The future for contractors and freelancers after Brexit

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What will the future be for contractors after Brexit?

Published on Wednesday, May 31, 2017

Written by Alex Cadman

Contractors and freelancers have plenty riding on the outcome of Brexit. Employment laws, immigration rules and Britain’s single market status are all things that could change once Britain leaves the EU. How will these factors affect contractors and freelancers in the short and long term?

We look at potential implications of Brexit on the contractor and freelancer industry.

Employment law

Employment law is one aspect already being reviewed by the government, as the rise of the gig economy has led to the questioning of whether ‘gig workers’ should have statutory employee rights. Matthew Taylor, head of the Royal Society of Arts, was commissioned to lead a review into flexible working which will partly look at how workers who currently class themselves as self-employed compared to their employed counterparts. The outcome of the review will affect how the gig economy is legislated.

The UK is busy developing its own set of employment rules surrounding flexible workers, the gig economy and additionally how one-man businesses are taxed. As for general employment law, plenty of what are considered norms in employment law in the UK were derived from EU law, and this is unlikely to change in the near future especially if Britain remains in the European Economic Area (EEA).

Hiring and workforce planning

The BBC stated that self-employment accounted for 45% of jobs growth over the last decade. With uncertainty surrounding the outcome of Brexit, the short-term hiring decision of companies is likely to be that they will avoid hiring permanent workers, and instead hire flexible contractors to meet business needs and project goals. If this holds true, there will be more work for contractors and freelancers over the next couple of years as the UK moves through Brexit negotiations with the EU. 

Entrepreneurial-thinkers tend to power through challenges and carry on as normal, according to Emma Jones, founder of Enterprise Nation. Many of those who have made the lifestyle decision to work for themselves will find a way to continue making self-employment work for them regardless of the market situation post-2019 Brexit.

Contractors, freelancers and the self-employed make up 15% of the UK’s workforce, and as more professionals are craving independence and a work-life balance, this figure is unlikely to decrease.

Movement of workers and supply-and-demand

When the UK officially exits the EU in 2019, it’s likely that there will be less EU contract opportunities available, and if Britain leaves the single market - cutting off the free movement of goods, capital, services and labour – more British contractors who’d otherwise work abroad will remain in the UK. In the long term, this could result in an excess supply of contractors in the UK, increasing competition and lowering rates. This is a big if, however, and remains to be seen as per the outcome of negotiations.

However, foreign secretary Boris Johnson suggested that freedom of movement could continue after the March 2019 Brexit date – although not necessarily as freely as the current regime. This would be beneficial for highly-skilled contractors in a variety of sectors, such as IT, who take up contract opportunities abroad, come to the UK from the EU to take up contracts, and those whose UK-based clients serve businesses on the continent.

The immigration question remains just that, and over the next couple of years we will gain a clearer picture of the movement of workers and particularly how contractors will be affected.

The impact of Brexit will be felt by permanent workers and contractors alike for the next few years to come, but as to what the impact will be remains an uncertainty.

Planning for the future and looking to explore your contractor accountancy options? Contact our expert team on 01707 871622.

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