It’s April 2019 and Brexit is still in progress! This month, we are looking at Brexit and the impact on HR and employment law so far. There is also a helpful HR webinar to accompany this Brexit article, which you can watch on demand.
On 23rd June 2016, the UK held a referendum on its membership of the EU. In accordance with the European Union Referendum Act 2015 (EURA 2015), voters were asked a very simply phrased question: ‘Should the UK remain a member of the EU or leave the EU?’
On 24th June 2016, the Chief Counting Officer for the EU referendum confirmed the result:
- 9% of votes (17,410,742) were cast in favour of ‘Leave’
- 1% of votes (16,141,241) were cast in favour of ‘Remain’
On 29th March 2017, the Prime Minister gave formal notice to the President of the European Council triggering Article 50 of the Treaty on the European Union (TEU), commencing the two-year process of the UK’s withdrawal from the EU.
The UK went into negotiation with the EU to conclude an agreement that sets out the terms of the UK’s withdrawal.
The full impact of the UK’s decision to withdraw from the EU remains to be seen. The weight of this point remains true regardless of whether or not an exit is cancelled, as there has already been an impact on many organisations, and there will be continuing ramifications of these alone.
Brexit – Where Are We Now?
The 29th March 2019 at 11pm was the original date and time set for the UK to leave the European Union. However, on 13th March 2019 following parliament’s rejection of both the Brexit deal and leaving the EU with no deal, MPs voted to call the government to extend the 2-year withdrawal period.
As a result, Theresa May sought to extend the exit date until the 30th June 2019, but the EU rejected this. Instead, the EU granted the Prime Minister an extension until the 22nd May 2019, but only on the condition that the withdrawal deal negotiated was approved by MPs before the end of March. Failing this, the UK was given until 12th April 2019 to tell the EU what it wants to do next.
In an attempt to secure the extension date offered in May, on the 29th March, the government asked MPs to vote to approve both the Withdrawal Agreement and the political declaration on the Future Relationship between the UK and the EU. This was rejected twice. In a final attempt, they were then asked to vote just on the Withdrawal Agreement alone. However, this was also rejected by 344 votes to 286.
As a result of the failure to approve the agreement by the deadline, the default legal position is that the UK will now leave the EU at 11pm on 12th April 2019. The European Commission issued a statement, expressing regret over the result and the view that a ‘no-deal’ Brexit is now a likely scenario.
The scope of the Brexit impact so far
‘No-deal’ workplace rights
A number of employment specific regulations and technical notices have been issued in addition to the European Union (Withdrawal) Act 2018, making various provisions. For example, in the event of a ‘no-deal’ Brexit, the law around workplace European Works Councils will change and so will employer insolvency arrangements.
EU derived employment rights
EU legislation ensures a minimum standard of employment rights in a significant number of commonly referenced employment laws in the UK. This includes laws on minimum amounts of holiday, breaks and maternity leave. Although the UK has improved upon many of the minimum standards in the past, a post-Brexit government would be able to amend or remove these minimum standards (subject to withdrawal arrangements or trade agreements).
A key function of the European Union (Withdrawal) Act 2018 is to embed existing EU legislation into UK law, so that when the UK leaves, existing EU derived employment rights will continue to be enforced for the time being.
As above, brand new regulations have also been put in place already which make minor changes to existing laws. These changes are likely to particularly affect organisations who currently employ individuals who are based in the EU.
Upon exit, EU case law will no longer apply, but employment tribunals may still refer to case rulings if appropriate. This may also see current practices that have been learned from case law be destabilised and open up to UK interpretation.
Right to work
This is a change that will impact every employer’s practices to some extent, regardless of whether or not the UK leaves with a deal. The UK’s exit from the EU means the end of free movement, i.e. EU nationals may not come to live and work in the UK simply because they choose to, and neither can UK nationals do the same in the EU. To prevent a cliff edge effect whereby EU nationals would have to up and leave their jobs on exit day, the government have confirmed a transitional period will be in place. This is expected to last for approximately two years and at least until the end of December 2020. The transitional period will go ahead regardless of whether or not the UK leaves with a deal, but the precise dates are subject to the Brexit negotiations.
During the transition, right to work checks will continue as they are; for example, a Spanish national may continue to present their Spanish passport as proof of their right to work.
However, EU nationals who wish to remain in the UK after the transition period will need to have applied for a new ‘settlement status’. Going forwards, this status will ensure continued rights of those already in the UK, and it will be this which demonstrates their right to work. A status is pretty much guaranteed to all existing EU nationals, provided they are not a persistent or serious criminal. Applications can be made to the settlement scheme now and the deadline for applying will be 30 June 2021, or 31 December 2020 if the UK leaves the EU without a deal.
Thereafter, employers who wish to employ EU citizens who do not have a settlement status will need an employer to sponsor them. This is in accordance with ‘The UK’s future skills-based immigration system’ which was published on 19th December 2018. The government is looking at ways in which they can minimise bureaucratic red tape in the current tier 2 visa system for skilled non-EEA nationals, as part of what is being called a ‘lighter touch’ approach for the future. (Currently, employers have to apply and pay for a licence, face significant fees for each individual they wish to sponsor, and can experience delays of up to several months before an individual can join them.) Plans include; to remove the cap on the number of work visas, to widen the skill threshold to include A-level equivalent qualifications and to remove the labour market test.
Further Guidance: If you are subscribed to our HR Knowledge Base, you can sign in and visit our article on Foreign nationals and work permits for more detail, particularly under the ‘Future changes’ header where there is a lot of information about the settlement scheme. If you are a HR Solutions client, on our HR retained services package, please contact your dedicated HR Consultant requesting the article.
The UK employment market
Latest labour market statistics show that at the end of 2018, there were 2.27 million EU nationals working in the UK, which is 61,000 fewer than the year before. The number of non-EU nationals working in the UK rose by 130,000. Migration levels for the EU are the lowest that they have been for a decade however, it is still adding to the overall population of the UK.
In January 2019, figures for the year show that the overall number of people (both UK and non-UK nationals) working in the UK continues to grow, with a record level of 32.6 million people in jobs by the end of 2018, which is 444,000 higher than at the end of 2017. This is the highest employment rate recorded by the Office for National Statistics, ever.
Further to the above, it is interesting that the number of vacancies has also generally continued to rise since 2009. From October 2018 to January 2019 the number of job vacancies in the UK increased by 4,000, to a total of 863,000.
As more people are in employment and EU immigration levels are decreasing, experts have reported an intensifying ‘talent dilemma’. Various industries have reported concerns about continued business growth, if they struggle to recruit and are also competing for the most talented individuals. This situation along with the prospect of future EU sponsorship requirements, is already seeing many employers report a pressure on pay and benefits expectations and many are beginning to re-strategise how they maintain and attract talent both in the UK and in the EU.
Get support, or further information, in relation to any HR related matter by contacting HR Solutions on telephone number 0844 324 5840 or visiting www.hrsolutions-uk.com/hr-services.