Hard Or Soft Brexit – What are 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 UK declared its intention to leave the EU following the referendum in March 2017. Because of this neither, side is willing to commit to firm promises of what the new relationship between the UK and EU will look like post Brexit. What I can describe (in my view)  is the likely regimes of either a withdrawal  agreement reached or one where there is no agreement.

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 job offer required before an EU national 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 permanent settlement must make an application to remain in the UK prior to March 2019
  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. Eight to permanently settle to continue
  7. Application fee top settle to 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. Also, irrespective of what the outcome of the Brexit negotiations are, these individuals will be allowed to remain in the UK post Brexit. In addition, after 1 year of holding EEA PR, 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 as 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.  The reason we are advising clients to make such applications is because post Brexit EEA nationals may not have automatic rights 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, as they have 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 in 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 with Mobvista

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 within 2-4 months

Applying Post Brexit

  • £1000 per application (estimate) plus legal costs (fixed)
  • Decision,  unknown as hundreds of thousands of EU nationals will be applying simultaneously

For more information on this topic or any service we offer please contact Ivon Sampson on 020 7822 4000 or email ivon.sampson@healys.com.