European Union: Brexit: Future Proofing Your European Business

The dust has now settled after the seismic shift of the UK's vote to leave the European Union (also known as "Brexit") on 23 June.  The British Government has yet to formally trigger exit, and legal challenges are underway by opponents of Brexit.  The expectation is still on Brexit taking effect by 2019 as the 2 year negotiation process will likely start next year - even though the terms of the deal with the EU are still up for negotiation. It is clear that until the exit process is complete, the UK remains fully part of the EU and subject to its legislation, yet the projects and investments that companies are planning now may spill over the anticipated post Brexit period.  A substantial portion of UK employment and immigration laws are grounded in EU law - therefore, while waiting to see how "Brexit means Brexit" translates in practice, planning ahead is worthwhile. 

Seyfarth Shaw's International Employment team and Immigration team in London have the following guidance on how to prepare your European business during this transition period and beyond.    

Restructuring

The issue: A number of employers are restructuring their UK operations - either to send an advance guard to another European location (and in some cases use that location for EU financial services "passporting"), or to make savings in anticipation of tougher times ahead.  

Action points: Reductions in force in the UK do not require financial justification. A reduction or anticipated reduction in workload in the UK because of ramping up in another country will be a fair reason for termination provided the correct process is followed. But if an entire team or function is being relocated, this may trigger a TUPE transfer entitling employees to transfer to the new location. Where a restructuring could potentially lead to 20 or more employees being terminated within a period of 90 days, extra consultation applies - and this is arguably triggered when the plans are still in development and have not been finalised.  There are serious financial penalties for failing to follow either the TUPE or redundancy consultation processes.

Mobility

The issue: Perhaps the key issue in the Brexit vote was immigration. Though positions are likely to evolve again the British Government is currently expected to resist continuing the current free access for EU citizens to the UK in the Brexit negotiations.  This would have clear consequences for EU nationals (or family members of nationals) currently working in the UK without the need for immigration approval.  Even if the deal struck allows existing residents to stay, it may restrict future access.  And we expect that any restrictions which the UK applies to EU nationals will be applied equally by the EU to UK nationals living or visiting the continent. 

Action points:

Immigration - EU nationals in the UK. EU nationals are the largest minority in the UK's diverse range of resident workers, making around 10% of the UK workforce.  Employers have no obligation to fund or support nationals applying for local nationality, and would need to be ready to justify doing this for certain employees and not others to avoid potential discrimination liability. However, employers can inform their senior executives and key employees that Brexit could mean the need for immigration approvals in future, and encourage them to make their own applications for UK citizenship or a passport in another EU country now, to anticipate any future change of legislation.

An EU national exercising  their right to live and work in the UK  may apply for a UK residence card to confirm his or her status.  Family members may also apply for a residence card as the dependant of an EU national. This is not mandatory, but we would recommend it as a safeguard in case EU nationals do lose the right to live in the UK post-Brexit.  Residence cards would be valid for five years, at which point the EU national and family members should then be eligible to apply for permanent residence. 

Likewise, the immigration status of UK nationals residing or working in EU countries will not change until the transition procedure has been completed.  We anticipate that UK nationals who are settled in EU countries will be permitted to remain there after the UK has formally left the EU, however this is not guaranteed and will be subject to the outcome of the negotiations. Therefore, UK nationals residing in another EU country, who qualify for permanent residence or citizenship in that jurisdiction, may wish to apply now to formalize his/her status or gain "dual nationality" to preserve his/her right to remain in another EU country post-Brexit.

International assignments. It is likely that the UK will have to make concessions on EU visitors in order to get a favourable trade deal, so it is too early to be recalling employees from assignment or changing mobility strategies. However, we do recommend making a check of current cross-border working arrangements between the UK and the rest of the EU: how many employees may need to change work location or need immigration approvals in the worst case?  

For future assignments, check your documentation includes a continuous duty on the employee to cooperate in providing information on their immigration status and to cooperate in applications, and a right of immediate recall where required immigration approvals are not in place. If an employee cannot continue to work in their location country this may justify termination under local rules (as in the UK) but employees on international assignment may have a right of return to their "home" country and severance payment entitlements. 

Recruitment. Employers should steer clear of taking nationality into account in hiring. Discrimination claims are being reported, where employers prefer UK nationals for jobs because they are unsure that EU nationals will have the right to continue in role post-Brexit. Candidates rejected for this reason would have a right to financial compensation under the UK's anti-discrimination laws.  Similarly, existing employees should not be singled out based on their nationality. 

Mobility - benefits. Assignments between EU countries will need more thought post-Brexit, both in terms of immigration approvals and also because EU rules allowing social security continuation between different member states would likely no longer include the UK. Thought will need to be given to preserving employees' benefits position at the early stages of assignment planning.

At the moment, employees who have worked in different EU (and EEA) Member States receive "credit" for their past service to accrue social security and pension rights. Also, employees entitled to benefits from one country (typically unemployment benefits) may generally receive these when they are looking for work in the UK. Post-Brexit, this coordination could be discontinued, though bilateral agreements could be negotiated between the UK and each of the Member States (as the US has done with individual countries) to replicate the arrangement in part. This could have a particular impact on the pension rights of employees who work in the UK or plan to retire there. 

European projects

The issue: Currently UK employees count towards the thresholds triggering set up of European Works Councils, for employee representation, and employee participation in an SE (the special form of European Company). If and when Brexit does take place, these thresholds may no longer be met, so companies with a large presence in the UK may find they no longer need to maintain a European Works Council. For those who do continue to maintain a European Works Council or SE, UK employees may no longer have a right to be included.

Action points: Check whether your company does have European Works Council or SE. If a European Works Council, check whether it was set following employee request or on a voluntary basis before a request was made, as this will affect whether it needs to continue and whether it will cover the UK.  If it will no longer cover the UK, this would mean that information on UK developments may no longer need to be provided to the European Works Council (although information may still need to be given directly to UK representatives). If setting up a Special Negotiating Body or European Works Council now, companies may want to avoid making it subject to UK law, as this may not be accepted by the EU states post-Brexit.

Data privacy

The issue: If the UK leaves the EU, it will no longer be treated as an automatically "safe" destination for the transfer of data from the rest of Europe. This potentially means separate agreements and security measures would be required in order to transfer data - as is currently the case for transfers between the EU and the US. It is possible the UK's data privacy rules will diverge from the EU's post-Brexit, although the new UK Information Commissioner has recently stated that she expects the same levels of protection to continue: "I don't think Brexit should mean Brexit when it comes to standards of data protection."

Action points: It has been reported that some large European companies, such as Barclays, are considering relocating their key operations or servers from the UK to other EU countries so they can continue to take advantage of free transfer of data between EU member states.  We recommend tracking data flows to assess how far the UK is a hub for EU data and potentially pausing plans to expand data held in the UK. However, maintaining data privacy standards will be key to the Brexit trade negotiations - so for now businesses should be preparing to comply with the EU Data Protection Regulation in the UK which comes into force in May 2018, before the earliest possible date for Brexit. Clients should assume the UK's data privacy standards will be maintained.

Changes to employment law

The issue: A number of the UK's labour laws originally stem from European directives (which set minimum standards for member states to bring into law in their own countries). These include the TUPE regime (on business sales and outsourcing), discrimination legislation and collective redundancy consultation. There is speculation that some of the more employee protective aspects of this legislation could be removed following Brexit.

Action points: Our view is that any changes to UK labour laws post-Brexit will be limited short term. Most EU laws are now firmly embedded in the UK through UK legislation that has been in place for a number of years. There may be scope, in particular, for change around the edges - in particular the European rules on holiday pay and agency worker rights which have been strongly contested in the UK. But as EU law holds good for a minimum of two years, employers cannot yet apply a approach of "wait and see" to claims under these rules. Long term, depending on the terms the UK is able to negotiate with the EU, further reforms may be expected  as the UK will want to ensure it remains a competitive market attractive to employers, yet it is too early to speculate what changes would take place. For now, the UK Government has stated that it will not reduce workers' legal rights - while introducing extra powers to penalize employers who hire workers without the right to work in the UK.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Tessa Cranfield
Similar Articles
Relevancy Powered by MondaqAI
Morrison & Foerster LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Morrison & Foerster LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions