From McDonald’s running out of milkshakes thanks to a shortage of lorry drivers with the right working visas, to a risk of our favourite Christmas produce not making it onto the shelves, the complexities of Brexit are transpiring into everyday challenges for both businesses and consumers - despite the UK’s official withdrawal from the EU nearly two years ago.
According to research from the Institute of Directors, almost a third of businesses that deal with the EU have suffered a decline or loss of business since new barriers to trade were introduced, with over a quarter of companies saying Brexit has caused difficulties in hiring staff.
Yet there’s a simple solution for UK businesses to navigate such an ever-shifting minefield. Establishing an ‘employer of record’ partnership with an international business expansion expert like Mauve Group can help UK businesses recruit and employ staff across all EU markets. An employer of record model simplifies cross-continental HR and payroll logistics against a backdrop of varying employment laws and conditions.
How does an employer of record work?
As chief executive and co-founder Ann Ellis explains, an employer of record involves three parties working together - a company, their worker and Mauve Group - in a contractual triumvirate.
“As the employer of record, we employ workers on a company’s behalf, in countries where they don’t have an entity. We’re responsible for making sure the employee has a contract of employment which is compliant with the labour laws of that country. We also ensure they’re registered on the payroll in the country of work, that they’re paid correctly in the local currency, and the right taxes and social contributions are paid on behalf of that worker to the authorities,” Ellis says.
She continues: “As far as the regular responsibilities of the worker’s job, these are overseen by what we call the ‘client’, or the company managing that person on a day-to-day basis.”
Ellis also likens it to an intermediate relationship, where Mauve Group bridges the gap between the company and employees it is representing, keeping in regular contact with all elements of the business.
“As the in-country employer, we also have to be made aware of any issues relating to the employee. For example, if there was a problem with their performance, then we need to be involved in the process of resolving that issue. So we work in parallel,” says Ellis.
Employer of record as an in-demand post-Brexit solution
Demand for Mauve Group’s employer of record services soared by over 124% from 2019 to 2020. It is set to grow by a further 30% in 2021, as UK businesses look for a streamlined way of tackling their Brexit challenges.
“Because of our global presence, Mauve’s services can offer clients an alternative to setting up their own entity in a new location. For new businesses, or businesses that are perhaps testing potential markets, employer of record is a wonderful alternative that doesn’t have to be mind-blowingly expensive,” says Joanna Hart, Mauve Group’s head of research and solutions.
It’s an all-encompassing service that gives companies everything they need to employ staff in a particular location
“It’s an all-encompassing service that gives companies everything they need to employ staff in a particular location. Although the initial set-up of a company can be relatively straightforward, when it comes to HR, there isn’t a one-size-fits-all approach to employing international staff. Actioned incorrectly, it can be fraught with costs for businesses.
“Setting up in one country can also be easier than setting up in another. It’s a misconception that neighbouring EU countries are similar in legislation and processes. Companies have to remember they’re setting up in a country, not a whole union. Employer of record can be an antidote to that.”
Setting UK employers up to recruit and employ remote workers across the EU
The idea of employing workers remotely across different geographies had already been set in motion before Brexit was confirmed, but was obviously accelerated by pandemic restrictions. The remote work boom saw a surge in expats returning to their EU home countries, or deciding to work outside urban hubs, to increase their quality of life while potentially decreasing the cost of living.
As such, nearly 2 million people left the UK during the pandemic, and net migration from the EU to the UK was down 24% in January 2021. This has left UK businesses considering both a crisis and an opportunity - dealing with a talent gap on home shores that could be filled remotely, internationally.
Yet while remote work may sound like the answer to the problem, understanding how to recruit, hire and employ across 27 often disparate countries can present challenges in itself. This is where an employer of record partnership can help keep companies legally compliant.
“It’s not easy trying to find people to hire in another country, then having to employ them, not knowing any of the labour laws of that country, or the complications of payroll, as this is different from one country to another, as is the costs of employing a person in terms of tax and contributions,” says Ellis.
“Employer of record can help counter those complexities. This model allows companies to continue operating and employing staff in the EU, even where they’re restricted by a lack of a local entity, reduced resources, or limited knowledge and experience in how to employ locally.”
Brexit-impacted businesses can also access new global markets beyond the EU under an employer of record partnership, Ellis adds. Mauve Group, for example, is providing employer of record solutions to companies which enable their employees to test out new business opportunities in regions such as the USA, Africa, Asia and Latin America.
Confidence in an uncertain situation
As the list of considerations racks up, hiring across the EU in this post-Brexit environment can certainly prove daunting for businesses. But Mauve Group’s 61 international entities and 25 years of experience can give companies confidence in their partner, even in an unfolding situation where there is minimal government guidance to follow.
“We’ve had the experience of red tape in so many different scenarios, and our practices and experience have enabled us to overcome that - we always find a way to get things done. For UK SMEs expanding into the world, perhaps terrified that their EU prospects are going to disappear, we have sympathy and solutions for those challenges,” says Hart.
For more information on navigating Brexit and other global challenges, visit www.mauvegroup.com
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