The subject of Brexit is forever in the news, and is likely to remain so for at least another year. Given all the uncertainty and conflict, it would be easy to give up thinking about it and just wait and see. However, EU nationals represent a significant part of the UK’s workforce. Recent figures from the Office for National Statistics show that there are currently 2.28 million EU citizens working in the UK, representing 7% of the UK’s total workforce.
The workforce is a vital part of any organisation, and employers in the UK have benefited enormously from the migration of workers from Europe. Following the Brexit vote, and the subsequent uncertainty, businesses should be mindful that employees could be concerned about their future in the UK, and may decide to relocate back to the EU.
Replacing these individuals when free movement ends, and European nationals are subject to an immigration regime, could be tricky. It could restrict the work that businesses can deliver, and potentially reduce revenues. This could be a serious issue for UK organisations, with many already suffering from a skills shortage due to the record high employment rate in the UK.
Navigating through the uncertainty of Brexit is a significant challenge that all UK employers must confront, and the needs of the workforce must not be overlooked.
This is unlikely to change much either before Brexit, as the present Government have other priorities. This would change assuming we had a different political party in place.
Following the decision to leave the EU, one concern was whether the present Government might repeal some of the legislation that came from the EU. The Government published a white paper which proposes that there will be no regression in employment laws, such as the Working Time Regulations, protection of employees’ rights on transfer of business undertakings (TUPE), discrimination laws and the current collective consultation requirements. This position could change, and once the UK leaves the EU, there may in the longer-term be a growing divergence between UK and EU employment law obligations. In practice, it is likely that much EU derived legislation will remain in force in the short-term, and in some cases, for the long-term.
David Davis, the previous Brexit Secretary, indicated that existing employment law will not be radically changed. He blogged that:
“Empirical studies show that it is not employment regulation that stultifies economic growth… Britain has a relatively flexible workforce, and so long as the employment law environment stays reasonably stable it should not be a problem for business. There is also a political or perhaps sentimental point. The great British industrial working classes voted overwhelmingly for Brexit. I am not at all attracted by the idea of rewarding them by cutting their rights.”
Free Movement of People
However hard or soft our exit from the EU may be there will be some changes to the free movement of people. The Government is planning for a soft exit on this matter, and has various plans to go with that.
By the time the UK leaves the EU in March 2019, European nationals living in the UK will be able to apply for settled or pre-settled status. A transition period will run until 31 December 2020, during which free movement will remain intact, and EU nationals can freely come to the UK.
Brexit and Settled Status
As part of Brexit negotiations, the EU and the UK have now agreed in principle to a transition period during which the free movement of EU workers will continue. The agreed transition period will run from 29 March 2019 – when the UK will leave the EU – through to 31 December 2020.
Three different processes apply, dependent on when the EU national arrived in the UK.
- EU/EEA nationals who arrived in the UK by 29 March 2019, and have lived in the UK for five years will be allowed to stay indefinitely by applying for “Settled Status”. Once granted, it will mean that individuals can live, work and enjoy the benefits of living in the UK indefinitely. They will be able to apply for British citizenship once they are eligible to do so.
- EU/EEA nationals who arrived by 29 March 2019, but have not been in the UK for five years will be able to apply for temporary status (or “Pre-settled Status”) to remain in the UK until they have reached the five years’ threshold, they will then be able to apply for Settled Status. Once granted, it will enable them to live in the UK permanently.
- Those who arrived in the UK after 21 March 2019, i.e. during the “implementation” or “transition” period. The Government announced in February 2018 that these individuals will be required to register a common process in other EU nations. Thereafter, these workers will apply for temporary status until they have been in the UK for five years. They may then apply for indefinite leave to remain.
Close family members (defined as spouses, partners, dependant children, grandchildren, dependant parents and grandparents) will be able to join EU citizens after Brexit, where the relationship existed on 31 December 2020.
The roll-out of the trial registration process for EU citizens shows that the Government is serious about its post-Brexit immigration strategy. Despite warnings from a wide range of industries, sectors and large employers, it appears committed to ending the free movement of workers.
Whilst this potentially signals trouble for employers relying upon EU workers, with a bit of planning, there are steps that businesses can take to both help and support existing EU worker employees, whilst at the same time seek to protect their business over the longer term.
Employers can start by conducting a gap analysis, which identifies their EU workers and inform them of the process for applying, and ensuring that they have access to up-to-date information. It is crucial that organisations should engage with, and provide reassurance to staff, who are worried about what Brexit will mean for them and their families.
One consideration is helping staff through the process of obtaining, or working towards settled status. If requested, employers should make personal information easy and quick to access – details such as start dates and proof of employment may be necessary for employees to start their journey towards formalising their residence. Some employers will choose to take this a step further by offering to cover the cost of their settled status application. This should help reassure workers, while also demonstrating their value to the organisation, encouraging them to stay in the UK. Understandably, not every business will be able to provide such a measure, but they can still give direction and assistance to walk them through the application process.
Employers should take particular care with EU national employees who are currently on, or contemplating going on, an assignment out of the UK. Time outside of the UK could affect an employee’s eligibility for settled/pre-settled status, and this should form part of the planning conversations to ensure that everyone who expects to return and work in the UK in the future is able to do so.
Because Irish citizens had free movement rights long before the UK entered the Common Market, then all Irish employees will still be able to come and go as they please, so are unaffected by Brexit in this context.
What Employers can do – Alternative Strategies
Consider using natural staff turnover, and recruiting who you need now from within the EU, rather than post Brexit.
As recruiting staff from abroad is going to become more difficult, employers ought to consider how they can upskill existing employees, in order to future-proof their businesses. On-the-job and/or external training can provide improved opportunities for keen-to-learn employees, with the added bonus for employers of a highly trained workforce. If you have not already done so, explore how you can take advantage of the apprenticeship levy to create new training opportunities in your business. Given what is being said about immigration, it would be prudent if you are applying for permission to recruit from abroad, to be able to show that you are doing all you can to ‘grow your own’.
Consider obtaining a Sponsorship licence if you do not already have one in place. Failure to do so now will increase Home Office scrutiny, cost and processing times. This option, however, is not for the faint hearted. You may wish to get specialised help to ease the pain of the complications related to this.
Review your internal employment policies for inter-company transfer, and dealing with trips that your staff make in and out of the EU.
No Deal Brexit
UK employers should be alive to the possibility of a no-deal scenario, and ensure they understand the risks, and develop contingencies if the UK’s immigration system for non-EU workers is implemented for workers from the EU.
Much to employers’ and employees’ relief, there will be no mass deportations in the event of a “no-deal” Brexit – EU nationals working in the UK and UK nationals in the EU will not suddenly become illegal immigrants. But there will be complications for employers with staff who travel around Europe, or who post UK workers to an EU country.
In the event of a no-deal Brexit, the transition period until December 2020 will fall away, but this does not mean the UK will close its borders to new entrants. A new immigration system has not yet been designed, and free movement may well continue until a new system is devised, which should minimise disruption.
A further risk is the loss of employees (including key employees) who no longer feel entitled, or inclined, to stay if there is no deal.
Short term business travel is unlikely to be adversely affected. Both the UK and the EU already permit visa-free travel from many countries worldwide, and will likely want to do the same for each other.
The Future for Worker Movement
Prime Minister Theresa May’s announcement on 1 October 2018 that Britain will not continue to give EU nationals preferential immigration treatment after Brexit heralded the future of immigration between Britain and the EU. Britain has yet to decide what the immigration requirements are for EU nationals. Speculation on whether Britain will adopt “US-style” visas for travel and work has been considered, and May herself already indicated that waivers of visa requirements may continue on a reciprocal basis with countries (or regions) with which Britain agrees to these requirements.
The principal import of the Prime Minister’s announcement is that after 2020, EU nationals will need to apply for formal admission requirements in advance of moving to Britain, and may also face travel visa or pre-registration requirements. What these requirements will ultimately translate to will depend on continued negotiations and the input of key business sectors and stakeholders, such as the Migration Advisory Committee.
Employers addressing workforce needs should be closely evaluating their current EU pool in Britain, and the likely fluidity of travel and work assignments in the next 18 months.
Whilst the Government has reiterated that EU nationals do not need to apply for permanent residence, many are still choosing to do so. This may be because they wish to become British citizens before we leave the EU (in which case, under current naturalisation rules, they are required to hold a permanent residence document first). It may be because they are concerned that the volume of applications to be processed means there are likely to be delays in the new settled status being awarded, and they want the certainty of having permanent residence documentation, which will allow later applications to be fast tracked.
The Migration Advisory Committee acknowledges that employers who are trying to plan ahead are being stymied by uncertainty about the new regime. However, the tone of their report suggests any new system should not be sympathetic to those who pay low wages, or who fail to invest in training. We anticipate that the employers who will thrive under any new system will be those who have started taking steps now to become an ’employer of choice’.
Employers will be expected to check EU nationals’ right to work in the UK post-Brexit, the immigration minister has told MPs, though there will be a period where it will be “impossible” for employers to differentiate between somebody who has applied for settled status, and somebody who has recently arrived in the UK.
The Home Affairs Select Committee was advised that employers will be expected to carry out right to work checks when recruiting an EU national. There will be a challenge around how EU citizens evidence their right to work, particularly if they have not yet applied for, or are going through the process of achieving, settled status during the transition period. Any enforcement around the settled status scheme would not be overly rigorous early on, because it is “one of the conundrums that employers will face”, though employers will be expected to make reasonable checks, and “it will be an enormous challenge both for employers and for EU citizens”
There are a number of steps that you could consider now to help their EU workers and themselves.
- Conduct an audit of the current workforce. Employers should assess their current workforce to identify how many EU employees (and family members of EU nationals) they currently employ, and to ascertain how many of those individuals can meet the requirements of the EU Settlement Scheme.
- It would also be advisable for employers to ensure that their EU employees can provide appropriate evidence to show how long they have currently been living and working in the UK. On a wider scale, an employer may wish to consider how a more restrictive immigration policy after Brexit could affect its business, and its ability to recruit its workforce.
- Consult with EU employees. The priority must be to ensure they know they are valued, and that you wish to retain them. Employers do, however, need to be careful about any guidance they provide. Immigration advice is regulated, and it is an offence to provide immigration advice if you are not qualified to do so. The focus therefore should be on regular communication with employees about their intentions to stay or not and if they are planning to remain in the UK what progress are they making regarding applying for legal residency.
- Consider whether you would support employees with the cost of the applications required to secure their status in the UK. Applications for permanent residence cost £65 per person.
Please note that the contents of this newsletter are true at the time of publication, but this is a moving feast, so it is advisable to continue to keep abreast with Brexit developments, as indeed so shall we.
If you need help with how to go about conducting an audit, or any other assistance with preparing for Brexit, please speak to our Consultants.