The UK is scheduled to leave the European Union at 11pm UK time on Friday 29th March 2019, though a European Court has ruled that the UK can decide to stop the process. Alternatively the departure date can be extended if all 28 EU Members agree. Much has been made of the difficulties for businesses in planning around the uncertainty. This article focusses on the top five things businesses can do in the little time that is left.
The draft EU Withdrawal Agreement proposes that EU nationals living in the UK prior to 29th March 2019 will be permitted to remain but that they must make an application to evidence their right to live and work in the UK beyond 30 June 2021. There are exceptions – for example Irish citizens or people with indefinite leave to remain do not have to apply. The UK has an agreement in place with Norway, Iceland, Liechtenstein, and a separate agreement with Switzerland.
Employers need to identify the nationality of their employees, when they entered the UK and determine the rules that apply to each of them. Employers with British citizens working in the EU will need to consider their status and rights to work. Consider long term recruitment and succession planning, proposed secondments, rotations and consider what support you will provide to your existing and prospective employees.
Businesses that import and export to the EU will be affected. Other businesses may not trade directly with the EU but trade with businesses that do. All businesses, whether involved in goods or services must therefore carry out an audit of their supply chains to determine how trade and movement of goods could impact on them.
Consider contingencies such as additional warehousing. Consult the government’s technical notices. Apply for Authorised Economic Operator status. Assess the possible impact on cash flow of VAT charges and tariffs at the border.
Existing contracts should be reviewed. Most well-drafted contracts contain force majeure clauses or flexibility to account for unforeseen events but it is better to expressly address foreseeable events.
Consider possible impact on profitability and performance of your contacts and what the consequences might be for breach. If you are dependent upon the supply of goods or services from another business so you can meet your obligations to others find out if your supplier is prepared and what impact your non-performance could have on your customers.
- Regulation, compliance and product labelling
Most EU directives on matters such as compliance and product labelling have been incorporated into UK law. EU regulations will continue to apply until such time as the UK introduces new laws. Certain changes will be necessary immediately however, for example use of the term ‘EU’ in origin labelling would no longer be correct for food or ingredients from the UK.
Consult the Government’s Technical Notices. Identify what regulations apply to your business, how they might change and take steps to address them in good time bearing in mind that goods being produced now might be sold post-Brexit.
- Prepare for the unexpected
Despite a referendum, a subsequent General Election and MPs voting by a majority of 384 to trigger Article 50 to leave the EU on 1 February 2017 and the date for withdrawal being fixed in statute for 29th March 2019 there are still calls from some quarters for the UK’s withdrawal from the EU to be delayed or cancelled. Although the Conservative and Labour parties stood on manifestos pledging to leave the EU in the last election indications are that the majority of MPs in Parliament want Britain to remain in the EU contrary to the wishes of the electorate.
The extent of the yellow vest protests in France and economic chaos in other EU countries haven’t been widely reported in the UK but businesses should consider the risk of civil disobedience and a snap General Election if Brexit does not take place. A change of Government could suddenly shift the course of Brexit as well as the general economic and political climate of the country.
For legal advice on how your business may be impacted when the UK leaves the European Union or to review your commercial contracts, get in touch with Farleys commercial and corporate solicitors on 0845 287 0939 or email us.