Will Brexit Affect Your Company’s Relocation and Global Mobility Plans?

February 10, 2020

Global events and instability always have posed a threat to international relocations. Not only can they cause anxiety among assignees, but these events can have a significant effect on immigration and compliance regulations, which in turn, can impact businesses’ international operations. While there are a number of events of note, one has been at the forefront of the global economy over the last few years – Brexit.

After an initial vote in 2016 for the United Kingdom (U.K.) to leave the European Union (EU), the British parliament ultimately delayed actions to move forward with the decision. However, a special election at the end of 2019 brought the Conservative Party back into the majority, and with pro-Brexit U.K. Prime Minister Boris Johnson in office, formal steps to implement Brexit are likely to begin soon.

What does Brexit mean for businesses with operations in the United Kingdom and European Union?

With Brexit now a reality, U.K. and EU leadership will begin to work out a new trade agreement, which some experts believe won’t be finalized for several years. Because of this, there remain too many unknowns to explicitly state all the ways an eventual Brexit will impact businesses and their mobility programs. With that said, there are several broad outcomes that we foresee resulting from Brexit, which businesses need to begin assessing.

Added complexities around compliance regulations

Each year, compliance is the top challenge for HR professionals who are responsible for international assignments. Once the U.K./EU separation is official, the United Kingdom will begin imposing its own trade and immigration regulations that businesses must comply with, requiring more bandwidth and resources.

More assignments in the U.K. for U.S. employees

The United States and United Kingdom traditionally have been strong trade partners, which ultimately could be further strengthened by Brexit. After the move, the U.K. is likely to make a free trade deal with the U.S. – absent of tariffs. This new deal should increase foreign investment between the U.K. and U.S., and consequently, international assignments between the two.

Companies opting for virtual assignments more as an alternative to Brexit

While Brexit is at the forefront of many people’s minds, virtual assignments already have been on the rise in recent years. With access to improved and increasingly reliable technology, it’s easier for workers to communicate and collaborate with colleagues across the globe. But with complications from Brexit expected to arise, some businesses will likely begin relying on the services of U.S.-based virtual workers to fill the gaps of workforce needs abroad.

It’s important to remember, virtual assignments don’t always exempt your company from bypassing other countries’ tax and compliance regulations. While they vary from country to country, organizations need to review the tax and compliance regulations of the location employees are physically working – even with virtual assignments.

Also, don’t be quick to dismiss the long-term benefits of physically moving someone to a foreign location. While there are added costs associated with this, it can be tremendously beneficial to have someone on the ground who understands and embodies the company culture, especially when it comes to positions of leadership. These employees are able to drive acceptance and appreciation for how things are to be done, which isn’t always possible with virtual employees.

Anticipate concerns of employees potentially affected by Brexit

When your organization conducts business in a place facing volatility, keep in mind how these events might lead to added stress for employees on assignment there. To a business, these stressors may seem insignificant, but it’s imperative not to underestimate the impact they can have on staff, because oftentimes, the success of an assignment hinges on the stress levels of an assignee.

There’s little question if Brexit will have an impact on U.S. companies. It’s more how much will it affect their operations, particularly those who have employees on assignment there. Brexit will continue to be a fluid situation that has the potential to change unexpectedly in the months and years ahead. Businesses operating in the U.K. and EU should closely monitor these developments and adjust strategies accordingly.

If you have questions about how Brexit might affect your relocation and global mobility plans, we’d love to help!

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