Hard Or Soft Brexit – What Are The Risks That UK Companies Should Consider

7th December 2017 by

There has been a great deal of uncertainty and animosity between the UK and the EU since the referendum of 2016 and the implementation of Article 50 in March 2017. It is not clear what kind of relationship the UK will have with the EU in the wake of Britain’s withdrawal from the European Union, or what form a post-EU arrangement will take. There are however several likely implications for EU nationals in the event of a hard or soft Brexit:

Soft Brexit

  1. A transitional period of 2 years permitted from March 2019 to allow EU nationals already in the UK to apply for permanent settlement.
  2. Freedom of movement to continue for those that wish to work in the UK, but a job offer required before an EU national is allowed to come to the UK.
  3. No minimum skills threshold.
  4. No minimum pay requirement.
  5. No residence labour market test required.
  6. Right to permanently settle to continue after 5 years residence in a qualifying category.
  7. Application fee to settle or reside to remain at £65 per applicant.

Hard Brexit

  1. No transitional period. EU workers who do not have the right to permanent settlement must make an application, prior to March 2019, to remain in the UK.
  2. Freedom of movement to cease from March 2019. A new immigration category introduced for EU migrants similar to the present Points Based System (PBS) for non EU workers.
  3. Minimum skills threshold similar to the PBS.
  4. Minimum pay requirement.
  5. Residence labour market test required.
  6. Right to permanently settle to continue.
  7. Application fee to settle or reside to be raised to circa £1000.

How can UK companies minimise  the risks?

EEA Permanent Residence

Under the current EEA Regulations (Reg. 15), EEA nationals are entitled to permanent residence if they have been resident in the UK as a qualifying worker for a period of 5 years and have not spent more than 6 months out of the UK in any calendar year. This will provide these individuals with settled status and allow them to remain in the UK post Brexit, irrespective of the outcome of Brexit negotiations.  In addition, after 1 year of holding EEA permanent residence, these individuals will be eligible to apply to be naturalised as a British citizens.

Residence Permit (those EU employees that haven’t been residing in the UK as qualified workers for 5 years)

Under the provisions of the EEA Regulations, an EEA national exercising Treaty rights as a worker is entitled to apply for a 5 year Residence Permit. EEA nationals do not need to apply for such permits in order to work here; their passport or national identity card is sufficient to allow them to do so. The EEA Residence Card is simply a documentary proof of an automatic entitlement.  We are however advising clients to make such applications. There is a possibility that following Britain’s exit from Europe, EEA nationals may not have an automatic right to live and work in the UK.  They will however be able to argue that they have a 5 year grant of leave, which still stands, and had a legitimate expectation of that right as the law stood at that time of the grant of leave.

What are the pros and cons of regularising your employees status now or waiting till after the Withdrawal Agreement is finalised?

Pros

  • Certainty gained by regularising the immigration status of your EU workers
  • Goodwill established with EU workers
  • Significant reduction in application costs and legal fees as many EU nationals will have the right to challenge a hard Brexit in court

Cons

  • Legal costs incurred now as opposed to waiting and applying post Brexit
  • After incurring legal costs for each employee, they may leave employment

What are the cost implications for UK Companies to regularise the status of their EU employees now or waiting post Brexit?

Applying now

  • £65 application fee plus legal costs (fixed)
  • Decision made within 2-4 months

Applying Post Brexit

  • £1000 per application (estimate) plus legal costs (fixed)
  • It could take considerably longer for a decision to be made, since hundreds of thousands of EU nationals will be applying simultaneously

For more information on this topic or any service we offer please contact our immigration team on 020 7822 4000 or email enquiries@healys.old-website.shout-loud.co.uk.