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Worker Brexit

What Does Brexit Mean For UK Employers?

There is a great deal of uncertainty as to what is going to happen for both employers and employees insofar as how Brexit will affect workers who are EU Nationals after 19 March next year. So, let’s see what we do know…

 

On 23 June 2016, the UK voted to leave the European Union. On the 24 June 2016, my first call of the day came from a rather shady local employer who said;

“John, John what can I do, my whole work force comes from Poland,Latvia, Estonia, Hungary and Lithuania. How am I going to cope without them; what can I do?”

Having worked for this employer for some time, I suggested that he give all his employees proper contracts or at least a written statement of terms and that he should start complying with the existing laws of the land including the minimum wage! – but insofar as to the nationality of his workforce is concerned he should, in the words of the now defunct Ministry of Information;

“KEEP CALM AND CARRY ON”!

Nearly two years down the line and we are in a slightly better position to make some decisions and advise. On 29 March 2017, the UK government served formal notice under Article 50 of The Treaty on European Union to formally terminate the UK’s membership of the EU. Based on Article 50, the EU Treaties shall cease to apply to the UK and the UK exit will take effect in March 2019. So, we will have had two years to get our acts in order. The real problem of course was that the result of the referendum was so unexpected. The government was completely surprised by the result and, as a well-known wit once said, “Even Baldrick had a plan!”

 

So, what will it all mean for Employers and Employees who currently have legal relationships with, or are, EU Nationals. Well there are still some questions that need to be answered, but it looks like your German and French Staff, will have to undergo some of the same obligations and screenings that Australian or US staff currently face unless they have been here a while.

The exciting thing from a legal perspective is how the white paper on the European Union (Withdrawal) Bill that passed its second reading in the House of Commons on 11 September 2017 is going to become law. The Bill will repeal the European Communities Act 1972 that currently gives EU law direct effect in the UK and primacy over UK law. A foreword to the White Paper from David Davis, Secretary of State for Exiting the EU, clarifies that “the [European Union (Withdrawal)] Bill will convert EU law as it applies in the UK into domestic law on the day we leave – so that wherever practical and sensible, the same laws and rules will apply immediately before and immediately after our departure”. Yet this isn’t quite true because free trade and freedom of movement will be over.

The key features of the Bill that are outlined in the White Paper are as follows:

(a) the Bill will adopt any EU laws which are directly applicable in the UK;
(b) the Bill will preserve all UK laws that implement the UK’s EU obligations (hence the recent GDPR obligations);
(c) the rights in the EU treaties can still be relied upon in the UK courts; and
(d) the Bill will provide that the European Court of Justice’s rulings to date, whilst the UK was a member state, will have the same authority as decisions of the Supreme Court.

The rights of Workers’ are specifically referenced in the White Paper as an area where existing law will be preserved once the UK has left the union. And It appears that it is unlikely that there will be any immediate or fundamental changes following Brexit.

 

UK law already provides better protection to workers than the minimum required under EU Law and so the minimum wage, unfair dismissal, some holiday and parental leave rights will remain the same under UK legislation as being better and more beneficial to employees than EU requirements. The government has also promised to retain EU concepts that have become entrenched in the workplace such as some aspects of TUPE, aspects of discrimination law and redundancy requirements. Although in time one may expect succeeding governments to fiddle with these depending upon their manifestos and the support they are hoping to elicit.

Areas of Law that may be under threat are those areas where the EU made concessions to the UK who argued against their adoption. Whilst this won’t change immediately, one may expect that things like Holiday pay whilst on sick leave; some of the TUPE regulations, agency worker regulations and perhaps even equal pay and some discrimination laws could, in time, be re-examined.

But the really big question is the freedom of movement. This is very much a two-way thing with so many UK nationals working and having made their homes in Spain, France, Germany, Italy, the Netherlands and there is the very real problem of the Republic of Ireland.

Those who were pro-Brexit made a real fuss over the EU citizens working in the UK and seemed to be blind to the fact that it was a two-way exchange although there were more Europeans in the UK then there was UK citizens in the EU. As at Brexit there were about 3.7 million EU citizens living in the UK as opposed to 1.3 million UK citizens living in the EU. Both of these figures have supposedly dropped considerably since 2016.

 

Ireland has officially around 331,000 citizens living in the UK but that does not include all of the people with Irish parents and grandparents who are citizens of the Republic according to its independence act this could amount to 25-30% of the UK population (including everyone born in Northern Ireland). Whilst some members of the government want a hard border with Ireland, it may be that most Irish Citizens will be able apply for settled status should they so wish and it is suspected that cost will prohibit a hard border with the Republic. If a hard border was an easy one would have thought that it would have happened in the 1970s.

On 26 June 2017, the Government published a White Paper setting out its proposals for the rights of EU citizens in the UK after Brexit in the expectation that the EU will offer reciprocal treatment for UK nationals resident in its member states. So far the EU have made no public promises.

A secret plan leaked to the Guardian last year gives some direction.

(a) EU Nationals with 5 years of continuous residence before Brexit can apply for settled status and indefinite leave to remain (like non-EU residents)

(b) EU citizens present in the UK before the cut-off date without five years continuous residence in the UK can apply for a ‘temporary status’ in order to remain in the UK long enough to accumulate the five years continuous residence necessary in order to apply for settled status.

(c) Non-EU family members of EU nationals who are lawfully present in the UK before the cut-off date will be granted “deemed leave” and can apply for either settled status or temporary leave. But will also need a residence permit.

So, what does this mean for Employers? Well first you need to check that your employees have made the necessary applications for Settled Status and Temporary Status and, where need be, a residence permit. Failure to check will probably result in the fines or prosecution that currently exists for those who employ people who do not have the right to work in the UK. (Up to £20,000 and possible disqualification of directorships and even criminal charges for the worse offenders).

Of course, the good employer may want to explain this to their employees and might even help with the applications. The Home Office have suggested that there will be a “period of grace” in order for folk to get their acts in order, however the deadlines, dates and rules have yet to be made official.

The Prime Minister has made it clear that a key priority in the Brexit negotiations is the control immigration. Whilst the hints exist it looks like we are relying on the EU member states providing reciprocal arrangements and once the exit is finalised one can expect that work permits will need sponsorship with the same sort of obligations on employers who currently employ and sponsor overseas workers. The days of recruiting directly in Romania or Bulgaria without first checking that there are no UK citizens qualified to fill the posts are likely to be numbered.

So as an employer here is your “to do” list:

1. Audit your workforce and see who is going to need to review their status.
2. Keep an eye open for developments.
3. Advise those workers who need to apply for work or residency status to do so and remember, some employees may be entitled to dual nationality if they have a UK spouse.
4.Beware of potential racial pressures as the leaving date approaches and bear in mind how this might affect your overseas employees.

And then there is the Republic of Ireland, which is still a situation which needs to be confronted and we are still in the dark as to what will be done with our closest neighbour!

John Newcomb is Partner at SNS Solicitors in Maidstone Kent.