DTM Corporate Partner, Alison Brennan, outlines some practical steps you can take in your business amidst Brexit.
As the UK, Europe and the wider world continues to come to terms with the result of the referendum on the UK’s membership of the European Union (“EU”), one thing is clear and that is, despite persistent media speculation, no one yet understands what ‘Brexit’ means and it is impossible to predict quite where the referendum result is going to take us or how long the current uncertainty will last.
Uncertainty is almost always bad for business and, with this in mind, it is vital that businesses understand the issues and work to minimise the effects of external uncertainty.
There are a number of practical steps you can take including:
EU Income Streams
If your business has benefited from EU aid, grants and funding then an understanding of the terms on which funding has been received and how and when it might be removed will be essential.
Review your contracts
Understand the extent to which existing arrangements contain territorial definitions such as ‘the European Union’? Geographical definitions are common in distribution and franchise agreements and non-compete clauses and IP licences and may need to be reviewed along with choice of law and dispute resolution mechanisms.
Additionally, new contracts may benefit from review or termination clauses based on whether the UK remains in the EU or not and, if not, on the type of exit. Conversely, it may be advisable to exclude the UK leaving the EU from force majeure clauses to prevent a contracting party from using the Brexit fallout as a convenient way of avoiding its contractual duties.
Engage with your customers and suppliers
Is the result of the referendum already having a detrimental effect on your customer base or suppliers? Could the UK leaving the EU do so in the future? Any uncertainty in your customer base could have a knock on effect on the amount of money they have/choose to spend with you whilst uncertainty for suppliers could affect their ability to supply to you (and your ability to supply to your customers).
Now is the time to engage with your customers and suppliers and share knowledge and information about current and future threats and opportunities and ways in which you can work together to minimise the threats and maximise the opportunities.
Employee Rights
UK law contains a vast number of employment rights that have been derived or transposed directly from EU law. Understanding the extent to which these affect your business in a practical day to day way and which are part of UK law (and thus not necessarily impacted by the UK leaving the EU) will enable you to reduce uncertainty amongst employees.
Consider your organisational structure
In the run up to the ‘in or out’ vote, multi-national companies were almost unequivocal in their support for the free movement of people across EU member borders and the benefits it brought their businesses. Many multi-nationals operate an organisational matrix structure (which presuppose the ability to seamlessly transfer talent from one EU country to another) where employees are managed by more than one reporting line. If the UK were to decide to give up freedom of movement in an attempt to better control its borders then this could make it more difficult for companies to transfer talent freely between locations.
If your business operates cross border ensure you understand how freedom of movement affects you and look at how you can protect your business and workforce in the event that freedom of movement is curtailed in the future.
Final Thoughts
Organisations which understand the implications of the UK leaving the EU for their business will be better placed to lobby local Members of Parliament and business groups for the outcome they want and the one advantage of uncertainty is that nothing has yet been decided giving everyone a continuing opportunity to be heard in the debate.
For further advice on ascertaining the impact of Brexit on your business speak to Alison Brennan on 01244 354 815 or email alison.brennan@dtmlegal.com.
