What Does Brexit Mean for Recruitment Businesses?
One of the biggest issues for recruiters is ensuring that they have the same access to talent to stay competitive.
There are three threads to this:
- the loss of freedom of movement of workers;
- enticing people to come and work in the UK; and
- engaging and incentivising UK workers.
However, there is also an opportunity to use contracts and standard terms of business to protect the talent pool and ensure fees are paid.
More Restrictive Movement of Workers
EU citizens can currently work in the UK (and UK citizens can work in EU countries) without the need for an additional visa or clearance (this so-called “freedom of movement of people” is one of the “four freedoms” which underpins the EU).
The current EU-market provides a wide candidate market and skills offering without concerns over “right to work” and immigration status.
It is expected that freedom of movement will change after Brexit, so that visas or other immigration documents will be necessary. This would mean a shake-up of the immigration rules and the Home Office preparing for an increase in applications for visas giving individuals the right to work in the UK.
Recruiters may wish to talk to clients about obtaining sponsorship licenses (or exploring other visa options depending on the type of vacancy and industry they are in) if they don’t already have one, so that this is in place ready for Brexit.
Recruiters who currently supply services into mainland Europe should consider the pros and cons of creating legal entities/a legal entity elsewhere in mainland Europe.
The UK has already seen challenges with skills shortages and the need to bring in skilled workers from abroad to fulfil roles (see our Hot Response on NHS workers).
Forward-planning now, in case there is a shortage of skilled workers in your target industries, is advisable. Upskilling your own existing workforce, and/or supporting clients in doing the same, might be one way to plug the gaps.
Both recruiters and other businesses could also consider benefits and packages to make vacancies more appealing so that EU citizens are still incentivised to come and work in the UK.
In terms of contracts, businesses should take a prudent approach, making sure that they both understand their own recruitment business and existing contracts as well as keeping up to date with developments.
You can better protect your business from the changes now by updating your standard terms. We would recommend that this includes clarity around:
- which party will be picking up the cost of any visa applications and expenses;
- ensuring that the business cannot be held liable for any costs/losses in the event a hire falls through because a candidate does not/cannot get a “right to work”.
As discussed above, a worker and skills shortage (due to a reduced pool of workers from the EU) is widely anticipated. It is therefore important to ensure that your business’ talent pool and fee structure is secured with clients.
One way to help achieve this is to ensure ‘ownership’ of candidates/workers for a period from introduction, as well as having appropriate transfer and secondary introduction fees in place with clear charging and rebate structures.
Consider changing models with clients to work in retained or preferred partnership arrangements.
If clients are based overseas, consider if your contract can protect you from currency fluctuations so that you can continue to rely on its income stream.
Because recruitment is a personal data heavy sector, always have “data protection” in mind.
The UK government hopes to get approval from the EU for its ‘Adequacy+’ model of data protection, so that businesses may continue to share data as if they were still in the EU. Assuming this is achieved, recruitment businesses will need to ensure that they have:
- a grasp on their data processing arrangements;
- appropriate privacy documentation and training in place; and
- appropriate contracts in place which protect personal data.
If Adequacy+ is not approved, recruitment businesses will need to move quickly to ensure that they can still move data across borders legitimately.
You Know Who to Call
As you know, HRC Law’s lawyers are specialists in dealing with the recruitment industry, with many years’ experience in this sector.
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If you need help with any recruitment-related legal issue, you know where we are.
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Graham Hansen can help with wider commercial and contractual issues including Brexit, data protection and establishing subsidiaries. You can contact Graham on T: 0161 358 0552 or at E: firstname.lastname@example.org.
October 2018: This bulletin contains general overview information only. It does not constitute, and should not be relied upon, as legal advice. You should consult a suitably qualified lawyer on any specific legal problem or matter.