We're preparing Scottish businesses for Brexit

Following the EU referendum, Pinsent Masons teamed up with blue chip clients to developed BASe, a corporate crowdfunded Brexit advisory service. This delivers expert responses to Brexit-related legal issues within 48 hours, and provides access to thought leadership, knowhow and industry trends.

Pinsent Masons Edinburgh Pic Peter Devlin

Nine months on, BASe has established a database containing the 100 most frequently asked client questions, and I have picked a selection which provides an insight to the Brexit-related challenges exercising UK boardrooms.

1) Are you seeing clients implementing plans to move key staff overseas?

The main interest in this has come from financial services. Our experience has generally been that banks have not made final decisions to move large numbers of key positions to other EU centres.

Our sense is that no credible alternative to the City of London has been identified and it is too early for most clients to know whether relocation is necessary.

While there have been a lot of headlines around moving staff/roles out of the UK, in reality we don’t think this has really happened yet. Financial services firms are thinking about the regulatory piece first: “Do we need to set up a subsidiary in another EU country and get regulatory approval in that country?”

Those without an existing platform elsewhere in the EU may do this in order to future-proof themselves, while those with mature operations in existing EU hubs will start thinking about whether and how they could move roles/people if necessary.

2) Have you seen any attempts to use Brexit as a Force Majeure event and if so, what happened?

Initially we did see some clients consider trying to utilise this where the exchange rate risk had a significant impact.

However, we are not aware of any clients trying to claim Brexit as an FM event. Typically, where they have reviewed contracts, other clauses have been found that have been more helpful to them in addressing the issue and/or opening a commercial negotiation on relevant issues.

Much will turn on the wording of the FM clause and whether it covers the types of risks causing the relevant impact. We recommend proceeding with caution and taking specific legal advice if this is a course of action you are considering.

3) Is there anything I can do to prepare for changes impacting freedom of movement?

We would recommend: (1) Identifying EEA national employees and employees who are non-EEA national family members of EEA nationals working in the UK; (2) identifying UK nationals working in other EU states; (3) assessing the extent to which the UK business relies upon using employees from other member states and how your organisation can best minimise the impact of change if those employees lose the right to work in the country; (4) speaking to those employees about their immigration options in the UK and elsewhere in the EU, and (5) working out if any employee policies/groupings (eg EU-wide workers’ councils) need to be reviewed in light of Brexit.

4) Can I compel personnel fulfilling business-critical functions to relocate, particularly if their ability to fulfil the role could be impeded in future as a result of Brexit?

Much will depend on the specific terms and conditions of the employee’s employment contract. Many organisations include mobility clauses for senior personnel. If you anticipate relocation of teams or individuals is likely, or just want to have the option in future, consider updating the Ts&Cs of employment contracts accordingly.

A mobility clause doesn’t give employers the absolute right to compel a move and it is, of course, preferable to rely on non-contractual means to encourage mobility where possible. Enforcement of such clauses can be challenging, time-consuming and affect morale

James Cran is legal director and a member of Pinsent Masons’ Brexit Advisory Service