24 December 2018
The impending departure of the UK from the EU will affect millions of workers and their employers. We look at the steps employers should be considering.
Uncertainty
Such is the current political turmoil that it would be foolhardy to speculate on the nature of the UK’s ultimate relationship with its continental neighbours. For the purposes of this blog let’s assume that some kind of withdrawal agreement is passed by Parliament by mid-January and that therefore the country will leave the EU on 29 March 2019. Following that event there will be a transition period lasting until 31 December 2020. These are important dates for the Government’s advice on the employment of EU citizens, but the proposals relating to the transition period will not apply if the country leaves the EU without a withdrawal deal.
Essential workers
About 3.8 million EU nationals currently reside in the United Kingdom, of whom about 78% are in employment. At December 2017 EU nationals made up 6.8% of the workforce. Some industries are more reliant than others on these workers. 25% of those working in food and drink manufacturing were EU nationals, although this industry makes up only 3% of the country’s workforce. Wholesale and retail represent 6% of the UK’s employees, and of these, 15% were from the EU. Incidentally, 8.6% of NHS doctors are EU nationals.
There is no doubt that over the next few years the number of EU nationals working in the UK will decline and some industries will be hit quite hard. This is due to the fact that although those currently working here or who arrive before the end of the transition period will have the option to remain here permanently, thereafter, EU nationals migrating to the UK will only have the same rights as other foreign nationals have now. According to the Institute for Public Policy Research over 80% of EU nationals currently working in the charity sector would have been ineligible to work here if they had arrived post-Brexit. In social and residential care, the figure is 87%. This is mainly because they would not have passed the skills tests currently required of non-EU migrants.
A change of status
The rights of EU citizens with regard to their living and working here can be summarised as follows:
- Those who have been resident here for five years by 29 March 2019 may apply for Settled Status.
- Those who have been resident here for less than five years on that date can apply for Pre-settled Status, which they can convert to Settled Status once they have been here for five years.
- Those arriving in the transition period must register if they wish to stay more than three months. They also may apply for Settled Status when they can pass the five years’ residence rule.
- Those who already have Permanent Residence Status must apply to convert it to Settled Status.
To qualify as a resident an applicant must have spent at least six months of each of the last five years in the UK and must have proof of this.
Severe penalties
For EU nationals resident in the UK there is no option of doing nothing. The deadline for applications is 30 June 2021, and if Settled Status is not applied for by then that person becomes an illegal immigrant. If their employer continues to employ them, he or she will commit an offence under the Immigration, Asylum and Nationalities Act 2006, and be liable to a fine of £20,000 per employee or up to five years in prison.
It is clearly in the interests of all employers of EU nationals to encourage their employees to apply for settled status (or pre-settled status). At this point, it is worth mentioning that the same rules apply to EEA and Swiss citizens. We suggest that you take the following steps:
- Carry out a review of your workforce to ascertain who may be affected by Brexit, including those in the UK as family members of EU nationals;
- Consider whether individual EU workers or family members may be able to obtain Permanent Residence before Brexit or naturalise as British citizens before the end of the transition period;
- Advise employees to apply for settled status as soon after 29 March as possible and where appropriate assist them with advice, seminars, etc;
- Ensure that employment contracts include terms that stipulate that continuing employment is conditional on the employee having the right to work in the UK;
- If you are considering the secondment of an EU national to a location outside the UK bear in mind that an absence of six months or more will jeopardise any future application for settled status.
- Look into your future recruitment requirements and devise a policy for the replacement of any key EU nationals who might choose to leave the UK or who might fail a residence test.
The above is only a summary of the Home Office proposals, so if you employ EU nationals please do not hesitate to contact us for further advice.
As one of the leading firms of accountants in the North East, with offices in Newcastle, Sunderland and Jarrow, we have the expertise to advise you on a wide range of tax-related issues. If you would like to speak to one of our local experts, please contact us.
