How will Brexit impact international contractor recruitment?

Brexit international contractor recruitment

1st September 2020

As a leading expert on international contractor compliance, 6CATS International is acutely aware of the latest trends across the globe that impacts recruitment agencies. And while Covid-19 has certainly been at the forefront of everyone’s minds over the last few months as businesses try and navigate an incredibly challenging environment, we can’t forget that Brexit is just round the corner.  And with the CBI revealing that one in five businesses are less prepared for the UK’s departure from the Union now than they were at the start of the year due to Covid-19, it’s crucial that companies use the reminder of the year to prepare. However, according to our Brexit Impact Survey, which we ran in conjunction with APSCo, there is a real concern within the staffing sector about the availability of talent in 2021 following the ending of the Brexit transition period on 31st December.

Brexit Impact survey: overarching feeling of uncertainty

A key part of APSCo’s lobbying activity in the run up to 31st December has centred on minimising the disruption that Brexit will have and ensuring that staffing companies have access to the skilled workforce needed for economic recovery. And our Brexit Impact Survey reveals the sentiment of agencies that recruit domestically, as well as those which place talent within the EU. And the results reveal that there are understandably huge concerns when it comes to recruiters’ ability to source the right people for the right roles in 2021. In fact, of those respondents who operate out of the UK into the European Union, just a third are completely confident that their consultancy is appropriately set up for the New Year in terms of company structure, tax, finance and business operations, staff, business visits and visas. And this figure looks even more gloomy for those agencies that have a physical office in Europe (50% don’t feel ready).

Immigration hurdles and access to talent

The news has been full of stories about the impact the points based immigration system will have on companies’ ability to attract talent and this is particularly the case for those sourcing contingent workers, as the Bill has no visa route for independent professionals. And whether a contractor is working through an umbrella company or through a Personal Services Company, the new rules will mean that they will be treated as existing non EU independent professionals, which means that they won’t be able to operate in the UK unless an employer (not an umbrella) sponsors them via the tier 2 general visa.

And our survey highlights just how much of an impact this looks set to have on agencies placing contractors.  When asked ‘How confident are you that will be able to source enough skilled specialists for either perm or temp roles in your sectors from the UK or abroad under the new rules in the Immigration Bill?’ just a third were confident or very confident.  So much so is the concern that one recruiter who places tech talent into Europe went as far as saying: ‘The current VISA system and immigration service is a complete joke – there will be utter chaos in the future, guaranteed. It’s prohibitively expensive and time consuming.’

However, the Bill doesn’t just affect recruiters’ ability to attract talent for their clients, but it will also affect how they recruit staff for their own agency. Staffing companies looking to hire consultants for their own business from Europe will not only have to apply for a sponsorship license, but they will also have to pay an immigration skills charge. And our survey reveals that there is little interest in going down this route.

Skill shortages will exacerbate challenges faced under the new Immigration Bill

When we look at the impact the Bill is set to have on the availability of talent against a backdrop of ongoing skills shortages in so many sectors, it is clear to see why the sentiment of those we surveyed is overwhelmingly negative. The top five areas, according to those surveyed, where skills shortages are most critical were construction, health & social care, mechanical & chemical engineers, software engineers and software developers. And with the Immigration Bill set to make it very difficult to attract contractors to work on projects in these sectors, it looks likely that these individuals – who are highly skilled professionals – will be put off working in the UK due to the complex system they will encounter and, instead, choose from the many lucrative opportunities available in other countries with less burdensome immigration systems. And the result of this will not only be detrimental to UK staffing agencies, but also the economy as it tries to recover from the impact Covid-19 has had.

Post-Brexit and compliance: the future of international contractor recruitment

It’s clear that under the current immigration system, recruiters’ ability to access talent for both themselves and their clients will be challenging. However, regardless of the obstacles you face, it’s perhaps more important than ever that compliance remains absolutely front of mind.  It’s no secret that authorities across the world are continuing to clampdown on tax evasion and fraudulent activity. In fact, we wrote a blog recently about the latest compliance news that recruiters need to be aware of which is certainly worth checking out.

So, while the impact of Covid-19 is certainly being felt across all countries, the fact remains that governments are not putting compliance on the back burner. In fact, many are ramping up their activity and becoming much stricter when it comes to enforcing laws and prosecuting anyone seen to be breaking the law in a bid to claw back much needed funds in the face of weakening economies.

Consequently, it’s perhaps more important than ever that your recruitment firm doesn’t fall foul of laws that could land you in hot water. So, if you’re placing contractors overseas, contact the 6CATS team to find out how we can ensure you are protecting your firm and the contractors you place.  Our experts are on hand to assist you with all your requirements concerning international contractor recruitment compliance post-Brexit.


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