There are approximately 2.9 million EU nationals living and working in the UK as a result of the freedom of movement regime. Brexit and the changes in the UK government make their status a lot less certain. We summarize the key issues as they currently stand.

Key Legal Issues

What is the current position for EU nationals in the UK?
Withdrawal from the European Union is likely to take at least two years. This means there will be no immediate impact for EU nationals because the UK will remain a member of the European Union during that period. EU nationals will continue to have the right to live and work in the UK, and employers will be able to employ EU nationals under the existing freedom of movement rules. Any changes are likely to be gradual rather than immediate.

What is the likely position post-Brexit?
If the freedom of movement framework is withdrawn, then EU nationals will no longer enjoy the automatic right to live and work in the UK post-Brexit. However, it is likely that the UK government will put in place some kind of transitional arrangement regarding EU nationals currently working in the UK. The position for new entrants to the UK is less easy to predict. In the longer term, the hope would be that a reciprocal agreement would be agreed between the EU Member States and the UK, safeguarding the rights of EU nationals in the UK and vice versa.

Nothing can be certain at this stage, and much will depend on political developments, including the stance taken by Theresa May as the new Prime Minister of the UK. At the time of writing, Theresa May has stated that she will seek to “ensure the position” of EU nationals in the UK and British expats in the EU, and appears to favor petitioning Member States for a swift reciprocal solution.

What happens if no agreement is reached with the EU?

If EU nationals in the UK do not retain the automatic right to live and work in the UK post-Brexit, they may instead be subject to some form of points-based system (PBS) for immigration, such as that which currently exists in the UK for non-EU nationals. Currently this system allows for 5 “Tiers” of points-based entry ranging from Tier 1 (wealthy individuals and investors) to Tier 5 (work experience schemes) – although we know that changes to the current system are very likely.

If a similar system does remain in place, then the Tier 2 designation would be the most relevant one for EU nationals seeking to remain in the UK. This Tier covers (a) highly skilled employees filling roles which cannot be filled in the UK and (b) intra-company staff transfers from overseas. Although a PBS would not provide the long-term certainty that EU treaty rights provide, it may nevertheless be worth conducting a high-level analysis of how a PBS might apply to existing workforces. Key points to bear in mind are as follows:

  • The highly skilled employee route requires an employer to test the UK labor market by advertising the role prior to any appointment of non-UK workers;
  • These roles must be sufficiently skilled and must be within a certain range of salary; Employees being transferred intra-company must be able to prove that they have worked for the relevant overseas company outside the UK for at least 12 months;
  • The maximum period for which an employee is permitted to stay under the PBS is five years;
  • Time spent working under an intra-company transfer in the UK will not count towards overall residency rights; and
  • The employer will have to apply to the UK government for a sponsorship license and pay the relevant fees for each transferred employee.

If the PBS is unlikely to be relevant, then employers can also help employees to explore whether they might acquire residency rights in other ways, for example:

  • If employees have already worked in the UK for five or nearly five years, employers could assist them in making applications for indefinite leave to remain;
  • Some employees may have UK ancestry rights as Commonwealth citizens (this is unlikely but not impossible for EU nationals); and/or
  • Employees may qualify as family members of a British citizen or a person already settled in the UK

Key Communication Points for EU Employees

  • There is no immediate change: For the immediate future, and for at least the next two years, EU employees can remain lawfully living and working in the UK.
  • Exploring every option: Many employers are already taking action to safeguard the UK residence right of their employees where possible. These actions include:
    • assisting with applications for indefinite leave to remain for employees who have resided in the UK for five years;
    • assisting those with less than five years in the UK to obtain registration certificates to record their current status in the UK;
    • assisting with applications for British citizenship for those who have six years residence in the UK;
    • considering what rights to British citizenship employees might have on a spousal or ancestry basis; and
    • considering whether the PBS (on an intra-company basis or otherwise) might be applicable.

Employing EU Nationals Going Forward

  • During the next two years, it will still be possible to employ personnel from the EU, EEA and Switzerland in the UK. However, post-Brexit their position in the UK is much less certain.
  • Given the current uncertainty, EU nationals may be discouraged from working in the UK. This means employers may need to review the financial or other incentives they offer to EU nationals to encourage a move to the UK.
  • There may be extra administrative costs to be factored in, such as the cost of more complex immigration advice and visa application fees.
  • Limitations could also be placed on the type of employees who will be allowed to seek employment in the UK, for example, professions identified as having a particular need, which may further restrict the ability of employers to employ talent from the EU.
  • If Brexit results in continuing weakness in the British Pound, and if employers do not adjust pay scales accordingly, international assignments in or out of the UK may be less attractive either to employers or their employees.