In June 2016, the United Kingdom (UK) voted to leave the European Union (EU). On March 29, 2017, the UK officially invoked article 50, a clause in the EU’s Lisbon Treaty that outlines the steps to be taken by a country seeking to leave the EU voluntarily, kicking off a two-year countdown to this departure, which is widely referred to as Brexit.
“The final Brexit deal between the EU and Britain is yet to be completed and as such many international and multinational companies are in a ‘wait and see’ mode,” said Damon Ward, Lexicon® Relocation EMEA Managing Director.
As we quickly approach the one-year mark before the official exit, much is still unknown, both politically and economically, about the impact of this decision.
Last month, Lexicon Relocation joined the RES Forum, an independent community for international human resources and mobility professionals, at its first RES Connect event in Berlin, Germany. The event focused on creating an open dialog between global mobility professionals while sharing information about the most important topics in the industry, including Brexit.
What we learned
While the outcome of Brexit is wildly speculated, it is still vastly unknown how it will affect our industry, transferees living in the UK and EU as we know it. At RES Connect, industry experts shared their thoughts and ideas about this important topic. Although experts cannot confidently say exactly what the ramifications will be, it is clear the change will have a ripple effect throughout the countries, and now is the time to begin planning how this may affect your transferees and assignees in the UK and the EU.
When it comes to Brexit, Dr. Sven Mossler, Head of Brexit Unit for the Foreign Federal Trade Office in Germany, advised, “Be prepared for the worst and hope for the best.”
While negotiations have yielded some agreement between the UK and the EU on allowing residents to obtain permanent resident status, Dr. Mosser warned that those deals could fall through if the UK moves toward a “hard Brexit,” which would prioritize giving Britain full control over its borders and likely lead to a total cut off without negotiated trade and immigration agreements.
Where to start
Slowdowns, shortages and stoppages on immigration, cross-border movement and global mobility processes have all been mentioned in the media, but there is no solid information that these will occur. However, with so much uncertainty, it is a good idea to be prepared for anything with a plan in place on how your company will handle these situations.
“While some companies have contingency plans to open new centers in cities like Dublin and Frankfurt, the anticipated mass exodus of jobs from the UK, particularly in the financial sector, has not materialized as yet,” said Mark Burchell President of Suddath's international division. “No doubt the UK market has seen a slow-down in inbound mobility since the vote, however in the short- to medium-term, London is still going to be the financial capital of the world. Ultimately, it will be the final EU deal that will decide the mid- to long-term impact of Brexit on mobility.”
Companies can start by having employees answer four questions in order to determine how they will be impacted by Brexit.
1. How long have I lived in the UK/EU?
2. Was this time spent with one company or several?
3. How long do I intent to stay in the UK/EU?
4. Am I eligible for permanent residency or citizenship?What is the status of my family members?
How global companies are preparing
One well known tech firm is taking a proactive approach by establishing a working protocol and workflow for resident employees to obtain permanent resident status or citizenship.
“In order to avoid the inevitable strain these immigration matters have on HR, we decided to create a simple flow chart and resource to help our employees with the [permanent resident and/or citizenship] process,” said an employee of the firm.
The best way to combat this stress on HR is to establish an easy-to-use guide for employees to identify and locate the personal documents required to become a permanent resident or citizen and provide those forms or tell employees where they can obtain the documents.
The more time and information your employees have, the better prepared they will be for the consequences of Brexit.
Other firms are taking a close look at transportation and the movement of goods across borders.
“Policy makers [need to] understand the impact it would have on both sides if we return to a system of hard borders,” said Paul Bernardt, Managing Director, Harmony Relocation Network. “If transport stands still or is slow, or has too many bottlenecks, it has an inevitable impact on the entire supply chain, with cost increases for waiting times, the need to keep larger safety supplies for production, bureaucracy and general admin[istration] cost and so on, [increases].”
He advises global mobility professionals to be prepared for additional customs checks, heightened border control and high levels of bureaucracy.
Additional documentation or new requirements may mean companies will need to prepare more lead time for shipments. There is also heightened potential for extended transit times and potential delays, which can lead to additional costs in other areas. Some companies are responding to these unknowns by treating all incoming EU and UK employees and their goods as third-party nationals by preparing their documentation (including immigration) as though they were moving from outside the EU.
The overall impact on organizations will reach far beyond global mobility. Dr. Mossler encourages all companies to take a proactive approach by keeping Brexit and the developing changes in mind. Global mobility professionals can do this by approaching senior management with the anticipated changes and planning an execution strategy. Additionally, partnering with a global mobility expert like Lexicon Relocation to verify your company is up-to-date with the latest changes and how they impact your employees.
For more information about how your business can prepare for Brexit, please contact our UK team.