How can employers overcome the Brexit impact?

13th Jan 2020
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Brexit has been on the nation’s lips since June 2016, with negotiations having taken far longer than the government anticipated. We now have a leave date of 31 January 2020.

So far, Brexit has resulted in debate and controversy at every step, giving rise to three separate rejections by Parliament of the original EU withdrawal agreement and the resignation of Prime Minister Theresa May. It has dominated a General Election and seen Boris Johnson assume the role of PM with a vastly redistributed Parliament. The original Brexit ‘leave date’ was extended three times, before the latest Withdrawal Agreement was passed by Parliament on 20 December 2019.

Where are we now?

As things stand, the UK should leave the European Union on 31 January 2020 with the Withdrawal Agreement in place - subject to the European Parliament giving its green light on the deal.

Following this, the UK will enter a transition period until 31 December 2020 where it will effectively operate under EU rules. Negotiations over a new UK-EU trade deal will begin soon and will include discussions over tariffs, data protection and more.

Some considered the transition could be extended to as late as December 2022 to allow additional time for negotiation, but the government has so far ruled this out. We wrote this article on the basis that the transition period will end on 31 December 2020.

What does Brexit mean for UK Employment Law?

All current employment legislation will still apply post-Brexit, courtesy of the European Union (Withdrawal) Act 2018. The Act states that all direct EU-derived legislation in operation before the date of exit will remain in place following that date. Accordingly, EU derived laws, such as the Working Time Regulations, will continue to apply to UK employees.

However, UK employment laws may be eroded post-Brexit. Once the UK has left the EU, it will no longer be subject to EU Directives and Regulations. Parliament will be free to enact or repeal legislation without regard to the EU laws from which they derived. On this basis, Parliament could elect to reduce worker’s rights if it so chooses.

In any event, immigration rules will change following the end of the transition period on 31 December 2020.

Changes for EU citizens residing in the UK

After the transition period comes to an end on 31 December 2020, the current agreement that allows EU citizens to move freely between European countries (i.e. freedom of movement) will no longer include the UK. The status of EU Nationals already residing in the United Kingdom raised significant concerns.

In response to this, the UK government implemented the EU Settlement Scheme whereby EU nationals who already reside in the UK or will arrive before 31 December 2020 can apply for Settled or Pre-Settled status. The scheme has been in operation since 30 March 2019, and the criteria for applying are as follows:

Settled Status (or ‘indefinite leave to remain’) is available to EU citizens, EEA nationals and Swiss nationals who have been UK residents for at least 5 years. They must prove continuous residence to meet the criteria for this, including not being absent from the UK for more than 6 months in any 12 months without genuine reason (eg serious illness, pregnancy or compulsory military leave). EU citizens who obtain Settled Status are then able to stay indefinitely.

Pre-settled Status (or ‘leave to remain’) is available to EU citizens, EEA nationals and Swiss nationals who have been UK residents for less than 5 years. By obtaining Pre-settled Status, such individuals are entitled to remain in the UK and apply for Settled Status once they met the 5-year residency requirement.

From 30 March 2019 applications for either status are free, and can be completed via a smartphone or online up to a deadline of 30 June 2021.

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.

EU citizens should apply via the EU Settlement Scheme in advance of December 2020 to mitigate any risk that they will no longer have the right to work in the UK.

Changes to the UK immigration system post-Brexit

The UK government has stated that it will introduce a new points-based immigration system in 2021. It has commissioned the Migration Advisory Committee to review other systems around the world and identify features which will best strengthen the UK’s labour market.

While we do not yet know what the new UK immigration system will look like, it is likely to be far more stringent and focused on skilled labour.

What steps should UK employers be taking?

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

1. Undertake a full audit of the workforce to identify who is impacted by Brexit.
Employers should carry out a full workforce audit as a matter of urgency. Often overlooked are the family members of European nationals – for example, a US national working in the UK as the family member of a European national.

2. Take an active role in encouraging employees to consider their status.

Encourage employees to consider their status and help them apply for the most appropriate documentation.

3. Offer practical support and resources to employees. 
For example, hosting workshops where immigration experts 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.

4. Undertake full right to work checks on your employees.
Employers should be diarising right to work checks for October 2020, ie before the end of the transition period in December 2020. Encourage employees to make use of the EU Settlement Scheme as soon as possible and in any event in advance of December 2020.

5. Consider your talent pipeline on an urgent basis.
If there are 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 Brexit process will almost certainly remain unpredictable for some time to come. However, in the short term, the government has implemented transitional arrangements for EU nationals who wish to work or continue working in the United Kingdom. The emphasis is on the employer to make use of the EU Settlement Scheme and to move as quickly as possible to retain and recruit EU national employees who will be key to the continued success of their business.

If you would like to discuss your business’s specific Brexit-related requirements or require advice on the specific steps you should be taking, please email Victoria McMeel, a solicitor and Director of the Vistra Corporate Law Employment team at [email protected].

Authors:
Victoria McMeel – Director, Solicitor
Edward Smith – Associate, Paralegal