EU rules on Free Movement of Persons (FMP) currently give businesses, both in the UK and elsewhere in the EU, considerable flexibility to hire workers from other EU Member States. Equally, EU workers can freely move to another Member State to take up work.

FMP allows workers to:

  • move from one Member State to another;
  • reside in the ‘host’ Member State;
  • enjoy the same treatment as nationals of that Member State, including rights at work and access to social benefits; and
  • bring their family members with them (with those family members entitled to the same rights as the workers themselves in the host Member State).

The consequences of Brexit

It remains unclear exactly what immigration rules will apply following the UK’s exit from the EU. But there will certainly be changes.

From the UK’s perspective, the Government has made clear that one of its principal aims in the exit negotiations with the EU will be to reduce net immigration. To do that, it needs to introduce greater controls on EU migration to the UK. The FMP principle is seen as incompatible with this aim. One of the consequences is that the current flexibility for UK employers to engage workers from other Member States will be curtailed.

From the wider EU perspective, it is unlikely that UK citizens will be able to benefit from the full range of FMP rights elsewhere in the EU if EU citizens are not accorded the same rights in the UK.

The precise impact that the introduction of immigration controls may have on the UK economy remains to be seen, but it is likely to be felt across a number of business sectors. While statistics on migration within the EU are difficult to verify and often highly contested, estimates suggest that EU migrants make up a material proportion of the UK workforce, across both skilled and unskilled work. For example, it is estimated that EU migrants account for:

  • It remains unclear exactly what immigration rules will apply following the UK’s exit from the EU. But there will certainly be changes.
  • over 15 per cent of the 4.5 million employees in the UK hospitality industry;
  • 15 per cent of the academic workforce of UK universities;3 and
  • around 20 per cent of the regular employees in Britain’s agricultural sector, as well as the vast majority of seasonal agricultural workers.

The UK Government has a difficult political balancing act to perform here given its stated intention of reducing immigration. There are indications that it will look to implement any changes to the rules on FMP gradually, to avoid a ‘cliff-edge’ effect. The Brexit White Paper, published on 2February 2017, gives a clear signal that this is on the cards:

‘Implementing any new immigration arrangements for EU nationals and the support they receive will be complex […]. There may be a phased process of implementation to prepare for the new arrangements. This would give businesses and individuals enough time to plan and prepare for those new arrangements.’ Similar suggestions were made by David Davis, the UK Secretary of State for Exiting the European Union, in the immediate run-up to the service of the Article 50 withdrawal notice on 29 March 2017. Who may be affected by changes in immigration rules?

1. EU nationals currently living and working in the UK The first category of people potentially affected by restrictions on FMP will be workers who are nationals of other EU Member States and who are currently living in the UK.

As indicated above, under the existing FMP regime, these individuals have direct rights under EU law to (among other things) reside in the UK and access social benefits, including NHS treatment and welfare benefits. Following the UK’s withdrawal from the EU, this group’s rights in these areas will become a matter of UK law exclusively. In practice, this is likely to mean that the UK Home Office will assume a far greater role in determining these individuals’ ability to exercise these rights.

Although the point has not yet been finally confirmed (and has been the subject of considerable speculation in the lead-up to the service of the Article 50 notice), it is expected that individuals resident in the UK as at a particular date will be permitted to remain. That date could be, for example, the date of the referendum (23 June 2016), the date on which the UK served its notice of withdrawal under Article 50 (29 March 2017), or the date on which the UK’s withdrawal takes effect.

Under FMP rules, an EU citizen is typically able to obtain permanent residence in another Member State if they have been resident there for five years. The UK Home Office may therefore be required to process a very large number of applications for permanent residence, as individuals seek to demonstrate that they were resident in the UK before the cut-off date and to have their permanent resident status confirmed. Individuals will need to supply evidence to support these applications, eg evidence of continuous residence in the UK or evidence of financial self-sufficiency. This may not always be straightforward, as in practice many people may not have expected to need to maintain these records.

Furthermore, tighter immigration controls will mean increased checks at the UK’s borders for EU citizens. To add to this, the immigration framework that is introduced for EU citizens will almost certainly represent a departure from the UK’s existing regime. UK border officials will therefore be required to apply new and untested rules in deciding whether to admit or re-admit individuals to the UK, and there may well be teething problems as the UK authorities adapt to the new regime.

All of this is likely to result in greater uncertainty for EU national workers, with knock-on consequences for their employers. People mobility is now viewed as a major priority by many UK businesses, who see the ability to employ overseas nationals, including EU citizens in particular, as critical to their future success.

‘There will also of course be a greater burden on UK employers to show that they are complying with any rules that are introduced to regulate the employment of EU nationals.’

There will also of course be a greater burden on UK employers to show that they are complying with any rules that are introduced to regulate the employment of EU nationals. This could include requirements to apply to become a registered sponsor of EU nationals’ visa applications, to demonstrate that UK nationals have been given the opportunity to apply for any roles ultimately given to EU nationals, and to submit to compliance inspections by the Home Office.

2. UK nationals currently living and working elsewhere in the EU UK citizens currently living in other EU Member States (of whom there are estimated to be around 890,0005) are also likely to be affected. Assuming that EU Member States decide to introduce measures for UK citizens in the EU that are equivalent to those introduced by the UK for EU citizens, those UK citizens will face greater hurdles to work and access social benefits in their host country than they do at present.

In addition, if other EU Member State governments were to impose additional administrative requirements on their businesses when hiring UK citizens versus EU citizens, UK citizens would potentially become less attractive to these businesses from a hiring perspective. In numerical terms, the immediate impact for other EU Member States’ economies if the FMP rights of UK citizens are restricted would likely be less significant than the impact of FMP restrictions in the UK. That is because the roughly 890,000 UK citizens living in other EU Member States are far outnumbered by the roughly 3 million citizens of other EU Member States living in the UK.

3. UK nationals who may be asked to work elsewhere in the EU in future There has been much speculation that a number of UK-based employers, both in the financial services sector and elsewhere, are considering the transfer of at least elements of their operations to the EU in anticipation of Britain’s exit.

If any such transfer is likely to result in significant numbers of UK citizens being asked to relocate, careful consideration will need to be given to the immigration requirements that may apply to them in their new place of work. While EU Member States are unlikely to put up significant immigration barriers for businesses (or parts of businesses) that are being moved into their country, any organisations contemplating a relocation will need to be clear what those requirements will be.

4. EU nationals who wish to move to the UK in future to work The fourth group that will be affected by FMP restrictions will be new arrivals in the UK, ie those EU citizens who are not currently living or working in the UK, but who wish to do so following the UK’s withdrawal. (The position would be the same for EU nationals already in the UK if, contrary to expectations, those already in the UK at a particular date were not permitted to remain.) There are a number of models that the UK could adopt for migrants from the EU, although (as stated above) the UK will need to bear in mind the probability that the remaining EU Member States will seek to apply equivalent measures to UK citizens moving to the EU. ‘There are a number of models that the UK could adopt for migrants from the EU.’ The models that the UK could adopt include:

  • applying to EU nationals the same immigration rules that are currently in place for non-EU nationals, by requiring migrants to demonstrate that they meet minimum qualification or earnings criteria;
  • imposing a cap on the number of migrants entering the UK annually – the cap could be applied to all EU migrants, or limited to specific groups of migrants only, such as those intending to perform low-skilled work;
  • preserving the existing system of FMP for migrant workers (ie those moving to the UK to take up an offer of employment), with tighter restrictions on ‘economically inactive’ migrants (eg jobseekers); or
  • adopting different rules for EU nationals moving to work in different business sectors or regions in the UK, with sectors or regions that are particularly reliant on migrant labour being subject to less stringent rules.

Any new system will need to balance the political imperative of reducing net migration to the UK from the EU with the need to ensure that UK businesses that rely on access to labour from the EU are not unduly affected. However, introducing complex requirements will increase the already significant administrative and resources burden on UK immigration authorities – to be workable, any new legal tests will need to be straightforward to apply.

In the light of these issues, it will be important for UK businesses to engage with the Government during the withdrawal negotiation process to ensure that their views are heard. To the extent that employers are not already doing so, they will also want to consider what the impact of any changes might be on employees who are currently exercising their FMP rights, and what steps might be taken in advance to mitigate the impact of the UK’s withdrawal on their workforce.

‘Employers will want to consider [...] what steps might be taken in advance to mitigate the impact of the UK’s withdrawal on their workforce.’ The same is true for businesses outside the UK, who will also need to consider the effect that changes to FMP might have on members of their workforce who are either UK citizens working outside the UK, or citizens of other Member States working in the UK.

What steps should employers be taking now?

Employers both in the UK and elsewhere in the EU should be:

  1. Identifying key employees in their businesses who are themselves currently exercising FMP rights, or whose family members are exercising these rights (eg a non-EU spouse living in the UK), and discussing with these employees how any restrictions on these rights might affect their ability to work in the host Member State following Brexit. Do these individuals have any other means of remaining in the host state besides relying on FMP rights, eg do they have other relatives with citizenship of the host state? Can these individuals take any steps now to secure their right to remain in the host state post-Brexit, such as applying for permanent residence?
  2. Considering how their business would deal with any additional requirements that are introduced on employers relating to the employment of EU nationals in the UK, or UK nationals in the EU. Would existing in-house teams have the capacity to deal with this, or would additional resource be required?
  3. Engaging with the Government to ensure their views are taken into account in negotiations between the UK and the EU over the post-Brexit immigration framework.