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Despite the pandemic continuing to cause worry around the world, the UK government is still ploughing ahead with their plans for Brexit. Boris Johnson is pushing ahead with negotiations, and the process adds more uncertainty to an already worrying time for business owners. But just because we are in the midst of a pandemic, does not mean that other things stop, and as a business owner you should be planning for the impact of Brexit on your business. If you are not sure what that looks like yet, you are not alone – but here are a few of the areas you should be looking at.
When it comes to payroll, it might seem like there is no real impact from Brexit – but this is far from the truth. In fact, there are three big areas in which payroll departments will see changes when Brexit goes through:
Data Protection: Let’s be honest, data protection has been a bit of a waking nightmare for most payroll staff since GDPR came into play. If you were organised, then you should have all of your ducks in a row on that one. But Brexit throws a spanner in the works – because once we have left the EU, it will be up to the European Commission whether it grants the UK an ‘Adequacy Decision’ to transfer data around the region when the country is no longer an EU member. In theory, this decision should be ‘yes’, and everything should be OK. But we know not everything with Brexit has gone to plan, and if the answer is ‘no’, then transferring data is about to become administratively burdensome for employers, especially if you are a global company exchanging data across borders. In short – there might be a lot of extra paperwork coming your way.
Payment Processing: The payroll department’s job is to deal with money – in fact, the definition is ‘the function of a business paying its employees’. And when it comes to moving money around, being a member of the Single Euro Payments Area (or SEPA for short) makes this easy. SEPA is a body made up of EU member states, and their job is to streamline the sending and receiving of payment across SEPA regions – so any payments made to and from other European countries are processed the same way as UK payments. But if we are not in the EU, then we may not continue to be a member of SEPA, which will cause all sorts of problems for payroll providers. It is one of the big question marks over the Brexit deal, and something payroll departments everywhere will be keeping an eye on.
Employment Law: Saying that, payroll is not just money. The decisions around the money are made up of tons of other HR matters, like holiday pay, maternity pay and so on. And the rulebook we use to determine each one of those pay scales? The EU directives on employment law. Now, these laws have been great, but freedom from those EU directives means the British government could decide to revisit some of those laws and make reforms wherever they feel like it. Or not. This could be a good thing, or a bad thing, depending on your position. Continuing to abide by these directives would be the simpler choice, and make life easier for everyone, but there is no telling what changes could come into play once we are no longer in the EU, and how that would impact payroll.
Many of the decisions that could affect payroll in Brexit have yet to be made, which means at the moment the best we can do is make educated guesses. So, for the moment, payroll departments everywhere are watching the progress with their fingers crossed.
Changes to Employment
At the moment, as members of the EU, citizens from any EU state are legally allowed to work in the UK, as long as they can provide proof of their right to work (usually a passport or national identity card). So many businesses have used this to hire talent from across the EU, building their businesses on a diverse employee base. From the 30th June 2021, that will not be the case. So, businesses need to be considering what Brexit could mean for their employees who are EU nationals, how they can be supported through the transition, and what needs to happen so that they and their families can continue to live and work in the UK. There will also be questions raised around how UK businesses can employ EU nationals in the future, and what that might look like. Early research suggests that most businesses have not been deterred from hiring EU nationals but will need to carefully consider the preparations they need to make in a post-Brexit Britain.
There are also, as we mentioned before, a number of our current employment laws and HR laws that come from EU directives. Some of these we have already adopted into UK legislation, but others we haven’t, and the government may well decide to restructure these laws in the future. This means we may see a departure from the laws we have known for so long, particularly around things like workforce planning, pay scales, shared services, recruitment and more.
Of course, much of this is still projection, or educated guesswork. A lot hangs on whether or not a deal is agreed before the withdrawal date, as this deal will lay out many guidelines for our ongoing relationship with the EU. For now, our best advice is to keep an eye on the news and do your best to have a contingency plan in place for if we end up in the worst-case-scenario – exiting the EU without a deal.
If you need help putting this plan together, projecting your finances, or preparing for the future, we would be happy to help. Just email firstname.lastname@example.org or call us on 01249 691360.
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