Government warns employers over Brexit transition countdown

Business secretary urges firms to prepare for changes, including to the process for hiring people from the EU, in less than three months

Businesses need to prepare now for the end of the Brexit transition period in January regardless of the outcome of ongoing negotiations, the government has warned employers. 

Business secretary Alok Sharma has urged firms to familiarise themselves with the actions they will need to take to prepare for when Brexit takes effect in earnest on 1 January 2021, when the UK will leave both the single market and the customs union.

Despite ongoing negotiations between the UK and Europe, the government has said some changes are already guaranteed – including to the way companies import and export goods, the process for hiring people from the EU and the way businesses provide services in EU markets.

As such, Sharma cautioned that the “vast majority” of actions businesses needed to take to prepare – including ensuring staff register for residency rights and preparing for customs procedures when trading with the EU – should be done now and will remain unchanged regardless of the outcome of negotiations.

“There will be no extension to the transition period, so there is no time to waste,” said Sharma, who announced he would be writing to 600,000 firms across the UK to remind them of the changes. “Businesses have a crucial role to play in ensuring a smooth transition, and we will be there to support them through this change every step of the way.”

However, research conducted by EY found that only 29 per cent of companies in the UK and around the world felt they had a ‘good understanding’ of the implications of the end of the transition period. More than a third (36 per cent) had a ‘moderate’ grasp of the changes, and a similar number (35 per cent) said their understanding was ‘poor’.

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The poll of 2,200 businesses – conducted in September, with UK-based firms accounting for more than a third of participants – also revealed that only 13 per cent felt prepared for the end of the transition period.

Gerwyn Davies, senior labour market adviser at the CIPD, said the combined impact of the pandemic and Brexit was taking a considerable toll on HR departments. "The short-term priorities must be to get good data on your existing workforce, familiarise yourself with the cost and administrative implications of the new immigration system and ensure that you have done all you can to educate workers about settled status," Davies said. 

Looking further ahead, Davies said employers likely to recruit skilled overseas workers in the next six months needed to prioritise obtaining a sponsorship licence, or else weigh up potential alternatives, including internal development or hiring more local applicants. "The current low levels of labour demand may give some employers some breathing space to carry out this assessment now before the economy recovers fully,” he said.

Seema Farazi, partner and UK immigration Brexit leader for EY, said it was critical for companies to keep staff informed on their Brexit plans, just as they would for any updates on how the pandemic was affecting business. It was critical for employers to communicate with staff about immigration changes, future Brexit policies and how remote working might be organised in future, given many had become more mobile and potentially moved countries as a result of the pandemic, she said.

"Because of the speed at which [travel] restrictions came on, people just took decisions to get to where they needed to be or to join their families abroad, and businesses were very sympathetic to that," Farazi said. "But it does create risk if you don't have that visibility on where staff physically are in the world and what changes will affect them come the end of the transition period."

She added that the Covid-19 outbreak had put pressure on Brexit-related administrative turnaround times. She cautioned that any actions a business needed to take were “not going to happen as quickly now as... before Covid because of backlogs or delays in application processing”, adding that a second or third wave “could push delays even further”.

To make sure businesses were prepared, the government said it would host a series of sector-specific webinars throughout October to remind them of the changes they needed to make. The webinars will cover areas such as visas, work permits and tariffs – as well as sector-specific information.