Julie Duane, Solicitor Advocate at CG Professional.
The main question plaguing the country in today’s climate is whether there is going to be a deal or no deal in terms of Brexit. D-day is fast approaching and the consequences of exiting the European Union without a deal could have unexpected consequences for organisations.
What happens if there is a deal?
If the TFEU can execute a withdrawal agreement by the exit day the consequences are likely to include a post Brexit transition period from the exit day until the 31 December 2020. Whist this can be extended for up to one or two years by a decision of the Joint Committee, it is yet to be determined whether a withdrawal agreement can be reached in the first instance. Upon the UK’s departure from the EU, formal negotiations will then ensue regarding the future relationship between the UK and the EU as dictated by Article 218 of the TFEU.
At this juncture, it is anticipated that most EU law will continue to apply in the UK and vice versa and it is anticipated that the UK will continue to participate in the EU customs union and single market. However, at the conclusion of the transition period, it is intended that the withdrawal agreement will come into effect in order to avoid short term disruption. The withdrawal agreement will also seek to preserve many of the existing rights of UK citizens who are resident in the EU member state and vice versa. If an agreement is not reached before D-day it is anticipated that the withdrawal agreement backstop would come into effect thereby establishing a single UK/EU customs territory.
What happens if there is a no-deal?
In the event that the UK and EU are unable to reach an agreement by D-day and the Article 50 withdrawal notice is not revoked, then it is anticipated that the UK will still depart from the EU, but without an agreement to govern the terms of the withdrawal and without any transition period. EU law will then suddenly stop applying to the UK on exit day.
Whilst Brexit legislation will secure some degree of continuity, this can be problematic as we will not necessarily have alternate legislation in place to dictate the terms and conditions. As a result, the consequences of a no-deal scenario could result in immediate changes to the UK law where it currently relies on EU reciprocity. If there is no European Commission decision at the point of exit the transfer of personal data from the EU to the UK and will require an alternative legal argument and therefore further drafting may be required by lawyers in this regard.
It is also anticipated that the UK would no longer be part of the single market and trade union one of the Four Freedoms i.e. Free Movement of Services, Free Movement of People and Free Movement of Goods and as such there will be no longer be mutual recognition of the professional qualifications and regulatory frameworks and therefore recruitment in this regard could be impeded for business and organisations moving forward.
In relation to goods and services this will take place under the EU rules that apply to non-EU countries and any applicable national laws and national practices within the WTO (World Trade Organisation) as a result this could incur further tariffs and delays at customs in relation to a variety of goods and services. Unfortunately, the UK would not be able to rely on Article XXIV of the GATT to remain tariff-free trade with the EU in a no-deal Brexit scenario. If no such agreements are initiated by that date the WTO rules and WTO schedules will take precedence in relation to the default position on this.
What should employers consider?
In terms of employers, they may wish to consider the following in the event of a no-deal Brexit:
- Having a discussion with their EU employees regarding an application for settled or pre-settled status to continue working in the UK. It may also be useful to direct them to the gov.uk website for further information https://www.gov.uk/settled-status-eu-citizens-families;
- For EU drivers, or those who may need to drive in the EU, those individuals may need to apply for an international driving permit;
- Accounting for import VAT in a no-deal Brexit;
- Consider using the Business Readiness Fund, which has been introduced to help businesses prepare for Brexit https://www.gov.uk/brexit-business-grants; and
- Check out the Government’s Get Ready for Brexit Toolkit which has been introduced to help answer key questions for businesses and individuals https://www.gov.uk/brexit.
If you have any questions regarding this article, please do not hesitate to contact a member of the CG Professional team who would be more than happy to help.