Whilst we can only speculate regarding the overall effect the UK potentially leaving the European Union (a Brexit) would have on individuals and the UK as a whole, in this article I want to consider what might happen to small and medium sized businesses should we vote to leave.

Two areas which can be discussed with slightly more certainty are the possible effects on our laws and the future of immigration and EU workers.

Our Laws

Some of the laws of England and Wales have been adapted and sourced from European laws and therefore in the immediate aftermath of a Brexit there will be little to no noticeable change to the laws affecting small and medium sized businesses in the UK.

European laws are adopted and implemented promptly by Parliament through legislating within their jurisdiction. Localised legislation must represent European legislation accurately once it has been imposed upon the member states (members of the European Union).

European law comes in two forms: “Regulations” and “Directives”.

A Regulation is defined as a “binding legislative act” and is applied automatically across all member states to give individuals rights directly from the European law. A Regulation does not require further action from the members states in order to take effect.

A Directive is defined as a “legislative act that sets out a goal that all EU countries must achieve” and gives each member state discretion to achieve those goals how they each see fit.

Therefore, as Regulations do not have to be actively implemented by member states, it is likely that these would fall away naturally. This could well leave holes that the Government would need to fill. Worryingly, UK lawmakers have very little experience of drafting in some areas of law because much of it comes from Europe. Therefore it is uncertain as to how quickly and how well these gaps will be filled.

In reality the vast majority of our laws will not automatically change because of a Brexit.

Most commercial contracts (and other business agreements) do not refer directly to European laws but to the relevant member state law and therefore such agreements will not simply lose their effectiveness post-Brexit. It is entirely possible that a Brexit would give the UK Government an opportunity to assess the benefits of retaining some European based laws which may end up being repealed (this could be particularly relevant for consumer law which has been primarily sourced from European law).

The Government will also be keen to ensure that the UK remains a desirable place to do business and therefore changes to legislation are inevitable to give the UK an upper hand. Changes will be necessary in order to attract other member states to continue to do business with the UK and set up agreements independently from those automatically in place through the EU. Such legislation would most likely be non-compliant with EU laws and could include such things as; changes in working hours, employee protection and competition law. All of which have been heavily governed by EU law.

Whilst this may not directly affect small and medium sized businesses, changes will inevitably have a knock on effect.

Immigration and EU Workers

Change is inevitable in this area as, unless legislation is introduced to the contrary, all those EU citizens that are currently working legally in the UK will suddenly have this automatic status revoked. Similarly, if you have UK staff based abroad, their rights to live and work in Europe are not guaranteed. Therefore, if your business employs EU workers or operates in Europe, you will need to consider the effects of a Brexit and what you plan to do to counteract these should you need to.

If you have concerns regarding any aspect of your business, why not arrange for a fixed fee meeting for £95 including VAT with Rob Jefferies, one of our Company and Commercial specialists, who will be happy to advise you and your business on the best course of action? Contact Rob on rob@barrettandco.co.uk or 0118 958 9711.

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