Will Brexit affect how you pay your employees?

Will Brexit affect how you pay your employees? 150 150 Purple Lime

It is the final countdown as the UK heads towards Brexit, and it is a worrying time for businesses who are already dealing with the impact of the pandemic, as well as the uncertainty as to how Brexit will play out.

However, waiting for the details to be confirmed is not an option – as a business owner, you need to be prepared for the impact to make sure your business comes out strong on the other side.

As already mentioned, no-one knows what form the final agreement will take, but there are things you can do to prepare your payroll systems whatever the outcome.

You may think that Brexit couldn’t impact on payroll, but there are actually four key areas which need your attention.


Most of us are now up to speed with the various Data Protection and GDPR controls. However, once the UK has left the EU, the rules could change again. The European Commission will need to decide if it will grant the UK an ‘Adequacy Decision,’ which will allow data to be moved around the EU despite the UK no longer being a member.

Currently, there are no indications that this will be refused, but negotiations could move rapidly, so there could be a lot of extra administration if you have any data to send across EU borders.

Payment Processing

Paying your workforce is generally an easy process, and that is because the UK is part of SEPA – the Single Euro Payments Area. SEPA is an organisation for EU members and ensures that payments made to and from the UK and Europe are dealt with in the same way as internal UK transactions. It makes sending money across borders a much more streamlined process.

However, as the UK leaves the EU there are no guarantees that we will be allowed to remain a part of SEPA, and this could cause big problems for payroll providers.

Employment Law

The amount you pay your staff, including holiday pay, sick pay and maternity pay, is all based on EU directives. After 31st December, there is no requirement for the UK to abide by these directives. The easiest option for the UK would be to embed them into UK law, but it is possible that there will be changes to some, or all, of the rules.

Depending on your perspective, this could be a good or bad thing, but currently there is no way of knowing what the changes could be and the impact they will have on businesses.

Taking on Staff

People from any EU state with proof of their right to work are currently allowed to work in the UK with no issue. This has allowed employers in the UK to draw on talent from across the EU and rely on foreign talent pools in their expansion plans.

However, from 30 June 2021 this will not be allowed. Potential employees will need proof of a job offer from an approved employer sponsor before they’re allowed a skilled worker visa. Current employees from the EU will need to apply to the EU settlement scheme in order to be allowed to remain in the UK.

If you have, or are planning to have, employees from the EU, you need to start preparing now to make sure you can support those members of staff.

There are so many EU directives which form part of UK law, and while many are embedded in UK legislation, there are lots that are not. As the government work their way through all this legislation, it is entirely possible that rules will be changed, and businesses will have to adapt their processes.

With talks taking place as we speak, it is impossible to know exactly what the implications of Brexit will be. As a business owner the worst-case scenario seems to be ‘no deal,’ so preparing for this will put you in the best position to handle the changes coming our way.

For more help with planning for the future of your business and the potential repercussions of Brexit, get in touch with us today. Email hello@purplelime.uk.com, or call us on 01249 691360.