What Does Brexit Mean For International Employers?

On June 23, 2016, in a hotly contested referendum, British voters chose to leave the European Union in a contest dubbed "Brexit" (for "British exit"). It will take some time before the full implications of this decision become apparent to employers with operations in the UK.

Thankfully, very little is likely to change in the short term, providing employers time to plan and adapt to changes as new information becomes available. Exiting from the EU is governed by the Treaty on European Union Article 50, also known as the Lisbon Treaty. That Treaty provides a two year negotiation period (longer if agreed to by the parties) to determine the specifics of withdrawal. During the negotiation period, the UK will remain a member of the EU and continue to abide by EU laws and regulations. After Article 50 is triggered and during the ensuing negotiations, it is more likely that we will come to understand the long-term impacts of withdrawal.

While the results of negotiations will depend on a number of factors, there are several likely outcomes, with each scenario offering differing levels of connection between the EU and UK:

The Norwegian Model: This option might be called the "nearly but not quite" model. It would allow the UK to remain in the European Economic Area/European Free Trade Area, thus minimizing tariffs. This option will likely prove unpopular to "Brexiters" since it would require that the UK remain subject to EU legislation but with no voice in the legislative process.

This option would also require the UK to remain subject to the European Court of Justice. Furthermore (and most likely to offend the "Leave" campaign), the Norwegian Model allows "in general terms" for the free movement of workers.

The Swiss Model: This model would keep the UK as a member of the European Free Trade Area by negotiating a series of bilateral treaties with the EU. This option leaves socio-political issues largely open, and depending on the strength of the UK's position during negotiations, may allow the UK to attempt unilateral action within those spheres.

The Turkish Model: In this scenario, the UK would remain part of the Customs Union without full membership in the EU, thus reducing cost and legislative oversight compared to remaining in the EU. However, doing so would severely limit the UK's ability to negotiate other international trade deals outside of the EU.

Total withdrawal from the EU: Should the UK decide to end any relationship with the EU...