The dreaded "B-word" has been on the nation's lips since June 2016, with negotiations taking us well past the original deadline of 29 March 2019 and just short of the extended deadline of 31 October 2019.
As of 19 October 2019, a request has been made to the EU for a further extension, which may see the Brexit debate move into 2020. This is subject to the EU granting this extension. Meanwhile, MPs are yet to vote on the current deal which Prime Minister Boris Johnson has agreed with the EU.
Amid continuing uncertainty, 'No Deal' Brexit remains a possibility (either on 31 October 2019 or, if an extension is granted, at a later date). Should it materialise, it is crucial that UK employers understand what this would mean for their business and their employees.
Where are we now?
Having been compelled by the Benn Act to request an extension to the Brexit deadline, the UK government is currently waiting to hear whether the EU will grant this. If they do, it will be the second extension they have granted in 2019.
Meanwhile, Boris Johnson's government continues to press on in their attempts to pass the deal they have agreed with the EU through Parliament but are now faced with the prospect of further delays as MPs attempt to force amendments.
If an extension is agreed with the EU, it is possible that a General Election may follow. If it is refused, the UK would be left in a difficult position and would be faced with the prospect of a No Deal Brexit on 31 October 2019 (the current leave date).
What would a 'No-Deal' Brexit mean for UK Employment Law?
All current employment legislation will still apply post-Brexit, courtesy of the European Union (Withdrawal) Act 2018. The Act states that all direct EU-derived legislation in operation before the date of exit will remain in place following that date. Accordingly, EU derived laws, such as the Working Time Regulations, will continue to apply to UK employees, even in the case of a No Deal Brexit.
However, this does not preclude the possibility that employment laws may be eroded post-Brexit. Leaving the EU would mean that the UK is no longer subject to overarching EU laws. Accordingly, the UK government would be able to propose legislation which amends or repeals existing employment protections, as well as introduce new legislation which may be more favourable to employers.
What would a 'No Deal' Brexit mean for UK immigration?
The UK government has not confirmed what its new immigration policy would look like post-Brexit in the event of a "No Deal". However, it is possible that the system would be based on the Australian immigration system and may include provisions such as a minimum income threshold.
What we do know is that in the case of a No Deal Brexit, freedom of movement would end as of the date of exit. In the case of a Brexit deal, there would be a transitional period for freedom of movement extending to 31 December 2020.
Instead, EU nationals who enter the UK following a No-Deal exit date and are looking to settle will only be permitted to stay in the UK for a maximum of three months, provided they have secured permission to work or study.
They would then be able to apply for European Temporary Leave to Remain (ELR), which, if successful, would allow them to stay in the UK for up to 3 years. However, ELR is not a guaranteed route to permanent residency in the UK.
A No Deal scenario would also affect the over 3 million EU nationals already residing in the UK, many of whom live and work under their right of freedom of movement.
To continue residing in the UK, these EU nationals would need to apply for settled or pre-settled status under the government's EU Settlement Scheme, which provides the following:
- 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. A 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.
In the event of a No Deal Brexit, the deadline for applying for either status will be shortened from 31 June 2021 to 30 December 2020. In the interim, question marks may arise over the legal status of EU nationals who have not already obtained settled or pre-settled status before the exit date, as these individuals will be relying on an extinguished right to freedom of movement in order to work in the UK.
In summary, leaving the EU without a deal would mean tighter deadlines and procedures for both EU nationals entering the UK and EU nationals already residing in the UK, as well as potential legal difficulties for the latter if they have not obtained either settled or pre-settled status.
No Deal Brexit remains a possibility. It is therefore important to plan when it comes to your employees so that leaving the EU without a deal does not become an issue for your business.
What steps should UK employers be taking in preparation for a 'No Deal' Brexit?
We recommend that employers take the following steps to reassure and retain their talent:
- 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. Family members can also apply for settled or pre-settled status and should do so at the same time as the qualifying EU nationals to whom they are related.
- 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. Remember, the deadline for applying for settled or pre-settled status in the event of a No Deal Brexit will be 30 December 2020.
- 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.
- Undertake full right to work checks on your employees.
In the event of a No -Deal Brexit, employers should be diarising right to work checks for October 2020. Employers should also be alert to the potential right to work issues which may occur between the exit date and October 2020 as a result of freedom of movement ending.
- Consider your talent pipeline
on an urgent basis.
If there are key staff or new recruits in the pipeline, they may need to be brought into the UK by the exit date (either 31 October 2019 or, if an extension is granted, potentially later). Alternatively, employers will need to make use of the ELR scheme while waiting for confirmation on the UK's future immigration system.
The Brexit process may well remain unpredictable for some time to come. In the event of a No Deal Brexit, however, the message is clear: time is of the essence. 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.
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.