Written by Charlotte Fry

As another general election looms over the UK and Brexit draws ever closer, I'm sure you have started to think about what about what impact Brexit will have on recruitment agencies. More specifically, what the immediate impact a no deal Brexit will have on recruitment agencies and what you can do to mitigate any losses that may occur as a result of a no deal Brexit.

This article will tackle some of the issues that recruitment agencies may face as we stare down the barrel of Brexit with the aim of providing some (hopefully) useful insight regarding next steps, how you will be impacted and whether or not there is a silver lining.

How hard has the recruitment world been hit by Brexit so far?

According to a survey conducted by LinkedIn, 44% of HR professionals and recruiters are of the opinion that the UK is less attractive to EU candidates in its current climate. Brexit is already heavily effecting the UK recruitment industry with 40% of recruiters saying that the availability of talent has been hit hardest, followed by a soaring 36% of recruiters saying they felt that there was a reluctance of candidates to move to the UK.  

Will I need a new operating licence?

As it stands, the UK and EU require recruitment agencies to have different operating licences for those trading in the UK and the EU respectively and this is unlikely to change irrespective of Brexit. Equally, the UK government has reinforced that UK worker rights which currently operate under EU legislation will not be largely changed in the short term as a result of Brexit. This does not by any means indicate that the way the UK operates in relation to workers' rights will not change in future, but for now they appear to be safe. That being said, this may all change depending on which political party is elected to enter Downing Street!

What about those who are EU nationals and are already in employment within the UK?

The most likely pressing question for most recruitment agencies at the moment is what can I do to protect the employees I have placed in roles within the UK that are EU Nationals? The short answer to this question is to ensure that these employees have a sponsor within the UK for immigration purposes as their right to work in the UK may well be rescinded if they do not, post Brexit.

What about our contracts?

There are a few factors to consider;

  • What if Brexit causes a labour shortage and you have a contract that contractually binds you to a fixed cost for labour? This should be checked before entering in to any contractual agreements. It is worth considering what methods you could take to stop a fixed rate for labour continuing In light of labour shortages due to Brexit.

A remedy for this may be to have an exclusion clause inserted in to your contracts to state that if labour rates increase as a result of the UK withdrawing from the European Union, you can put your rates up too. For example, If you have placed contractors, this will be prevalent to business and to keeping these contractors placed. Remember, if they can get a better rate through someone else they are more than likely going to take the opportunity that pays more.

  • Look at your Service Level Agreements (SLA's). Brexit may well result in delays in deliveries of goods and you do not want to be caught out being in breach of contract if you do not adhere to said SLA's.
  • If your contract specifies a monetary arrangement, does it make mention of anything to do with exchange rates? For example, if you are paying contractors in a different currency to that in which your business normally operates will you end up out of pocket because of Brexit?
  • Are there any Brexit specific exclusion clauses in your contracts? If so, what do they say and how detrimental will this be to business? Does the clause give the other contracting party the right to frustrate the contract in light of a no deal Brexit or any other Brexit related reason?
  • Think about GDPR- as it stands we do not currently know what impact Brexit will have on GDPR however it is always worth thinking about who you are sharing your data with, how you are sharing it and what country they are in. We will provide more information on this as it happens.

Is there a silver lining?

Yes, not everything is doom and gloom. Let's remember the main focus point of the Brexit party was to bring British jobs back to British citizens. If you are a recruitment agency that has an EU base, you surely will be now inundated with EU nationals seeking to find work in within the EU and not the UK.

Additionally, if companies are left without skilled employees due to a shortfall in EU nationals applying for work in the UK, companies will seemingly be left with no choice but to provide these jobs to applicants in the UK. This would hopefully lead to training employees, higher wages for the newly trained employees and a stronger economy in turn. Also, there would be no relocation costs for the UK applicant opposed to an EU national applicant.

In turn, this will also lead to less work for recruitment agencies as they will not have to conduct the necessary checks on EU nationals such as right to work, thus saving time, money and resources.

Please note that the purpose of this article is to provide a summary of and our thoughts on Recruitment statutory rules and regulations. It does not contain a full analysis of the law nor does it constitute a legal opinion or advice by Lockton Companies LLP on the law discussed. The contents of this article should not be relied upon and you must take specific legal advice on any matter that relates to this. Lockton Companies LLP accepts no responsibility for loss occasioned to any person acting or refraining from acting as a result of the material contained in this article. No part of this article may be used, reproduced, stored in a retrieval