Brexit transition period guide for UK employers

The UK leaves the European Union on Friday 31st January 2020 at 11pm.

The Brexit transition period will then come into effect until 31st December 2020. This is the deadline by which the UK Government has to agree a deal with the EU as to the final terms of Brexit. Where no agreement is made, the UK will ‘crash out’ of the EU under a no-deal scenario.

While negotiations take place during the transition period, the UK will remain subject to the current rules on trade, travel and business.

This means that although ‘Brexit Day’ will not bring overnight changes in employment or immigration rights or responsibilities for employers, the imperative now is for UK businesses to use the Brexit transition period to prepare their organisations and employees for a post-EU future.

As we head into the formal transition period, we look at the key immigration and employment considerations for employers.

 

Brexit & UK immigration

The current status quo remains for UK immigration rules until 31st December 2020.

Travel and movement rights between the UK and EU countries will remain unaffected between 31st January and 31st December 2020. British citizens will not need a visa to travel to EU countries (or vice versa) but according to the European Commission, from 2021, UK travellers will need to apply for an ETIAS (European Travel Information and Authorisation System) visa waiver. Similar to an American ESTA, this is expected to cost around £6 and will be valid for several years.

By January 2021, however, EU free movement is set to end, border checks and controls are to be introduced in the UK and a new immigration system implemented that covers all non-UK nationals supported by a reformed infrastructure to enable and enforce the new rules and regulations.

The Government’s vision is to build a points-based immigration system, modelled on that of Australia. The system is to be centred on migrants’ skills over any nationality-based preference. EU citizens looking to come to the UK after Brexit to work must apply for and meet the same requirements as non-EEA nationals.

Expect changes to immigration rules at break-neck pace as the Government moves to have the necessary rules and systems in place for January 2021, which will also coincide with the deadline for the end of the transition period.

 

EU citizens in the UK

EU citizen rights will remain as they are for the duration of the transition period. EU citizens will continue to be able to come to the UK to work during the transition period, free from travel or work restriction.

For employers, the risk during the transition period is not gaining access to EU workers; it is the declining retention and availability of such workers that is impacting businesses across sectors. EU net migration continues to decline rapidly since the referendum result in 2016, at 48,000 in the year ending June 2019, compared with over 200,000 in 2015 and early 2016.

Employers are being urged to ensure their EU workers are aware of the changes affecting EU free movement and to encourage them to register under the EU Settlement Scheme to safeguard their future status. The deadline for the EU settled status registration is 30th June 2021 if a deal is agreed with the EU.

The Government has made assurances that those EU citizens in the UK who are without EU settled status by the required deadline will not be automatically deported. However, it is expected that EU citizens in the UK who have not registered for settled status may face practical difficulties when proving their right to work and to rent property in the UK after Brexit.

With a surge in registrations expected in advance of the final confirmed deadline, it is advised to apply as soon as possible.

 

A new points-based immigration system

On 28th January 2020, the MAC published an extensive report on a new points-based immigration system for the UK.

Headline findings from the 270-page document include:

• Retaining the existing Tier 2 framework for workers with a job offer, and expanding the skill requirement to medium as well as highly skilled workers.
• Retaining the minimum salary threshold but lowering the current £30,000 threshold to around £25,600, and £17,600 for new entrants (currently £20,800) based on specific calculations, unless the relevant SOC code stipulated a higher minimum.
• Amending or replacing the current Tier 1 (Exceptional Talent) visa to provide a more adequate route for skilled workers without a job offer. The new route would adopt an expression of interest system in which those who want to come to the UK can register that interest and a monthly invitation to apply drawn from that pool, though subject to a cap.
• No guidance could be provided as to changes in the UK settlement system due in large part to a lack of data, although a review was deemed necessary of settlement requirements. The MAC also recommended pausing proposals to increase the settlement salary threshold.
• Ruling out adopting any form of regionalised system or regional salary variations and has instead recommended a separate pilot visa for ‘remote’ areas of the UK. This also comes after Nicola Sturgeon this week called for a Scottish visa system that would allow for a different and more relaxed set of immigration rules designed to attract migrants to Scotland. Given concerns that a restrictive immigration system post-Brexit will hit Scotland particularly hard, The proposal to devolve immigration to Holyrood was however instantly dismissed by the UK government amid fears of further complicating the new points-based system.

 

While the report is not binding on the Government, recommendations in previous MAC reports have been largely adopted, which is expected to be the case for this latest report.

 

Impact on recruitment & workforce planning

High on the business risk agenda is the impact of immigration reform on the availability of migrant workers in the UK economy.

This is without considering the general decline in appeal of the UK among economic migrants due to hostile environment policies and as other countries such as Canada have moved to enhance their appeal among skilled professionals.

Of particular concern are areas of the economy reliant on lower skilled labour from the EU, such as the care, agriculture and construction sectors.

While the Government’s Immigration White Paper from December 2018 gave initial indication that allowances may be made to ease labour shortages through specific lower-skilled routes for specific sectors, this measure has yet to feature as part the Government’s proposals to date for an Australian-style points-based system.

In addition to new and revised visa routes for workers, a new system for sponsoring or hiring visa workers is also expected to be introduced to replace the existing sponsorship licence, as indicated in the Government’s White Paper in 2018. While the detail of any new sponsor scheme is yet to emerge, employers are being warned that the cost of sponsoring overseas citizens under any new points-based system is expected to increase.

Employers will also need to consider how the end of EU free movement and new criteria for hiring non-UK resident workers will impact planned recruitment from overseas from January 2021 onwards. In particular, when submitting annual CoS allocations in April 2020, sponsors may need to factor in EU workers for the January to March 2021 period.

 

Right to work compliance

Existing prevention of illegal working duties will continue to apply to UK employers during the Brexit transition period. Employers should continue to perform right to work document checks on all new employees in the same way as they had prior to Brexit.

However, changes to the right to work regime will necessarily have to follow to reflect immigration reform and the end of EU free movement.

Employers should use the transition period to ensure their compliance house is in order and that all right to work checks and documents are up to date to support with transitioning to any new system.

 

Brexit transition period employment law changes

Again, the 1st February will see no ‘day one’ changes from an employment law perspective. The UK remains subject to existing EU laws and rules until 2021 and existing legislation and case law will continue to apply during the transition period.

Whether the UK departs from current EU requirements in the future, however, will be shaped by any deal (or no deal), to be determined by 31st December 2020.

However, a number of factors would suggest that wholesale reform of existing employment laws is unlikely:

• Much of the EU employment law is effected by UK legislation, and would require Parliamentary approval for specific amendments to be made.
• UK employment law in many areas exceeds the European minimum standards, such as maternity leave entitlement.
• Reducing entitlements could be difficult both from a legal and employee relations perspective. There is little appetite for workers’ rights to be eroded or withdrawn, not least for political reasons, yet the Government’s position in this area remains unclear.
• Key aspects of UK employment law does not derive from Europe, such as the minimum wage.

A key area of contention for the Brexit negotiation is the extent to which the UK will remain subject to European rules and case law. This includes whether UK courts and tribunals would deal with existing UK case law stemming from EU decisions. It is, for example, possible that acceptance of (at least some) EU legislation could form part of a trade deal.

 

What next?

The Withdrawal Agreement allows for an extension of the transition period, but this has to be agreed by 1st July 2020 and would be contrary to Johnson’s Brexit momentum. As such, employers should brace for 11 months of unprecedented upheaval, ensuring a proactive approach to ensuring changes are reflected as required within their organisation’s processes, systems and strategies.