Post-Brexit Labour Shortages: A UK SME’s Guide to Building Remote Teams

Key takeaways

• Post-Brexit immigration changes have made it more difficult for UK SMEs to hire from the EU, especially in sectors like healthcare, hospitality, and logistics.
• Remote hiring gives SMEs access to a broader talent pool, enabling them to bypass visa sponsorship and relocation hurdles.
• Building remote teams involves understanding compliance, investing in tech infrastructure, and creating strong onboarding and communication processes.

Understanding post-Brexit labour shortages and their impact on UK SMEs

Since Brexit, the UK’s labour market has experienced significant shifts. Many small and medium-sized enterprises (SMEs) now face a pressing challenge: how to fill talent gaps without the ease of access to EU workers. Traditional hiring methods no longer offer the same flexibility. Fortunately, remote work opens a new pathway. 

In this guide, we’ll show UK SMEs how to utilise remote hiring to navigate labour shortages, enhance business resilience, and remain compliant in a post-Brexit economy.

Why did labour shortages occur post-Brexit

Brexit led to the end of freedom of movement between the UK and the EU, which significantly reduced the inflow of EU workers. Reports show net EU migration declined by around 5.5% in 2017, compounding skills gaps in SMEs. Stricter immigration policies and sponsorship requirements have made it more challenging and expensive for UK businesses to hire from abroad. Additionally, according to the Migration Observatory at Oxford University, the number of EU workers in the UK decreased by more than 7% between 2019 and 2022, particularly in lower-wage and mid-skilled occupations.

Sectors most affected by labour shortages

• Hospitality and catering: The end of free movement has severely impacted the hospitality industry, which traditionally depended on EU nationals for roles in food service, housekeeping, and guest services. Behind the scenes, back-office roles like reservations, payroll, and operations coordination have also been harder to fill, especially in SMEs with limited hiring budgets.
• Healthcare: A notable drop in EU healthcare professionals has impacted NHS trusts and care homes. BBC reports that social care vacancies in England have risen to 165,000 as EU nationals have left the sector.
• Construction and logistics: These sectors have struggled to replace the EU labour force, particularly for hands-on or shift-based roles. The Road Haulage Association estimates a shortage of over 60,000 drivers, partially due to post-Brexit licensing and border changes.
• Agriculture: The seasonal worker shortage has affected harvesting and production timelines.
• Manufacturing: Delays in production are often compounded by a lack of skilled technicians and operational planners. Support roles in documentation, safety compliance, and logistics planning are equally affected.

“Labour shortages are holding back the economy. Businesses are struggling to find the people they need, and the situation is especially tough for smaller firms.”

— Jane Gratton, Head of People Policy at the British Chambers of Commerce

Consequences for UK SMEs

These labour shortages are not just abstract statistics; they have a real, daily impact on how small and medium-sized enterprises in the UK operate, grow, and compete. The loss of access to a large pool of EU workers has left many SMEs scrambling to fill critical roles, particularly in industries that already operate on tight margins and fast turnarounds.

Increased labour costs

With fewer candidates available domestically, competition for talent has intensified. This often means SMEs must raise salaries and offer more generous benefits to attract and retain qualified staff. For many smaller firms, this puts pressure on operating budgets and profitability.

Delayed delivery timelines

When roles go unfilled, especially in logistics, manufacturing, and customer-facing sectors, delivery timelines inevitably suffer. Orders take longer to process, projects stall, and service delivery slows down. This is especially problematic for SMEs that rely on quick turnaround times to differentiate themselves from larger competitors.

Reduced service capacity

Labour shortages can also force businesses to scale back their offerings. Some hospitality and retail businesses, for instance, have reduced their hours of operation or temporarily closed locations due to staff shortages. For service-based SMEs, this might mean limiting the number of clients they can serve or delaying product rollouts due to a lack of technical support.

Loss of competitiveness in international markets

In a global economy, time is money, and businesses that can’t operate efficiently risk losing out to international competitors. When UK SMEs can’t fulfil orders or deliver services on time, clients may look elsewhere, damaging long-term business relationships. Additionally, an inability to innovate or scale due to limited talent availability can hinder international expansion and digital transformation efforts.

“Cost of labour in Britain up by 30 % since referendum… Brexit and the energy crisis are probably about two‑fifths each [of cost rises].” — Professor D’Maris Coffman, UCL Bartlett School of Sustainable Construction, Guardian

Benefits of remote hiring for UK SMEs

Remote hiring isn’t just a temporary fix; it can be a long-term growth strategy for SMEs facing limited local talent options.

Access to a global talent pool

You’re no longer limited to a 50-mile hiring radius or constrained by immigration policies. Countries like Portugal, South Africa, the Philippines, Poland and Armenia offer skilled, English-speaking professionals across various functions, from software to sales.

Cost efficiency

Hiring from countries with lower living costs allows SMEs to manage budgets more effectively. For example, hiring a digital marketing specialist in South Africa or the Philippines can cost 30–60% less than hiring in the UK.

Increased flexibility and scalability

Remote teams can be scaled up or down quickly based on project needs. SMEs can build agile, project-based teams without committing to long-term office leases or fixed employment models.

Diverse skills and perspectives

International hiring introduces new problem-solving approaches and cultural perspectives that can enhance innovation and creativity.

Improved business resilience

Remote work reduces dependency on local labour supply and can help SMEs better withstand economic shocks.

“Employing cloud‑based collaboration tools and virtual project management systems enables organisations to maintain seamless communication and workflow—even during crises—thus significantly enhancing organisational resilience.” —- Bill Wagner, LogMeIn, Financial Expert

Step-by-step guide: How UK SMEs build and manage remote teams

Step 1: Identify roles suitable for remote work

Start with functions that rely on digital tools and don’t require physical presence. Common remote-suitable roles include:

• Software engineering
• Graphic design
• Digital marketing
• Finance and bookkeeping
• Customer support
• Data analysis
• Sales

Step 2: Create clear job descriptions and expectations

Remote roles demand clarity. Be explicit about:

• Daily responsibilities
• Expected working hours and time zone overlap
• Tools used (e.g. Slack, Asana, Google Workspace)
• KPIs and performance metrics

Step 3: Find candidates through the right channels

When building a remote team, where you look for talent matters just as much as who you hire. Casting your net in the right places will help you attract skilled candidates who are not only qualified but also experienced in remote work. Instead of relying solely on traditional job boards, explore platforms and communities where remote-ready professionals are actively seeking opportunities. 

• Remote-specific job boards: Post on platforms like We Work Remotely, Remote OK, and Remotebase to target candidates accustomed to distributed work environments.
• Professional networks: Use LinkedIn to tap into niche talent pools and passive candidates open to remote roles.
• Freelance and gig platforms: Sites like Upwork, Toptal, and Fiverr can connect you with high-quality freelancers and contractors, especially for project-based roles.
• Industry-specific communities: Join online forums, Slack groups, and subreddits related to your industry to connect with candidates who align with your culture and skill needs.
• Employee referrals: Encourage current team members to recommend remote professionals from their networks, often leading to higher-quality hires and faster onboarding.

Or partner with an EOR provider like Native Teams that handles sourcing, screening, and compliance.

Step 4: Understand legal, tax, and compliance requirements

When you hire someone abroad, their country’s employment and tax laws apply, even if your business is UK-based. You’ll need to:

• Register for tax where required
• Offer mandatory benefits (e.g. pensions, health insurance)
• Handle contracts in local languages if needed

Step 5: Invest in remote work technology and infrastructure

To build a productive and sustainable remote team, your tech stack must be reliable. The right tools can bridge the physical distance between team members and create an efficient virtual work environment. From smooth communication to secure file sharing and accurate time tracking, here are the essentials your organisation needs:

• Communication: Slack, Zoom, Microsoft Teams
• Project management: Trello, Notion, Asana, Jira
• File sharing: Google Drive, Dropbox
• Time tracking: Toggl, Hubstaff

Step 6: Build a strong remote culture

Culture doesn’t develop by default; it requires intention, especially in distributed teams. Without in-person interactions, remote teams can easily feel disconnected or disengaged. Establishing a clear, positive culture helps build trust, fosters collaboration, and keeps employees motivated. Here are some practical ways to cultivate a strong remote work culture:

• Weekly team calls and check-ins: Keep everyone aligned and encourage open communication.
• Celebrating wins (even small ones): Acknowledge achievements regularly to boost morale and momentum.
• Virtual team-building sessions: Create space for informal bonding and relationship-building beyond daily tasks.
• Recognition and career growth: Make sure employees feel valued and see a clear path for their development within the company.

Step 7: Provide structured onboarding and development

Successful remote onboarding sets the tone for an employee’s entire experience. A well-designed process ensures new hires feel supported, connected, and confident from day one. At the same time, ongoing learning and development opportunities are crucial for retaining top talent and creating career progression. Your onboarding and development plan should include:

• Company handbook: Provide a comprehensive guide that outlines values, expectations, tools, and workflows.
• Welcome call with HR/manager: Create a personal connection and address any early questions or concerns.
• First-week plan: Set clear goals and tasks to help new hires integrate and contribute quickly.
• Buddy system or mentorship: Pair new employees with experienced teammates to foster connection and knowledge sharing.
• Training modules and career pathing: Offer structured learning resources and define growth trajectories for every role.

Overcoming common remote team challenges

While remote work offers flexibility and access to global talent, it also comes with some challenges. From communication to time zone differences, these issues can impact team morale and productivity if left unaddressed. Recognising and proactively managing these issues is essential for maintaining a healthy and high-performing team.

Time zone differences

Plan overlapping work hours, use shared calendars, and assign tasks that can be done asynchronously to overcome scheduling hurdles.

Communication barriers

If your team is experiencing communication challenges, consider encouraging documentation, utilising video calls for nuanced discussions, and clarifying expectations through written follow-ups.

• Encourage asynchronous updates (written stand-ups)
• Use clear and concise writing
• Default to video for high-stakes discussions

Data security concerns

Data security is vital when it comes to remote work. You can implement these to secure your company data:

• Use secure VPN access
• Limit admin privileges
• Conduct regular cybersecurity training
• Ensure GDPR compliance when handling EU data

Employee engagement and wellbeing

Providing mental health support for your remote team is very important for a healthy work environment. Here are some things you can do to ensure your team’s well-being:

• Schedule informal catch-ups (e.g. coffee chats)
• Ensure employees have a manageable workload.
• Offer wellness stipends or mental health support
• Recognise burnout signs early

“Remote workers can feel isolated, so we prioritise regular 1:1s and wellbeing check-ins.” – People & Culture Lead at a UK creative agency

Conclusion

Brexit may have changed the way UK SMEs recruit talent, but it also presents an opportunity to adopt a more global approach to hiring. By strategically building remote teams, SMEs can overcome labour shortages, improve cost efficiency, and future-proof their operations. With the right tools, partners, and processes in place, distance is no longer a barrier; it’s an advantage.

Frequently asked questions (FAQs)

1. Is it legal for UK SMEs to hire remote employees living abroad?
Yes, but the employment relationship must comply with the labour laws and tax regulations of the employee’s country. Partnering with an Employer of Record (EOR) like Native Teams ensures full legal compliance.

2. What are the best countries to hire remote workers from post-Brexit?
Top destinations include Poland, Portugal, the Philippines, Armenia, and South Africa, offering a mix of strong English skills, competitive costs, and robust talent pools.

3. How do SMEs handle payroll and taxes for international remote employees?
You can either set up a local entity or use an EOR provider that manages local payroll, tax withholdings, and statutory benefits on your behalf.

4. How can SMEs maintain productivity in remote teams?
Use clear KPIs, provide the right tech stack, and foster strong communication. Productivity thrives with transparency and trust.

5. What are some pitfalls to avoid when building remote teams?
Avoid unclear contracts, misclassification of employees as contractors, neglecting onboarding, and failing to address time zone or cultural differences.

6. How can Native Teams help UK SMEs build and manage remote teams?
Native Teams acts as an Employer of Record in the UK, handling local compliance, payroll, taxes, and benefits across 85+ countries. With Native Teams, UK SMEs can legally hire, pay, and support international employees without setting up a company abroad.