What’s in store for Contractors with Brexit (Part 1)

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Last month’s announcement by Theresa May that a general election is to be held on June 8th could be the starting gun for some much-needed clarity on what the UK’s future relationship with the EU will look like, and where contractors fit in.`

If the Prime Minister’s conservatives win a substantial majority, giving them an enhanced democratic mandate for Brexit, it may have the paradoxical effect of softening the EU’s negotiating stance, resulting in a compromise deal which minimises any damage to both sides.  The reason being that many within the EU are hoping that the UK will change its mind about Brexit.  A pre-referendum poll indicates 44% of contractors might want the same.  Reports last week suggest those contractors are even more likely to support calls for a second referendum if they work in IT – a sector that is ‘particularly negative’ about Brexit’s impact.

Deals, digital and divorce

But the EU’s belief is that we are more likely to U-turn or go for a ‘soft’ Brexit if the deal is highly detrimental to Britain.  That’s exactly what France’s new President Emmanuel Macron probably wants, given that he regards Brexit as a “crime”

Interestingly though, Brexit is not going to be front and centre of the political campaigning over the coming weeks.  Not at least if the business community gets its way.  In fact, the British Chambers of Commerce has put issues like digital connectivity on a par with Brexit.  The BCC says that like super-fast broadband and better mobile coverage, Brexit should be one of five priorities, not thee priority.  You might think that Contractors in IT would likely agree that connectivity is as important as the Continent but that does not seem to be the case.

Since the referendum result last June many British contractors working in the EU have voiced their concerns about residency status.  For many the opportunity to work in different countries is a major part of the appeal of contracting.  For the time being it is business as usual, but as the March 2019 divorce date closes in, end users in EU countries (and the agencies they use) will begin to take stock of their contractor resources.  At that time they will weigh up the benefits of using British contractors versus other EU nationals.

Imagining immigration, post-2019

Whatever the outcome of the negotiations between the UK and the EU, Brexit won’t mean the end of contracting opportunities in the EU.  Much will depend on what sort of trade deal is agreed and how freedom of movement is interwoven with that, if at all. Concrete details are scarce at present but Mrs May’s letter to European Council President Donald Tusk notifying him of the UK’s intention to leave the EU provides a few high-level clues as to what the UK’s future relationship with the EU will look like.

The letter stresses the need for liberal, democratic values.  This means Brexit may not mean an outright rejection of globalisation and a retreat from the world, as some have suggested.  Indeed, the foreign secretary Boris Johnson recently suggested that freedom of movement might continue beyond the March 2019 cut-off date.  This is something else contractors will likely welcome, and not just those in IT.

However, open borders without a time limit isn’t really the sure bet it once was.  Last week Mrs may defied the expectations that she would scrap the Tories; discredited promise to reduce immigration to the “tens of thousands” by saying that she too will get it down to under 100,000.  This all begs a number of questions, the answers to which will affect contractors.  What kind of immigration system will the UK end up with? What will happen with work permits? And to what extent will EU states reciprocate whatever we put in place

Mrs May has talked about the UK and EU remaining “committed partners” and the UK being “your closest friend and neighbour.”  If she’s received well her comments suggest that the UK’s relationship with the EU will not be equivalent to most other non-EU countries.  They also seem to suggest that while we won’t be fully integrated into the EU’s freedom of movement rules there might be some kind of halfway house arrangement.

One option for the UK would be to introduce an immigration system like the KMR in the Netherlands.  The KMR is the fastest and most flexible immigration regime in the EU and is a model we could look closely at.  Such a system, if reciprocated by the EU (and it would likely have to be symmetrical) would allow the UK government some measure of control but not be a significant bureaucratic impediment to highly skilled contractors in areas such as IT, operating relatively freely across Europe.  What it probably would do is restrict the flow of unskilled migration, which has been so politically contentious.

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