Vistra Insights

How can employers overcome the Brexit impact?

The dreaded “B-word” has been on the nation’s lips since June 2016, with negotiations having taken far longer than the government anticipated. As of 11pm on 31 January 2020, the UK is no longer a member of the European Union.
Where are we now?

On 23 January 2020, the European Union (Withdrawal Agreement) Act 2020 was given royal assent. The EU voted on 29 January 2020 to accept the terms of the Withdrawal Agreement negotiated by Boris Johnson’s government. The Act implements the government’s deal with the EU into UK law. As a consequence, the UK is no longer an EU member state.

Instead, the UK has now entered the “Transition Period”, which will extend until 31 December 2020.  During this period, the UK will effectively operate under EU rules, while negotiations over a new UK-EU trade deal will begin and will include discussions over tariffs, data protection and more.

There has been talk of extending the transition period to as late as December 2022 in order to allow additional time for negotiation, but the government has so far ruled this out. This article is therefore written on the basis that the transition period will end on 31 December 2020.

What does Brexit mean for UK Employment Law?

All  EU-derived employment legislation in place prior to the date of exit, 31 January 2020  still applies post-Brexit, courtesy of the European Union (Withdrawal) Act 2018. Accordingly, EU derived laws, such as the Working Time Regulations, continue to be applicable to UK employees.

There was and is a common misconception that worker’s rights would be reduced immediately upon the UK leaving the EU. This is not the case (although some rights that came exclusively with EU membership, such as the right to set up a European Works Council, have since fallen away).However, this is not to say that UK employment laws may not be eroded post-Brexit.

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 worker’s rights if it so chooses (subject to the trade deal agreed with the EU, which may yet contain ‘level playing field’ provisions for worker’s rights).

In December 2019, a new Employment Bill was announced in the Queen’s Speech, which will set out the government’s approach to worker’s rights post-Brexit among other proposed legislative changes. Whilst we do not know exactly what this Bill will look like, it is possible it will include extending redundancy protections, among other things.

In any event, immigration rules are set to change following the end of the Transition Period on 31 December 2020.

Changes for EU citizens residing in the UK

Another common Brexit misconception is that the current agreement which allows EU citizens to move freely between European member state countries (i.e. freedom of movement) has ended as of the date of exit. This is not the case. Freedom of movement will continue until the end of the Transition Period on 31 December 2020.

After this period ends, freedom of movement will no longer include the UK. Accordingly, concerns have long since been raised regarding the status of EU Nationals already residing in the United Kingdom.

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. Continuous residence must be proven to meet the criteria for this, including not being absent from the UK for more than 6 months in any 12-month period without genuine reason (e.g. 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 until such time as they meet the 5-year residency requirement for Settled Status, which they can then apply for. 

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.

Applications for either status are free and can be completed via a smartphone application or online up to a deadline of 30 June 2021. However, it is advisable for EU citizens to apply via the EU Settlement Scheme in advance of December 2020, in order 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 exactly what the new UK immigration system will look like, it is likely to be a far more stringent system which focuses 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.

    This should be carried out 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 information workshops put on 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. 
     
  4. Undertake full right to work checks on your employees.

    Employers should be diarising right to work checks for October 2020, i.e. before the end of the transition period in December 2020. We advise encouraging 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 new recruits in the pipeline that are currently based elsewhere in the EU, they should be brought in to the UK by 31 December 2020 to make use of the EU Settlement Scheme.

The future of worker’s rights in the UK following the end of 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 worker’s rights.

In the meantime, from an immigration perspective, transitional arrangements for EU nationals who wish to work or continue working in the United Kingdom have been implemented in the short term. 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.

At Vistra Corporate Law, as a regulated law firm and part of the wider Vistra family, we are uniquely positioned to provide integrated legal services alongside our other client offerings.  We provide specialist advice in the areas of Employment, Corporate and Commercial law and ensure we are at the forefront of legal developments across the EU.

Brexit has led to sustained uncertainty for employers of all sizes. If you would like to discuss your business’s specific Brexit-related requirements or require advice on the steps you should be taking, please email Victoria McMeel, a solicitor and Director of the Vistra Corporate Law Employment team, at Victoria.McMeel@vistra.com.


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

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