Brexit: It’s affecting you already
Your trading contracts; your staff’s employment rights; future prices – all may already be affected by Brexit. So start planning nowMatt Scott
Brexit. Love it or hate it, the result of the EU referendum is going to change the way you do business.
Whether it’s handling employment contracts for EU nationals, or once again being allowed to sell bananas by the pound, Britain leaving the EU will have a big impact on your organisation.
Legal expert Chaman Salhan, founder of 2ndOpinionNow, says that the scale of the changes on the horizon means managers need to start planning now, even though the date of the country’s departure from the EU hasn’t been decided.
“The reality is that Brexit has massive implications in numerous legal areas, and businesses need to start planning now for potential changes,” he says. “A lot of people may think that’s quite peculiar – why would you start planning now when you don’t know what you’re going to be left with? But the reality is that businesses trading overseas could end up with a huge problem if they do not start their preparations early enough.”
A recent CMI survey of 1,065 managers found management teams lacked faith in the ability of their senior executives to navigate a post-referendum marketplace.
Nearly half (48%) said they lacked confidence that their leaders could lead their organisations in a Britain removed from the EU. So managers need to act now to steady the ship and make sure their business has measures in place to protect their interests, both at home and on the continent.
One of the key areas for concern, Salhan says, is how changes in legislation and trading tariffs could affect existing contracts with parties in other EU member states.
“As you’ll have priced contracts on the basis of existing regulations, they won’t take into account any changes that may occur and any cost or time implications imposed in the wake of Brexit,” Salhan says. “So, if you sign a five-year deal today at a certain price, that may be fine now, but, in a few years, the deal may not be possible at the agreed price.”
Changes in regulations, such as restrictions on the number of imports into a country, or trading tariffs, could increase the cost of honouring a contract, which could make a deal unprofitable.
Salhan says this could, ultimately, leave firms in a position where they are losing money each time they honour a contract.
“You won’t necessarily be able to turn around and say you can’t honour the deal anymore, because the other party could argue that you can – you just have to pay more,” he says. “That could leave you in a position, as a business, where you have to provide things at a loss. So people need to be building clauses into their contractual agreements that allow them to renegotiate, given the changes coming in as a result of Brexit.”
Protect your staff
The other legal challenge facing businesses in the wake of the referendum is the right (or otherwise) of EU nationals to remain and work in the UK.
Salhan says employers need to start thinking about who is going to be responsible for obtaining work permits for staff from the EU. They must also protect themselves from the risk that key members of staff may no longer have the right to work in the UK once Britain has finally left the EU.
“Businesses could look into insurance policies for senior staff who may be asked to leave the country, to cover the legal costs associated with defending their right to work in the UK,” he says. “Lots of sectors are also reliant on lower-level foreign workers, and they need to be prepared for the fact that these workers may no longer be available should measures be introduced allowing only skilled workers to have the right to work in the UK.
“Some organisations may be thinking about getting rid of foreign workers and keeping only UK people. The problem is that you may be breaching your contract with your employee, as you cannot discriminate against someone because they are an EU national. But businesses must start thinking about how they’ll structure themselves post-Brexit.”
And, with Theresa May saying article 50 will be triggered by the end of March 2017, businesses cannot afford to put their heads in the sand and wait until the Brexit dust has settled.
Companies need to start putting changes in place now, before it’s too late.
Looking for legal advice on how to deal with the challenges of Brexit? Contact Chaman Salhan and the 2ndOpinionNow team on 020 7936 3177 or visit www.2ndopinionnow.co.uk