Last reviewed 23 May 2018

Stuart Chamberlain brings us up to date with the latest developments in the Brexit negotiations.

One of the potential problems identified for the post-Brexit period is a shortage of necessary labour. This is an issue of concern, particularly for employers in production-based industries that are heavily dependent on migrant labour, including seasonal workers from Eastern Europe. Concern has also been expressed about the ability or willingness of the British labour force to fill these gaps. Recent figures on migration from the Office for National Statistics (ONS) are summarised below.

Agreement over the rights of EU citizens living and working in the UK (and UK citizens in the EU) was a precondition of progress in the negations over UK’s divorce from the EU. Some relief for these employers and the EU citizens working in the UK came in December 2017 with an agreement between the UK and the EU on citizens’ rights on the UK’s withdrawal from the EU. This agreement provides some certainty for UK employers over the continued use of an EU workforce.

The agreement

As part of Brexit negotiations, the EU and the UK have now agreed in principle to a transition period during which the free movement of EU workers will continue. The agreed transition period will run from 29 March 2019 — when the UK will leave the EU — through to 31 December 2020. During this time the free movement of EU workers in the UK will continue.

This permission is also extended to resident nationals of Norway, Iceland, Lichtenstein, and Switzerland. Irish citizens residing in the UK will not need to apply for settled status to protect their entitlements, as the rights of British and Irish citizens in each other’s countries are rooted in the Ireland Act 1949.

Three different processes apply, dependent on when the EU national arrived in the UK.

  1. EU/EEA nationals who arrived in the UK by 29 March 2019 and have lived in the UK for five years will be allowed to stay indefinitely by applying for “settled status”. Once granted, it will mean that individuals can live, work, and enjoy the benefits of living in the UK indefinitely. They will be able to apply for British citizenship once they are eligible to do so.

  2. EU/EEA nationals who arrived by 29 March 2019 but have not been in the UK for five years will be able to apply for temporary status to remain in the UK until they have reached five years’ threshold. They will then be able to apply for settled status.

  3. Those who arrived in the UK after 21 March 2019 — that is, during the “implementation” or “transition” period. The Government announced in February 2018 that these individuals will be required to register — a common process in other EU nations. Thereafter, these workers will apply for temporary status until they have been in the UK for five years. They may then apply for indefinite leave to remain.

Close family members (spouses, partners, dependent children and grandchildren, and dependent parents and grandparents) will be able to join EU citizens after Brexit, where the relationship existed on 31 December 2020.

What is “settled status”?

The Government has promised that the process will be “streamlined, quick and as user-friendly as possible”. It will be an online service, which will go live in the autumn of 2018. Any citizen applying for settled status will need to:

  • provide an identity document and a recent photograph to confirm identity and nationality

  • pay a fee — the Government has stated that this application fee will be no more than the cost to British citizens of a UK passport (presently £75.50). If an individual already has a valid permanent residence document no fee will be payable.

  • declare any criminal convictions.

Therefore, unlike current EU law on freedom of movement of labour, all EU citizens will be required to obtain settled status — or temporary leave while they accrue the necessary five years’ residence or registration for those who arrive in the UK during the transition period — as the legal basis for their continued residence in the UK.

The Government has stated that it will apply a light touch during these processes: that EU citizens and their families will have at least two years to apply for a new status in the UK. During this time period and until their applications are decided, they will enjoy their current residence rights.

The Government has put on record that the conditions for obtaining the UK settled status will be at least as generous as those presently laid down in EU law to obtain permanent residence. Plus some leniency will be provided where an EU/EEA national fails to obtain the necessary documentation before a deadline.

There are two stated grounds for a refusal of an application for settled status.

  1. The applicant was not resident in the UK by 31 December 2020 — the end of the transition period.

  2. Serious criminal convictions and a fraudulent application.

A future immigration policy?

The Government has emphasised that from 31 December 2020, the end of the implementation or transition period, it will be mandatory to hold settled status or a temporary residence permit. It is also committed to a more restrictive immigration policy overall, including a reduction in the number of migrants in the UK.

A future immigration policy will need to support the UK economy by enabling businesses and the key sector workforces such as the NHS to acquire the necessary skills and talent from Europe and from around the world. To this end the Government has asked the Migration Advisory Committee (MAC) to gather evidence on EU migration patterns and the role of immigration in the wider economy to assist them in devising a future policy.

The MAC will provide its final recommendations for the design of a new migration system at the end of the Brexit transition period on 31 December 2020. In March 2018 it issued an interim report, highlighting a number of employer concerns about the expected decrease in EU/EEA workers after Brexit:

  • necessary skills for both high- and low-skilled positions are scarce in the UK workforce

  • supply of UK staff is insufficient as unemployment is currently very low

  • EU/EEA workers are more reliable and flexible

  • EU/EEA workers are more willing to take up unappealing work than UK workers.

This report confirms that employers are finding it hard to recruit in a number of sectors and that this problem will intensify after Brexit.

Conclusions

The Government has acknowledged that leaving the EU does not mean the end of migration between the EU countries and the UK. A mantra of the negotiations between the UK and the EU is that “nothing is agreed until everything is agreed”. The agreement still has to be ratified by the other EU states — probably in the autumn of 2018. Some uncertainty therefore remains.

What should employers do now?

The Government suggests that employers do not need to do anything now. There are a number of steps, however, that an employer could consider and these are set out below.

Conduct an audit of the current workforce

Employers should assess their current workforce to identify how many EU employees (and family members of EU nationals) they currently employ and to ascertain how many of those individuals can meet the current five years’ residency requirements. 

The workforce audit should also include checking the immigration status of all members of staff, the length of their service in the UK or abroad and, for EU nationals, the date on which they can apply for documents to certify their permanent residence in the UK. 

It would also be advisable for employers to ensure that their EU employees can provide appropriate evidence to show how long they have currently been living and working in the UK.

On a wider scale, an employer may wish to consider how a more restrictive immigration policy after Brexit could affect its business and ability to hire the necessary workforce.

Consult with EU employees

Employers should provide reassurance to any EU employees that their rights are protected and to explain the process required to apply for settled status.

If an employer is dependent on EU labour, it could consider putting in place a Brexit team to carry out the above steps, to deal with any queries from EU employees about their status and to assist with applications when the online application process goes live in the autumn of 2018.

Above all, keep in touch with any subsequent developments

The Government has yet to provide details of the mechanics for residence documentation or precise details about the procedures for the autumn of 2018. And further information of post-Brexit immigration policy will enable employers to drive business growth and fill skills shortages.

Some recent statistics: a summary

Recent statistics from the ONS shed light on EU citizens living and working in the UK. These statistics set some of the problems outlined in this article in some context. They can be summarised as follows.

  • Some 3.7 million people living in the UK are citizens of another EU country. This represents 6% of the population.

  • There has been a slight fall in net migration to the UK since the EU referendum in June 2016. At the same time there has been an increase in the number of immigrants from outside the EU ( covered by the points-based five tier and visa policy).

  • Some 2.3 million citizens of other EU countries are employed in the UK — a slowing down of the growth rate.

  • Since the 2016 referendum 81% of EU citizens are more likely to be in work; compared with 75.6% of British citizens and 63% on non-EU nationals.

  • Polish is the largest EU nationality in the UK, followed by Romanians and Irish nationals.