BREXIT – What it Means for Small Business and Contractors in General

An advantage for employers using contractors is the flexibility they offer. Workers can be taken on at short notice to meet urgent demands but, equally, their services can be dispensed with easily in difficult times.

The recent referendum vote to leave the EU, therefore, may give mixed feelings as to whether greater opportunities or increased dangers lie ahead.

BREXITPeriod of Uncertainty

All businesses like certainty because it gives them confidence to invest and plan. However, uncertainty is likely to last years until Britain leaves and even beyond that, which will not help decision making. It has been evident in the lead-up to the referendum when decisions have reportedly been put on hold and, since then, with stock market volatility and a falling exchange rate.

This uncertainty will continue to some degree until negotiations to leave the EU are complete and the resulting agreement is clear. Beyond that, there will be a need to negotiate trade agreements with other countries.

Although this uncertainty may cause projects to be delayed or cancelled, reducing employment opportunities, it may create openings for contractors. Companies may be reluctant to hire full-time employees until they know how things stand and instead take on short-term freelancers to manage risk better.

The EU and Beyond

Our relationship with the EU will certainly change but the nature of it will not be clear for some time. However, some possibilities and effects can be identified.

  1. Free movement of labour is likely to be more restricted. That will affect contractors working in EU countries, who may need work permits and visas. Overseas contractors working in the UK may have to satisfy a points-based immigration system, possibly resulting in less competition here and rates going up as a result. This may, in turn, lessen the appetite for using contractors.

    Overall, the market is likely to be less flexible and EU-based businesses will have added administrative challenges when taking on UK Nevertheless, opportunities remain in other countries outside the EU, such as Switzerland where there are skills shortages.

  2. EU employment laws, generally viewed as burdensome for businesses and restrictive to free trade, may no longer apply to the UK. This means the Agency Workers Regulations and similar legislation could be withdrawn although this depends on the agreed EU trade deal.

    These laws could be replaced, although hopefully by something that will encourage a flexible labour market in uncertain times.

  3. New trade agreements will have to be agreed with countries other than the EU. These should be more relevant to the UK rather than covering the needs of 28 diverse countries and give opportunities in markets that are expanding faster than the EU.

Challenges and Opportunities

It’s hoped the volatility experienced in the aftermath of the referendum will calm and that, although there are challenges ahead, these will be outweighed by new opportunities. There is still the possibility of prolonged inertia caused by the election of a new prime minister, a possible general election and even a second referendum. However, contractors are used to working in challenging conditions and generally benefit through their flexibility.

 

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