What does the Brexit mean for freelancers, contractors and micro-businesses?

Working in the EU

As members of the EU, British freelancers and contractors have been free to work anywhere in the EU. Now that Britain has voted to leave, this may change. Workers from countries that are not members of the EU (namely the UK once the exit is complete) need to obtain a work permit or visa if they want to work in one of the EU’s member state.

It’s worth noting, however, that other countries (such as Switzerland) have struck deals that allow the free movement of workers with EU member states without being a member of the EU themselves. This is likely to be on the agenda for the exit negotiations led by David Cameron’s successor in October.

Client relocations

According to research by the Bertselsmann Foundation before the referendum, 29% of British and German companies planned to either relocate or decrease capacity in the event of a Brexit, with the IT sector highlighted as being one of the most vulnerable. It remains to be seen what changes large businesses will make following the Brexit.

If passporting rights (allowing banks and other financial institutions to do business freely with the rest of the EU) are restricted, the financial services sector is likely to suffer. The full extent of passporting changes will be dependent on the exit terms negotiated with Brussels later this year.

Regulation

Micro-businesses may benefit from a lower regulatory burden being outside of the EU, particular in the field of employment law. An example is the EU working time directive – generally unpopular amongst micro-businesses due to it preventing staff working overtime should they wish to. The Federation for Small Business has campaigned to make the legislation more flexible since 2014.

Travel

For freelancers working in the EU, it’s possible that air fares could increase as a result of the UK leaving the European Union, adding expense to travel arrangements. This has been highlighted by various parties, including European airlines, although opponents have argued that fares wouldn't necessarily increase if Britain is successful in negotiating to remain in the single European market.

Pay and competition

Depending on the approach taken in respect of movement of workers and immigration once the exit terms have been agreed, this could go either way for contractors. As IPSE highlight, a limit on immigration could see a shortage of skills for certain contracts, resulting in better rates for contractors due to decreased availability of EU workers. However, if a points-based immigration system is implemented this could result in the government incentivising EU contractors coming to work in the UK in areas where there is a skills shortage – resulting in greater competition securing contracts for UK freelancers.

Summary

The extent to which the UK remains in the single market and retains free movement of workers is going to have an impact on where freelancers and contractors work. In respect of large businesses, it is too early to tell what will happen following the leave vote, although plans are likely to be firmed up up over the coming months. What is clear, however, is that the exit negotiations by David Cameron’s successor later this year will be crucial in determining how contractors and freelancers will work in a Britain outside the EU.