European Union: Brexit Update: Ongoing Uncertainty

In late 2018, Prime Minister Theresa May, head of the United Kingdom's executive branch, and the European Union agreed to a draft form of the agreement that sets out the terms of the UK's withdrawal from the EU (colloquially known as the "Withdrawal Agreement"). However, in recent months Parliament has voted against Mrs. May's deal, whilst the EU has made it clear that it does not wish to renegotiate its terms. As such, the future of the Withdrawal Agreement, and therefore the basis on which the UK will leave the EU, remains uncertain. Meanwhile March 29, 2019, the date of the UK's withdrawal from the EU by automatic operation of law, looms ever closer.

Brexit: where are we now?

The draft Withdrawal Agreement was roundly rejected by Parliament on January 15, 2019 (despite the 18 months that it took to negotiate). Two weeks later, after further debate, Mrs. May secured the backing of Parliament to reopen negotiations with the EU in the hope of extracting fresh concessions on the border between Ireland and Northern Ireland, which has proved a significant sticking point for both sides.

The EU has given no indication that it is willing to entertain re-drafting the terms of the UK's exit, a fact confirmed in clear terms by the President of the European Commission Jean-Claude Juncker on February 7. However, this stance has not deterred Mrs. May, who made a further statement to Parliament on February 12 confirming her intention to push for a revised deal. If no further agreement is reached by February 26, she said, then a further vote will take place in Parliament on the following day.

With just over a month to go until Brexit takes effect, it is still bewilderingly unclear whether the UK will leave with an amended form of the Withdrawal Agreement, or whether another course of action (the options being, broadly speaking: leaving the EU automatically on March 29, 2019 without a deal (often referred to as a 'no-deal' Brexit), extension of Article 50 to allow negotiations to continue, or revoking Article 50 to remain in the EU) is politically possible or viable.

The settlement scheme: some clarity

The draft Withdrawal Agreement included, amongst other things, an agreement on how EU citizens and workers living in the UK (and UK employees employed elsewhere in the EU) should be treated. These arrangements are known as the EU Settlement Scheme.

In order to provide some degree of certainty, the UK Government confirmed in a policy paper published in December that it will operate the EU Settlement Scheme even in the event of a no-deal Brexit, albeit with some crucial differences. Generally, the paper makes it clear that EU citizens and their families who are already living and working in the UK prior to Brexit will continue to be able to do so.

The EU Settlement Scheme as envisaged by the Withdrawal Agreement would provide EU citizens and their families who are resident in the UK by December 31, 2020 with a right to stay and work in the UK thereafter. The December policy paper makes it clear that, even in the event of a no-deal, EU citizens and their family members resident in the UK by March 29, 2019 will be able to apply for settled status or pre-settled status before December 31, 2020.

In both cases, EU citizens who have lived in the UK for more than five years at the time of making the application will be able to apply for "settled status" – that is, the right to remain in the UK for as long as they wish (provided they are not absent for a period of five consecutive years). Citizens who have lived in the UK for less than 5 years will be able to apply for "pre-settled status," which will allow continued residence in the UK until they have been resident for five years, at which time citizens will be able to convert their "pre-settled" status into "settled status."

The key difference, however, is that new EU citizens arriving in the UK during the period between March 29, 2019 and December 31, 2020 will, in most cases, not be able to make an application under the scheme in a no-deal scenario. Instead, they will be subject to the UK's normal immigration rules. Under the Withdrawal Agreement, equivalent provisions were also due to come into force in EU member states for UK employees who live and work in the EU27 – there is no equivalent guarantee under a no-deal scenario.

The key steps for employers to take will depend to some extent on the nature of their workforce. Practical steps might include: 1) undertaking an audit of the workforce to understand how many employees are potentially affected; 2) providing guidance and reassurance to EU citizens already in the UK that they will be able to remain even in the event of a no-deal (subject to having made an application – the fee for which has recently been waived); and 3) considering whether any key EU staff who are due to relocate to the UK after March 29, 2019 might instead relocate earlier to allow them to take advantage of the proposed scheme.

Further employment law repercussions

Employment law more widely will not change in an instant on March 29; even in the event of a no-deal Brexit, the European Union Withdrawal Act 2018 will transpose a body of retained EU law into the UK. This body of retained law will include both UK law that implements EU requirements and most directly-applicable EU law. In the long term, the UK would be free – subject to any future agreements with the EU that restrict this ability – to diverge from EU law, and so gradual changes may occur.

There may be significant immediate impacts on certain specific areas of law, however. For example, procedures may be in flux post-Brexit in relation to social security payments across the UK and EU, and for international litigation.

All of the above is predicated on the assumption that, with or without a deal, the UK will leave the EU on March 29, 2019. Of course, if certain Members of Parliament have their way, Article 50 may be extended or revoked. The former is possible under the text of Article 50 itself, although the unanimous agreement of all 27 remaining EU states is explicitly required, whilst the latter has been confirmed as unilaterally possible by the European Court of Justice. As ever, it seems, we must wait and see.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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