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Brexit - the immigration consequences for UK businesses

Posted: 01/07/2016

The most important message following the outcome of the referendum is that, until the UK formally leaves the EU, EU law will continue to apply within the UK. There will be no immediate change in the way that people move or trade. The same cannot however be said of public perception and the uncertainty felt by UK businesses and those who are planning to move to or do business in the UK.

The type of immigration system the UK will end up with in relation to EU nationals will be dependent on which of the following two outcomes currently being debated is pursued:

  • The UK leaves the EU and the single market which may mean that EU/EEA nationals will have to comply with domestic UK immigration laws (Points Based System)
  • The UK leaves the EU but signs up to the EEA option ie stays in the single market in which case free movement for EU nationals could continue.

In the highly unlikely scenario that the referendum is overturned, the changes negotiated by the Prime Minister ahead of the referendum placing certain restrictions on free movement of family members of EU/EEA nationals may be brought in.

Regardless of which option the Government takes forward, there will be a significant job to do in the two year period before the UK leaves and all EU treaties will cease to apply. This will include negotiating new trade deals, considering its stance on immigration, and identifying which of the UK’s laws need redrafting and those which should be repealed.

Below we set out some key immigration considerations for employers:

What happens to your current EU/EEA employees and their family members?

EU/EEA passport holders, those holding EEA residence cards, and their family members already in the UK can continue to work and travel freely (free movement rights). Those employees who have been in the UK exercising treaty rights for at least five years may wish to apply for permanent residency to confirm their status. These applications can take up to six months to process.

For those employees who do not currently qualify for permanent residency but are in the UK exercising treaty rights, it is expected that transitional arrangements will eventually be put in place to allow them to continue their employment. If the UK opts for the EEA model, then these employees may still be able to qualify for permanent residency.

What happens to those EU/EEA nationals recruited following the Brexit vote but before the UK formally withdraws from the EU?

For those employers looking to hire/in the process of recruiting EU nationals, new hires are also expected to be covered by transitional arrangements.

What will be the process for hiring EU/EEA nationals if the UK formally withdraws from the EU and the single market?

Nationals of EU/EEA member states would need to meet the requirements of UK domestic immigration laws. Any new immigration laws affecting EU/EEA nationals will also need to take into account the reciprocal arrangements that the UK will require for its nationals. For those simply visiting the UK for leisure or business, there is unlikely to be a significant impact but for those seeking to work or study in the UK, it is expected that entry clearance applications will be required, in the same way as non-EU nationals.

It should be noted that the current UK immigration system does not cater for low skilled migration. Under the Points Based System (PBS), Tier 3 (which was designed for low skilled workers filling specific temporary labour shortages) has never been opened. The reason for this is that the UK had a strong supply of labour from the European Economic Area (EEA) but, moving forward, it is likely that the UK Government will need to resurrect this long forgotten category.

Setting up a business

Currently, the single market allows businesses to set up and operate freely in all member states (freedom of establishment). Crucial to this is the freedom of movement allowing employees to move freely between member states. Should the UK leave the EU and the single market, businesses based in the UK looking to set up branches in the EU or vice versa will need to comply with any new arrangements agreed as part of the negotiations. If the UK opts to join the EEA, the freedom of establishment should remain.

British nationals working in Europe

UK employers also need to be aware of the potential impact on British workers who are required to work in Europe. If the UK imposes restrictions on EU nationals working in the UK, it is only reasonable to assume such restrictions would be reciprocated.

As yet no one knows how any new immigration system for EU/EEA nationals will pan out. Employers should therefore do what they can to ensure that any EU/EEA nationals they are currently employing/intend to employ prior to the UK’s formal withdrawal from the EU are kept informed of changes as and when they are announced.

The immigration team at Penningtons Manches will provide further updates as soon as they are available.

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Penningtons Manches Cooper LLP

Penningtons Manches Cooper LLP is a limited liability partnership registered in England and Wales with registered number OC311575 and is authorised and regulated by the Solicitors Regulation Authority under number 419867.

Penningtons Manches Cooper LLP