DETROIT (July 5, 2016) — The nervous tailspin U.S. business leaders are experiencing as a result of “Brexit” is not likely to settle anytime soon, especially due to the fear of the unknown.
The reality, however, is there are some things we know will occur, and we can prepare now to minimize negative impact.
While the exact reason the United Kingdom voted to exit the European Union is likely to be debated throughout history, the term “freedom” was touted as a leading factor. Freedom from deep integration with the rest of the EU, freedom for Britain to make its “own” decisions regarding economics, and freedom to change its own immigration laws are the key issues.
However, with the approval of Brexit, these freedoms will soon become restricted and will have tremendous impact on employers — especially the freedom for employees to easily relocate for work to and from the U.K. and within the rest of the European Union.
While the world begins to feel and understand the economic aftershocks stemming from U.K. voters' decision, U.S. corporations do not have to feel completely helpless waiting for details to unfold. Corporate America needs to prepare as best as possible knowing the divorce, or separation, between the U.K. and EU will include changes such as:
- A registration plan may be established between the U.K. and EU to prove lawful status of EU nationals who are in the U.K. This will replace the current free-travel arrangement between the EU's 27 participating countries and the U.K.
- The current points-based system in the U.K. that regulates immigrant workers on different tiers such as entrepreneurs, investors, artists, engineers, midwives, skilled labor and students, for example, will most likely be replaced with an Australian-style system. While the EU's system currently used in the U.K. is more relaxed, Australia's is more rigid. For instance, unless an individual is either a documented and U.K.-approved refugee — sponsored by an employer to fill a job or approved from a specified list of skilled professions — chances of relocating to the U.K. will be nil. (It will not apply to Irish nationals because of Ireland's strong relationship with the U.K.)
American companies that have offices in the U.K. are likely to wonder whether they should start looking to relocate into an EU country. If they employ staff from the EU, these companies need to prepare for delays and increased costs that will occur from increased red tape that will occur from Brexit.
On another side, the U.K., during this turmoil, may look even further to its friendship with the U.S. for guidance and will not want to upset its relations with U.S. business leaders who have a strong impact on their economy. Keeping calm and being alert regarding possible upcoming changes will only serve to benefit U.S. business.
Alexandra LaCombe is a managing partner and attorney at Fragomen, Del Rey, Bernsen and Loewy in Troy. Mich. She is a member of the American Immigration Lawyers Association and serves as an adjunct professor at the University of Detroit Mercy School of Law. She wrote this blog for Crain's Detroit Business magazine, a sister publication of Tire Business.