Preparing your business for no deal
The default legal position as set by the Article 50 process is that unless the Prime Minister requests an extension from the EU the UK will leave the EU on 31 October 2019.
This, alongside the enhanced commitment the new Government has shown to leaving the EU on October 31, means that the UK falling out on no deal terms is a likely outcome which our members must take seriously and prepare for.
In order to do this techUK has produced information and guidance to help our members get ready.
Please see below five key areas we believe tech businesses should be aware of as well as links to further guidance and relevant support.
For any further questions or requests please contact Neil Ross who leads on techUK’s Brexit work.
Free flow of personal data: If the UK leaves the EU without an agreement then the UK’s membership of the EU’s common data protection framework will end as of 23.00GMT on 31 October, as a result the UK will become a third country when it comes to data protection.
In this case, under the rules set out in GDPR, companies which wish to transfer personal data to the UK from the EEA will need to ensure ‘appropriate safeguards’ are put in place to provide assurances that these transfers meet data protection standards. As a result, UK business which receive data from other companies in the EEA or wish to enter into business that requires exchanges of data between the UK and the EEA will need to review their business contracts to ensure that the recognised ‘appropriate safeguards’ are included.
UK companies will therefore need to check their existing contracts and review new contracts/ bids to ensure that these safeguards are included and that they are sufficiently robust to reassure potential business partners that they will not fall foul of data protection authorities. Failing to do so will mean that UK tech firms will be at a competitive disadvantage to companies based in the EEA.
The end of free movement and the impact on recruitment: The end of freedom of movement will have a large impact on the UK tech sector which already suffers from a significant skills gap. To avoid further disruption to hiring and existing staffing UK tech companies will need to raise awareness among EU staff of the EU Settlement scheme and become familiar with UK government guidance on the hiring of EU nationals before and after a potential no deal exit.
Importing and exporting goods/ impact on supply chains: Importing and exporting goods after a no deal exit will become significantly harder as UK imports and exports are subject to tariffs and checks on goods when the UK leaves the EU.
UK business should expect to experience significant changes with goods exports required to go through additional processes or be denied entry into the EU if the right documentation Is not completed. UK companies will have to ensure that they are obtain a European Union registration and identification (EORI) number and comply with necessary regulations on controlled goods such as chemical imports and exports. Firms should also be aware that in the instance of disruption their goods may be delayed as essential products such as food and medicine are prioritised. Therefore, companies should review their supply chains and where repair and maintenance components are supplied from to factor in possible delays or make alternative arrangements.
Mobility of workers: The temporary movement of UK nationals to the EU to provide business functions, so called mode 4 of supply, will become much harder for UK nationals in the event of no deal. If the UK leaves on no deal the rules for mode 4 of supply will revert to WTO terms. The EU’s WTO schedule relating to mode 4 of supply restricts the maximum stay of a third country national to only three months in any 12 or for the duration of the business contract, whichever is the shortest. That means offering a contract longer than three months from the UK to an EU client would be increasingly difficult to service without establishing an in-market business presence following no deal.
UK nationals travelling to the EU for work will face immediate disruption to intra-company transfers and the provision of ‘fly-in-flyout’ services. Businesses which regularly send UK staff to EU for work or provide ‘fly in-flyout’ services as part of their business model should begin to assess what impact respective Member State third-country immigration rules could have on their business and whether they will have to begin establishing a business presence in key markets to ensure that their business model remains viable.
Meeting business regulations: After a no deal exit the supply of services directly between UK and EU firms could face disruption. So called mode 1 of supply, where services are exchanged directly with no physical presence of staff/ business presence will vary depending on domestic rules. Most EU member-states make a commercial presence or establishment a condition of market access for a variety of services. For legal services some states, including Belgium and Cyprus, place nationality-based conditions (Swiss or EEA) on representation in domestic courts and membership of the domestic bar.
In the event of a no deal Brexit member companies will have to check where business is being delivered and the requirements that will be placed on them in the event of no deal. Clarity on the recognition of professional qualifications will be key as well as any specific business regulations that must be complied with. UK companies will need to review all of this in the event of no deal or face disruption and a loss of competitiveness when compared to rivals based in the EEA.
Further techUK guidance on preparing your business for no deal: here
Explaining data adequacy, personal data transfers to the EEA under no deal and what the UK Government should do in the event of no deal on data: here
The ICO’s guidance on no deal: here
The UK Government’s technical notices to help business and UK citizens prepare for no deal: here
techUK’s summary of no deal notices: here