Brexit: doing business in Britain
By Helen Wong
Helen Wong assesses how Brexit has both positively and negatively affected overall business negotiations
For law firms, Brexit has been a welcome source of additional work: advising clients on the minefield of changes to Employment, Immigration, Intellectual Property, Commercial and various other laws.
For clients, Brexit has been less of a positive experience despite the autonomy from the European Union (EU) as many businesses have been impacted by the shortage of European workers due to the end of the free movement of people. The lower-skilled roles such as baggage handlers or hospitality have been heavily hit and previously these roles were filled by EU citizens. The Office for National Statistics (ONS) data in June 2022 shows more EU citizens left the UK than arrived.
Businesses have also been faced with disruption to trade exports to and from the EU. As commercial lawyers advising clients on allocation of risk, it is important to add Brexit clauses in commercial agreements to allocate risk and costs that may have escalated due to import controls, extra border checks and red tape given the free movement of goods is no longer frictionless anymore. As an aside, the force majeure clause is not readily applied to Brexit fallouts as Brexit has been negotiated for years, so not an unforeseen scenario.
Constitutional lawyers are faced with the conundrum of Northern Ireland which shares a land border with the Republic of Ireland, which is part of the EU. There have been in-depth negotiations for goods to be transported from Northern Ireland to the Republic of Ireland without checks but this, like many divorces, remains fraught with dispute and tension.
Wrapped around this geopolitical roller coaster, negotiations have been exacerbated and somewhat dwarfed by the global pandemic, the ongoing Ukraine-Russian war, rise in energy costs and now a recession. However, Brexit is still something all lawyers should consider for their clients and their own businesses.
The European Union (Withdrawal) Act 2018 came into effect on 31 December 2020 when the Brexit transition period ended. This act basically incorporated EU legislation into UK statute so the UK government could have time to consider each law and cut or retain each law as required.
There are 2417 EU laws. As of the date of this article, 2006 remains unchanged, 182 are amended, 196 are repealed and 33 are replaced. The key sectors which have been considered so far are fishing, transport, manufacturing, financial activities and public administration and defence.
The government has a dashboard advising what laws are unchanged, amended, repealed or replaced. Courts will need to consider whether they use decisions previously made in the European Court of Justice as points of reference.
Retained Law Bill 2022
This bill gives the UK Government the right to deal with the remainder of EU law not dealt with so far. If by 23 June 2026 the remaining EU laws are not preserved, then they will be revoked on 23 December 2023. This is a huge job for parliament to consider all these laws and the raft of domestic legislation will be extensive and there will be a need for lawyers to deal with these changes. The EU principles of proportionality, non-retroactivity, equivalence and effectiveness are no longer to be the overriding view.
The UK government has the autonomy to decide what laws work for the UK and stay and amend or delete those that don’t work with the desire to cut red tape and bureaucracy. Yet for 50 years, laws have become entrenched in the UK, so it is not such an easy exercise to execute.
For law firms, there will be more requirements to assist clients to interpret the future changes and the impacts on clients’ businesses. For laws which create unintended consequences, there are going to be interpretations to make and arguments to present to assist clients with their business strategies.
Starting a business
Deciding what to sell and what sector to be based in will be vital to determine whether a business survives post-Brexit. All businesses must have a USP (unique selling point) and a marketing strategy.
It is important always to review your contracts and analyse the risk-reward matrix. If there is risk, how do you mitigate it? A Brexit clause allocates risk to the parties so everyone knows who takes the hit, e.g. if there is a delay in supplies or an increase in the base costs of the raw materials can that additional cost be passed on? If it is not written into the contract, then no. So, it is worth considering your terms and conditions in detail.
? Finance/EU funding:
Is the business reliant on EU grants and funding? If so, that will stop so cash flow and funding is important to plan for. The interest rates are rising, so ensure you stress test your business plan and ensure you can pay for finance repayments.
Staffing up a business may be initially the founder, but as the business grows, employees are key. With the living wage rising and the talent pool reducing, consider where you can source your team from. Perhaps you may even consider becoming a sponsor and hiring outside of the EU using the work permit route. If that is a consideration, then consider whether the job is on the job shortage list.
? Goods / Supply Chain:
Businesses selling goods which are imported must have a backup plan in case there are delays in the supply chain – since Brexit, there have been more scenarios of delays, added paperwork to complete, tariffs to pay and red tape to overcome. Planning ahead to ensure sufficient stock lands in time for big events e.g. Black Friday or Christmas is vital for a business to survive.
Insurance policies are essential for any business to operate but come into the fore more so now – especially for business interruption, so it is worth reading the small print.
? Communication and PR:
Engaging with your team and customers will help carry the business if you need to ask for patience when goods may be delayed or understanding when upping pricing. People sell to people, so have a voice, use it and communicate.
Lasting impact of Brexit
Brexit is here to stay and will impact business within Britain, but there are other pressures on business such as rising costs of energy and raw materials, the increased living wage in a smaller employment pool and a recession.
It is an opportunity for lawyers to speak to their clients, to review the business plan and to plan for the worst eventuality (which ideally should be a lawyer’s forte). Only then can the wider risks be analysed and planned for.
There could also be opportunities such as international trade which will require legal assistance to help new trading relationships blossom on a secure foundation.
As the EU laws become assimilated or amended into domestic law, there will be more need for legal minds to apply these laws to businesses and advise accordingly. Likewise, it may give rise to more litigation if the unintended consequences arise from the mammoth task envisaged in the Retained Law (Revocation and Reform) Bill 2022.
Helen Wong, MBE is a senior consultant at Setfords Solicitors setfords.co.uk
Helen's book "Doing Business After Brexit" is available at Bloomsbury Proffesional