Staffing issues practices face post-Brexit

EU flag and recruitment
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When Britain finally steps away from the EU, almost every accounting practice faces difficulties in the recruitment and retention of staff. 

At the top end, the current regulations that permit anyone with a European accounting qualification and clearance to carry out audits in the UK are to disappear overnight.

As an interim measure, the UK government has announced in its documentation relating to a no deal Brexit that there would be a temporary interregnum during which such individuals could continue to sign off audits. This will end in December 2020.

To quote from the government document “At the end of the transitional period EU auditors will cease to benefit from automatic recognition of their qualifications in the UK and may no longer be offered an aptitude test. However, EU qualified auditors who were recognised as a result of an aptitude test process, which is begun before the end of the transitional period, will continue to be recognised”.

However, if one or more of the auditors in your practice comes into this category, it might be wise to take precautions. If you are personally covered by an overseas qualification and have no other qualified support, the situation is obviously going to be that much more critical.

This transition appears to be unilateral from the UK side. Therefore, if any of your work is carried out overseas and you rely on UK staff to sign off an audit, it may be necessary to recruit someone local in a hurry.

The more obvious problems relate to recruitment and retention of staff. It has become apparent over the last couple of years that a couple of factors are pointing in opposite directions. First of all, it is increasingly difficult to recruit professional staff at various levels, especially manager, possibly in part as a result of the slowdown following the 2008 recession. A similar limited market applies to support staff, though for other reasons.

Many firms have filled the gap by taking on very capable employees from various parts of mainland Europe or the Republic of Ireland. As things stand, any such employees can continue to remain in the UK and work as before.

It has become apparent that Brexit uncertainty has led many European nationals to question the wisdom of remaining in this country in the longer term. Add in the natural wastage that inevitably occurs when people cross borders and there is already great pressure on recruiting and retaining people at all levels.

Assuming that the will of the people and, more particularly, the current government holds sway going forwards, individuals from Europe will no longer have free entry to the UK unless they meet certain very specific criteria. One of these could relate to levels of remuneration.

This will make the employment pool even smaller and quite possibly more expensive at specific key levels. While partners in the Big Four will probably not be too concerned at their ability to fill any gaps, further down the feeding chain things are likely to become more and more strained.

As if all of this is not bad enough, there has to be a strong possibility that inflation will begin to become a much more material factor, especially wage inflation. The government might also need to increase taxes on employment in order to keep the economy steady during the short-term, post-Brexit downturn that is predicted by just about everybody, even those most strongly in favour of change.

A point that could actually work in our favour relates to the restrictive Working Time Directive. The 48-hour limit on working without a specific written waiver comes from European legislation, although it will presumably be transferred and embodied in the UK equivalent. That remains to be seen.

Then we come to the Irish question. A reader questioned the assertion in an earlier article that employees living on one side of the Irish border and working on the other would be affected even by a no deal Brexit. Judging by subsequent news coverage and comments from Irish government representatives, this is a likely outcome, if only because there could be long queues to get across borders. Should negotiations between the British and their former European partners get particularly unpleasant, then the borders could get really “hard” making the problem far more extreme.

The likely upshot of all of this is that many firms will struggle to maintain adequate staffing levels, feel obliged to take on underqualified staff because that is all that they can get and, to add insult to injury, probably find their wage bill heading upwards at an alarming rate.

About Philip Fisher

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12th Mar 2019 10:31

Don't worry when they implement off payroll working in April 20, I reckon 300,000 companies will disappear and there will be 10,000 accountants twiddling their thumbs. with no PSCs to do any more.....

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to Tom 7000
12th Mar 2019 11:19

So the 300,000 shareholders/directors will either return to PAYE or self-employed, which perhaps will only leave 5000 Accountants twiddling their thumbs or sorting out the coming MTD mess.

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12th Mar 2019 12:20

"The likely upshot of all of this is that many firms will struggle to maintain adequate staffing levels, feel obliged to take on underqualified staff because that is all that they can get and, to add insult to injury, probably find their wage bill heading upwards at an alarming rate."

I think that you underestimate the ability of a free market to self correct.

Or maybe Chicken Little was right all along, and the sky is about to fall in!

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12th Mar 2019 12:52

This article typifies all that is currently wrong with the way this country thinks.

It's all negative, tells us why things can't be done, and offers no solutions.

'We're dooomed'!

Yes, there may well be challenges, deal or no deal, but the sky won't fall in and if partners actually have to work for a living and do real chargeable hours then that's no bad thing.

Maybe it will focus minds into looking at the type of business they run and focus on more profitable clients as well as adequately training and promoting.

Maybe spend more money on training.

And as the old saying goes 'if you pay peanuts, you get monkeys'.

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By Locutus
13th Mar 2019 14:59

Philip Fisher wrote:

A reader questioned the assertion in an earlier article that employees living on one side of the Irish border and working on the other would be affected even by a no deal Brexit. Judging by subsequent news coverage and comments from Irish government representatives, this is a likely outcome, if only because there could be long queues to get across borders. Should negotiations between the British and their former European partners get particularly unpleasant, then the borders could get really “hard” making the problem far more extreme.

Yes, I did question the assertion and still do.

I have read or heard nothing that suggests that *people* will have difficulty getting across the border. There is no infrastructure currently in place to *stop* the movement of people … or indeed anything else.

If the Irish Government are going to enforce single market rules and customs checks then it would take many months to build the necessary depots / inspection posts *away* from the border – you can’t just do all this stuff beside the road.

Even the EU itself has admitted that a technological solution may have to be found in the event of a no-deal Brexit. It is also possible that the EU would make additional single market checks at ports for shipping arriving from the Republic of Ireland (to the annoyance of the Irish).

On the other point of lack of recognition of EU auditor qualifications in the UK – I don’t see that as a particular problem. Even though I live in London, I have never met any audit partners whose right to continue signing off audits arises solely from their EU auditor qualification. I dare say there are some, but probably not too many.

I feel a far bigger problem for the UK audit market over the past 20 years is that many registered auditors (admittedly mostly smaller auditors) with a UK audit qualification have been choosing to give up their audit qualification, because it is just too much hassle. But the auditing world has managed to carry on – probably because there aren’t so many audits to go around.

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