Brexit’s transition period is ending: Here’s what UK employers need to do now

1st Dec 2020
Brought to you by
Share this content

It remains unclear whether a trade deal can be struck by the transition deadline and what that deal might look like. The outcome of this deal will have numerous implications that companies should consider to ensure they are on the ‘front foot’ whatever the outcome. 

What Brexit means for UK employment law

All EU-derived employment legislation in place before the 31 January 2020 Brexit date still applies, courtesy of the European Union (Withdrawal) Act 2018. Accordingly, EU-derived laws such as working time regulations continue to apply to UK employees.

This is not to say that UK employment laws may not be eroded as we progress through the post-Brexit era. Once the transition period ends, the UK will no longer be subject to EU Directives and Regulations, meaning Parliament will be free to enact or repeal legislation without regard to the EU laws from which they were derived. 

On this basis, Parliament could elect to reduce workers’ rights if it so chooses (subject to the trade deal agreed to with the EU, which may yet contain “level playing field” provisions for workers’ rights). However, the previous and current governments have committed to ensuring that workers’ existing rights are retained. This was reiterated in March 2020, when a note was issued to confirm that workers’ rights would continue as they stand, whether or not a deal is achieved.

Changes for EU citizens residing in the UK

EU, EEA and Swiss citizens can apply for “settled” or “pre-settled” status under the EU Settlement Scheme. Since its launch in March 2019, there have been more than 3.8 million applications. This is mandatory for all EU nationals who wish to continue living in the UK after 31 December 2020.

Family members can also apply for settled or pre-settled status and should do so at the same time as the qualifying EU national to whom they are related.

Those EU nationals who have been resident in the UK for five years or more will be eligible for settled status, granting them permanent leave to remain in the UK. Those EU nationals with less than five years of residency will be eligible for pre-settled status, granting them leave to remain for up to five years, at which point they will become eligible for settled status. Applications are free and can be completed using a smartphone application, online or by the post, with a deadline of 30 June 2021. However, EU citizens should apply via the EU Settlement Scheme as soon as possible, particularly bearing in mind that there are significant delays in processing applications due to Covid-19.

New immigration scheme

A new points-based immigration system for the UK will commence on 1 January 2021. Except for Irish citizens (who will continue to benefit from longstanding alternative arrangements), this new system aims to attract people who can contribute to the UK’s economy and will treat EU and non-EU citizens equally.

The points-based system will include a broader route of entry for skilled workers who have already secured a job offer from an approved employee sponsor and who amass the necessary points to be eligible to apply. Anyone coming to the UK to work via this route must have been offered a job at the required skill level (English A-Level or equivalent or above), be able to speak English to the required standard, and meet the relevant salary threshold. There are various points attributed to each of these criteria.

If an individual has been offered a role on less than the relevant salary threshold, but not less than 20,480 pounds, it may be possible to “trade” points on other specific characteristics against the salary requirement. For example, if an individual has a PhD relevant to the job offered or is taking a role on the Shortage Occupation List, these characteristics may attract additional tradable points.

There is no general visa route for lower-skilled workers earning on or near the national minimum wage under the new immigration system. It could be argued that this is a significant limitation in the new points-based system. It is notable, however, that the skilled-worker route has been broadened to include lower skills and salary thresholds than the previous points-based system. Despite this, there is continuing concern about the impact of the new system on areas such as adult social care, where, even if the role met the skill requirement, the average pay would be far from the relevant salary threshold.

The government has stated that the country must adapt under the new scheme and look to fill those lower-skilled, lower-paid roles with UK nationals and the 3.8 million EU nationals who have already applied to stay in the UK. With no relaxation on the position anticipated, this change highlights the importance of employers using the EU Settlement Scheme to ensure they can retain any existing EU workers and engage any potential workers who are still based outside the UK.

Businesses that want to recruit skilled EU and non-EU workers in the UK from 1 January 2021 will need to apply for and secure a sponsorship licence from the Home Office. Employers will need to ensure they are up to date with changes which have been made to the sponsorship scheme. If they anticipate recruiting migrant workers after 1 January 2021, they should apply sooner rather than later.

Steps UK employers should take now

We recommend that employers take the following steps to reassure and retain their talent:

  • Undertake a full audit of their workforce to identify who is affected by Brexit. This should be carried out as a matter of urgency. Often overlooked are the family members of European nationals, such as a US national working in the UK as the family member of a European national.
  • Take an active role in encouraging their employees to consider their status. Companies should also help them apply for the most appropriate documentation.
  • Offer practical support and resources to their employees. For example, host information workshops presented by immigration experts to provide up-to-date information. The government’s EU Settlement Scheme toolkit provides factsheets, posters and videos for employers to raise awareness among their staff.
  • Undertake full right-to-work checks on their employees. Employers should be diarising right-to-work checks now, before the transition period ends 31 December 2020. Companies should encourage their employees to make use of the EU Settlement Scheme as soon as possible and in any event before December 2020.
  • Consider their talent pipeline on an urgent basis. If they have key staff or recruits in the pipeline that are currently based elsewhere in the EU, they should be brought into the UK by 31 December 2020 to make use of the EU Settlement Scheme.

The future of workers’ rights in the UK after the transition period will almost certainly remain unpredictable for some time to come. For now, employees and employers can take comfort knowing there will be no immediate changes to UK workers’ rights.

Transitional arrangements for EU nationals who wish to work or continue working in the UK have been implemented in the short term. The onus is on the employer to make use of the EU Settlement Scheme and move as quickly as possible to retain and recruit those EU national employees who will be key to the continued success of their business. Also, with an increasingly global way of working, employers may want to consider geographically widening their prospective talent pool beyond traditional European borders, particularly given the fact that the new points system will treat EU and non-EU citizens equally.

Please contact us if you have any Brexit-related questions or require further assistance.


Victoria McMeel -  Director, Solicitor

Dana Ewans - Senior Associate, Solicitor, Vistra Corporate Law and Middle East Desk (UK)

You might also be interested in