Brexit Bulletin October 11, 2016

11 Oct, 2016

Brexit

The following is a roundup of recent developments concerning Brexit negotiations and the United Kingdom’s withdrawal from the European Union.

News Summary

Prime Minister Theresa May and Home Secretary Amber Rudd have laid out plans which suggest the U.K. should prepare for a “hard Brexit”, but critics in Parliament and the business community have warned that such an approach could have dire consequences for the U.K.’s access to the European Union’s single market and the free movement of people.

May said she would invoke Article 50 of the Lisbon Treaty to formally begin the U.K.’s withdrawal from the U.K. no later than March of 2017. She and Rudd have doubled down on a goal of reducing annual migration to the U.K. below 100,000 per year, which would require, at some point, reducing migration from Europe.

The government faces opposition from some members of Parliament, though, who say that Parliament should have a vote on the terms of negotiating the U.K.’s withdrawal from the EU. There’s also a question of whether May herself can trigger Article 50, an issue that will be the subject of a High Court hearing this week.

The good news for now: It appears that even after the U.K. leaves the EU, which will happen no sooner than 2019, EU workers in the U.K. at the time of the Brexit will retain their status – with many believed to be eligible for permanent residence at or before the point when the U.K. leaves the EU. However, there is little clarity over what immigration framework is likely to be implemented post-Brexit.

Immigration

May said at a Tory Party conference recently that she would not seek a Norwegian or Swiss-style arrangement with the EU, where the U.K. would have access to the single market and retain freedom of movement within Europe.

“It’s not going to be a Norway model,” she said. “It’s not going to be a Switzerland model. It’s going to be an agreement between an independent, sovereign United Kingdom and the European Union.”

May and Rudd would like to reduce annual migration to the U.K. below 100,000 – a goal of former Prime Minister David Cameron’s that he never achieved. This plan could involve abandoning the points-based system for non-EEA nationals and, post-Brexit, EEA nationals as well. Whether a work permit system, with caps on immigration numbers, would be introduced to replace the points-based system remains to be seen.

New Proposals

Rudd outlined plans for reducing European migration in the long term while focusing on other measures in the short and medium term. Specifically, Rudd said the U.K. should:

  • Adopt a more stringent system for employers using the Tier 2 resident labour market test.
  • Create a £140 million fund to support public services in areas with heavy migration.
  • Consider a tiered student visa system, with priority given to students attending elite universities.
  • Require companies to report the number of foreign workers on payroll.

Rudd also profiled some of the Immigration Act 2016 reforms, including making it a crime for landlords to rent to tenants known to be in the country illegally and requiring immigration checks for taxi drivers. These changes are set to take effect in December.

The proposal to force companies to report the number of foreign workers they employ was particularly controversial, but Education Secretary Justine Greening clarified in recent days that this information would not become public and would only be used by the government to identify areas of skills shortages in the U.K. workforce.

Work Rights Post-Brexit

While the U.K.’s future immigration policies for EU member states have not yet been set, the status of EU workers in the U.K. – and U.K. workers in the EU – will not change until at least 2019. May has said that at the time of the Brexit, “existing workers’ legal rights will continue to be guaranteed in law – and they will be guaranteed as long as I am prime minister.”

Press reports indicate that roughly 80 per cent of EU nationals living in the U.K. could be eligible for permanent residence when the U.K. leaves EU – and that the U.K. might grant the remaining 20 per cent amnesty to stay in the country.

Changes on hold

What seems clear at this point is that the Government is increasingly seeing the development and implementation of its migration policies in the context of the Brexit.

Changes to the Tier 2 visa categories announced in March – before the Brexit vote – were expected to take effect this fall, but no date has been announced yet. The delay is most likely due to the further changes that May has indicated will be made within the Tier 2 categories and, possibly, other changes to the immigration system, but few details are available at this time.

Politics

Parliamentary Hurdles

The government is facing opposition from some members of Parliament, both in terms of the substance of its proposals and the process of negotiating the U.K.’s withdrawal from the EU.

“Nobody gave the government a blank check here,” said Sir Keir Starmer, Labour’s shadow Brexit secretary, in an interview with the BBC. “We must have a vote on the opening terms of the negotiation.”

May said a “Great Repeal Bill” would be introduced to remove the 1972 European Communities Act, which gives effect to EU laws in the U.K., from the statute book. The bill would convert existing EU law into British law. It would take effect the day the U.K. leaves the union, but what portions of the law might be changed – and how that would affect migration – remain to be seen. The repeal could provide another opportunity for Parliament to shape the post-Brexit landscape.

“Only Parliament can repeal Parliament’s legislation,” said Scottish Conservative MSP Professor Adam Tomkins. “The government can’t do that and when parliament repeals its legislation it will be parliament that legislates for what replaces the European Communities Act, not Theresa May.”

Legal challenge

There’s also the question of whether May herself can invoke Article 50. May and Attorney General Jeremy Wright have both said that the decision on when to invoke Article 50 rests with the Government. However, a group of Brexit opponents has filed a lawsuit, arguing that Article 50 can only be invoked through an Act of Parliament. A High Court hearing on this question is set for Thursday.

Business

The business community has expressed concerns over the current climate.

“Businesses will not welcome further restrictions on high skilled migration from key trading partners around the world, especially as a series of changes were only announced earlier this year,” Josh Hardie, CBI Deputy Director-General, said in a statement. “At a time when we need strong links globally to seize new opportunities after the referendum, being seen as open to the best and brightest is vital. And we should be clear that business does not see immigration and training as an either/or choice. We need both.”

Companies with concerns about how Brexit-related immigration changes might affect their business are urged to share these with the BAL London Team.

Preparing Your Company

Brexit negotiations will begin once the U.K. invokes Article 50, but now is the time to begin preparing your business for what lies ahead. BAL can assist with a number of services including:

  • Assessing your company’s EU population needs.
  • Tracking EEA employees and new hires.
  • Exploring EEA employee options, including EEA Registration Certificates and permanent residency in the U.K. or British citizenship, or eligibility under the Tier 2 regime.

BAL strongly urges clients to provide feedback on both Brexit and additional Tier 2 changes with the BAL London Team.

Should you have any questions or require more information on how BAL can help with Brexit planning, please contact us at uk@balglobal.com.

The Brexit Bulletin has been provided by the BAL Global Practice group in the United Kingdom. For additional information, please contact uk@balglobal.com.

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