31 December 2020, the date at which this transition period ends. Free movement will continue during this time, and contractors will still be able to complete jobs in Europe.

Due to the uncertainty Brexit has caused, it’s ultimately unclear how contractors will actually be affected. At the moment, employers don’t know what Brexit really means, so businesses don’t know if they’re going to be in the Single Market or not. It’s also an unknown in terms of which deals will be made between the UK and Europe and how those deals will impact tariffs relating to goods and services.

Britain’s self-employed contributed £271 billion to the economy in 2017. This figure clearly showcases the importance of such an industry to the UK. So, while there’s still uncertainty, the work performed by freelancers and contract workers isn’t likely to be diminished.

Hiring contractors

Given that employers don’t know what will happen post-Brexit, there will likely be a delay when it comes to investing in people and businesses until the uncertainty clears up. This could affect hiring decisions, from eliminating some contractor positions altogether to restricting the amount of time contractors can work before they’re replaced by permanent employees.

There’s also the possibility that businesses will choose to move out of the UK, which could cut down the number of contractor jobs available. For instance, the US already invests 25% of its EU technology spend in Ireland, a country attractive to massive companies like Google, Apple and Amazon. Other companies may follow suit and decide to leave the UK to set up shop elsewhere within the EU. Even if they choose to stay, they could eventually reduce their facilities in the UK, which would then lead to a loss of jobs.

On a more positive note, the UK and the EU have agreed that workers from EU countries will still enjoy the same rights until 2020. However, this hasn’t stopped a large number of skilled, experienced and educated EU citizens from leaving the UK. As this talent migrates back to their home countries, skills gaps are appearing in every industry. The need to address them will probably facilitate a rise in contractor jobs.

In addition, employers may very well decide to hold off on hiring permanent staff until they’re clear about how Brexit will affect them. In the meantime, new projects and system changes still need to be actioned, which is where contractors come in. This doesn’t mean contractors will be out of a job after March 2019. The full impact of Brexit will not be known for months – perhaps even years – and businesses are likely to continue hiring contractors.

What about a no-deal Brexit?

At the time of writing, it appears that the possibility of a no-deal Brexit has been taken off the table by the Prime Minister Theresa May. However, that hasn’t stopped many contractors from worrying what would happen if we, somehow, end up having a hard Brexit and what the impact of such a scenario would be.

Leaving the EU with no deal would have significant implications on the movement of both people and services, which would affect contractors and freelancers working in the UK and Europe.

If the Government and the EU cannot reach an agreement, the 21-month transition period would not occur, severely impacting tariffs on trade and offering even more uncertainty over the rights of Brits in the EU and of EU nationals in the UK. It’s also likely that contractors could be caught in the first budget cuts. To make matters worse, some companies have threatened to move operations out of the UK if the Government is unable to reach a suitable deal with the mandarins in Brussels.

Richard Hepburn

Richard Hepburn

With a no-deal Brexit, therefore, British workers wouldn’t be able to just relocate to new places in Europe, as they would immediately lose freedom of movement. This freedom is crucial for contractors, which is why many don’t want to see a hard Brexit.

With no trade agreements in place, the UK would have to make use of the World Trade Organisation (WTO) rules until new trade deals could be struck. However, WTO regulations don’t cover trade of services in the same way that the EU rules do.

The uncertainty and ambiguity surrounding Brexit make it very difficult to predict the future of UK contracting. There’s no denying the negative aspects surrounding the country’s departure from the EU. However, there’s also some good news for contractors.

Even though it remains impossible to know for sure what might actually happen, it’s important to consider that UK contractors will likely continue to have opportunities presented to them going forward.

Richard Hepburn is Operations Manager at Gorilla Accounting

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