Unless Parliament approves a Brexit deal, an extension is made or the government decide to cancel Brexit, the United Kingdom will be obliged to leave the European Union without an agreement on 31st January 2020. This is dependent on the outcome of the general election being held on 12th December. 

With the number of UK small business tech start-ups rapidly increasing, the industry value is expected to rise to $400 billion in 2020. Less than half of these businesses consider themselves ready to face a no-deal Brexit on 31st January, bringing multiple problems their way.

The affects a no-deal Brexit will have on Britain’s small businesses is extremely unclear. This is the primary reason why some business have taken steps towards preparing for this huge change.

Nevertheless, there are certain implications that can be foreseen and actions that can be taken to prepare for them.

Here are 3 of the most important problems small businesses in Britain will face as a result of a no-deal Brexit:

• Trade
• Data Transfer
• Employment

Trade

2017 saw 53% of UK imports coming from the EU, with the UK exporting 44% of its goods to the EU. To have this connection cut off will bring abrupt change that will be dealt with the best through preparation. This conflict will bring a variety of problems such as border disruptions, higher prices and a new source of essential goods that could take an unexpected amount of time to acquire.

Once the UK has left the EU, trade will be regulated under the World Trade Organisation (WTO) rules. Trading goods outside of the UK would be subject to tariffs, which could add new expenses to your business.

As expected, letting go of the EU will have a detrimental effect on the UK economy, which will then result in more financial problems for the country beyond trade.

Unfortunately, a no-deal Brexit will bring a no transition period, giving businesses no time to prepare for the change once we leave. Measures have been put in place by the UK and the EU to help businesses prepare for Brexit, which small establishments should strongly consider adopting in order to experience a smooth transition. There is guidance on the subject of applying for EU-funded programmes, handling civil legal services and importing/exporting goods specific to the industry you trade in. A list of all guidelines can be viewed here.

Due to the scale of trade loss between the UK and EU, a future trade relationship agreement can be predicted. This agreement would abide by the Article 50 agreement, which could lead to negotiations being more challenging and giving parliament greater responsibility in these cases.

Data Transfer

The way we transfer personal data between the UK and the EU is going to change. It is essential that small businesses prepare for the change in regulations to avoid being prosecuted and potentially losing valued customers. 

At this moment in time, data transfer between the UK and the EU is unrestricted, which will continue into 2020 until a long term solution is put in place. However, this is only relevant if a withdrawal agreement is made.

In the event of a no-deal Brexit, new regulations will be put in place in relation to personal data transfer. These regulations have not been specified yet, but the UK government have made it clear that they intend to enable unrestricted data flow from the UK to the EU.

How should you prepare for this possible change?

The most important thing you can do is track your data patterns. Make note of the journey your data takes and what you are responsible for. This will prevent any unexpected issues in the case of a no-deal Brexit.

In no case will your business be immune to this change, so make sure you are prepared and have the necessary measures in place to deal with the change in the law.

Employment

The following employment rights will remain unchanged, ensuring a smooth transition:

• Rights to holiday pay, rest breaks, annual leave, maternity and paternity leave
• Protection from discrimination and harassment based on sex, age disability, sexual orientation, religion or belief, and race or ethnic origin in the workplace
• Protection of workers rights where there is a TUPE transfer
• Protection of part-time, agency and young workers
• Protection and consultation rights for workers, including for collective redundancies

The short-term sees no significant changes to workplace rights in the event of a no-deal Brexit. Nevertheless, the long term could see some changes, but these are still very unclear. The changes are highly dependent on the second referendum which could see the Conservative leadership taking control.

There are regulations that have been identified by the employer association and various groups which may be presented for amendment.

Some of the potential regulations include:

• Agency worker protection
• Limiting awards for discrimination
• TUPE
• Holiday pay claims during sickness

Any decisions made regarding a change in employment legislation will take a lot of consideration and negotiation between the UK and the EU. Therefore, this isn’t something you should be concerned about in the short-term, but not dismissed in the long-term.

Summary

To conclude, there will be implications of different severity that could have a negative effect on small businesses in Britain.

Trade is one of the most important elements of business, a sudden change in its infrastructure could have a negative and costly effect on your business. Following the guidelines put in place by the UK and the EU is strongly recommended to ensure a smooth transition due to the no transition period.

The change to personal data transfer regulations is still very unknown, but you can be assured that the data flow regulations will remain unrestricted in the event of a no-deal Brexit. It is important that you don’t overlook this process and start to track your data patterns and highlight what you are responsible for, in case of a change.

It can be said that employment legislation is not going to experience a substantial shift in the short term, but the long term may see amendments to certain regulations. If you keep up to date with the possible change in legislation, you will be fine.

The outcomes of a no-deal Brexit are extremely unclear and can create an unsettling environment for small businesses in Britain.

Everyone is in the same boat and experiencing the same shift as you.

Follow the measurements in place and prepare as much as possible to ensure a smooth transition in the event of a no-deal Brexit.

Good Luck!

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