With the UK set to leave the EU on 29 March 2019, much uncertainty remains on EU citizens' rights post-Brexit. At a recent roundtable event hosted by Travers Smith for business leaders, one of the key concerns raised was the ability to recruit and retain EU staff. According to the CBI, the issue ranks "equally as important as uncertainty about the UK's future trading relationships". Below we consider some of the key challenges in this area and options for addressing them, in the light of what we know so far from the withdrawal negotiations.

Retaining existing staff

The outlook for existing EU employees is promising and there are active steps employers can take to provide reassurance.

Whilst no formal agreement has yet been reached with the EU, we do have details of the UK's proposals for EU nationals currently in the UK, and these have formed the basis of negotiations so far. EU nationals who have been living in the UK before a specified "cut-off date" will generally be able to stay after Brexit and will have their residence status protected. The cut-off date has not yet been agreed but is widely expected to be set at 29 March 2019; the date the UK will leave the EU. The cut-off date will certainly be no earlier than 29 March 2017, the date that the UK formally triggered the Article 50 process.

The suggestion from the UK Government so far has been that its position on existing EU employees will be the same in the event of a 'no deal' situation.

What are the proposals for existing EU employees?

The UK Government plans to introduce a new requirement for all EU nationals living in the UK to apply for some form of status document on Brexit. Individuals with at least five years of residence will need to apply for a new "settled status" which would give them a permanent right to live and work in the UK. EU nationals with less than five years of residence by the cut-off, will need to apply for temporary status, until they reach the five years required to apply for settled status. Individuals who arrive after the cut-off date are likely to be required to apply under a new regime to be introduced to cover EU nationals arriving after Brexit.

A grace period is expected, to avoid a bottleneck and allow time for EU nationals to apply for their new status after Brexit. This is likely to be up to two years from Brexit. The Government envisages a new streamlined, user-friendly digital application process for applications, with the process potentially opening up in 2018 for those wishing to apply early.

For more detail on the proposals, click here for our briefing on the UK's proposals or here for our briefing on the EU's negotiating position.

What about employees who already have permanent residence?

Under current proposals, EU nationals who have already obtained permanent residence documentation under the current rules would have to re-apply for the new "settled status" once introduced. However, the suggestion is that individuals will be able to "swap" permanent residence cards for a "settled status" document under a streamlined, low cost process, which would not involve a full re-assessment of the residence criteria. It is, therefore, worth EU nationals who qualify for permanent residence under the existing rules applying now.

Recruiting for the future…

The UK Government is yet to publish its policy on the immigration rules for EU nationals coming to the UK post-Brexit. A draft document was leaked to the press in early September 2017, which hinted at a two-tier system for highly-skilled and low-skilled workers. However, it is widely acknowledged that this document does not reflect current proposals. This lack of certainty is perhaps one of the greatest challenges for business. The CBI argues companies are already being deterred from investing in the UK. Concerns were also expressed at our roundtable over the inability to secure the best talent, as some highly skilled, highly mobile and highly sought-after staff such as programmers, web designers and executives are favouring jurisdictions that offer more certainty.

It is, however, likely that the post-Brexit rules for EU nationals will be at least as favourable as those that currently apply to non-EU nationals. The rules favour higher earners and skilled workers. However, for lower paid, lower skilled roles, employers are required to show they cannot find suitable candidates from the local workforce.

A further challenge is that the rules which allow EU migrants to bring family members to the UK are currently more generous than those which apply to non-EU nationals and, oddly, even British citizens. Under current rules, EU nationals are permitted by EU law to bring non-EU dependent parents and grandparents to live with them in the UK; British and non-EU nationals are not. The UK Government will likely want to put an end to this anomaly post-Brexit. This may contribute to the difficulty in recruiting executives for the UK who would like to bring extended family with them.

Further detail on the Government's post-Brexit immigration policy may be some time away. The Government has commissioned the independent Migration Advisory Committee (MAC) to report on the impact of Brexit on the UK workforce and what the UK’s future immigration system should look like. However, the MAC's final report is not due until September 2018.

In the meantime, employers should get to grips with the current immigration rules as they apply to non-EU nationals. This will, to some degree, help inform policy and budgeting for future EU recruitment. Currently, employers are required to hold a "sponsor licence" to employ non-EU nationals. It is not currently clear whether the same requirement will apply post-Brexit in respect of EU nationals but employers who do not have a sponsor licence would be well-advised to apply for one now in preparation.

What can employers do now?

While the current uncertainty on immigration is likely to persist, employers can start to take steps now to prepare for these changes. Employers should consider:

  • undertaking an audit of staff to ascertain numbers of EU employees, to help inform strategic planning
  • offering information sessions and/or advice surgeries for existing EU employees on the current position and guidance on options
  • supporting applications for EU residence documentation under the current regime and budgeting for applications post-Brexit
  • identifying other retention strategies for EU staff (some employers are even considering retention payments for key staff)
  • obtaining an immigration sponsor licence or ensuring their current licence is up-to-date and fully compliant with the current immigration rules.