Plan for your workforce
As we count down to Brexit day, the Government has removed much of the immediate uncertainty for employers and prospective employees from EU member states by announcing new transitional rules. While freedom of movement will officially end on Brexit day, in practice, little will change for EU nationals coming to the UK until 31 December 2020.
However, prudent businesses should revisit their no-deal Brexit plans to ensure their organisation has the necessary skills and labour in the right places to continue delivering its business objectives.
Immigration policy after Brexit
The Government published a draft migration policy for the post-Brexit period in December 2018. It is still intended that the new system will take effect from 2021 and the recently announced transitional rules will apply from a no-deal Brexit day to 31 December 2020.
Under the transitional rules, subject to certain “tougher UK criminality thresholds at the border”, EU citizens will be able to come to the UK to live and work here without any formal application process. If those individuals wish to remain in the UK after 31 December 2020, they can apply for “temporary leave to remain” in the UK which, if granted, will allow them to continue living and working in the UK for 36 months from the date it is granted. The rules are very similar to the intended transitional period rules announced on 19 March 2018 and will not affect the rights of EU nationals already in the UK on Brexit day. This is a welcome clarification for UK employers and, in practice, it means that freedom of movement will effectively continue for inbound EU nationals until 2021.
Any EU national who is granted temporary leave to remain in the UK under the transitional rules can apply for permanent UK residency under the new points-based immigration system from 2021 onwards.
The post-Brexit immigration system proposed in the White paper would expand the current skilled migrant program to all inbound workers (including those from the EU). However, it includes a proposal for a temporary ‘Transitional short-term workers’ program to allow low skilled workers from ‘low-risk countries’ in Europe and further afield to come to the UK (without employer sponsorship) and seek work for up to a year.
The Migration Advisory Committee (MAC) did not recommend creating special schemes for low skill/lower paid workers, apart from possibly maintaining a special scheme for agricultural workers. If there is a no-deal Brexit, employers reliant on low skilled workforces will need to consider a longer term plan for their workforce.
EU nationals already working in the UK
Applications for settled status by EU nationals already living in the UK on the date of Brexit must be made by 30 June 2021 or 31 December 2020 if the UK leaves the EU without a deal. Applications for settled status are now open and can now be made free of charge. Businesses should ensure that existing EU national employees that meet the criteria know to apply for settled status.
Pensions on a no-deal Brexit
The Technical Note for the banking, insurance and financial services sector makes clear that the loss of “passporting” rights for financial services (the ability to provide services across the EU from the UK) will have a direct impact on the pensions they provide.
The main practical problem is that without passporting rights, UK-based firms will not be able to make payments into pensioners’ bank accounts in other EEA member states (a no-deal Brexit will mean leaving the EEA as well as the EU). There is also the problem that UK nationals in the EU may not be able to access their UK bank accounts – at least not without transactions costing more and taking longer. However, the Government has already announced that there will be a temporary permissions regime for EU-based financial services providers so that they can continue to pay pensions to UK residents.
If there is a no-deal Brexit, employers will need to make sure that members of their pension schemes fully understand the potential implications – especially if the members are EU nationals or are already living in an EU member state.