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

News Summary

The U.K. government released its proposed offer on EU citizens’ rights last week. Given the lukewarm response by the EU’s Brexit negotiator, the talks have a long way to go to bridge the differences between the two sides. Splits are also appearing within Prime Minister Theresa May’s cabinet over whether a hard or soft Brexit is the best approach to preserve continuity for U.K. businesses.

While the proposal on EU citizens’ rights does nothing to immediately change the status of EEA nationals currently living and working in the U.K., it does offer insight into the type of immigration regime and requirements the U.K. government is contemplating for EEA nationals, and provides some clues as to how employers and EEA employees may begin planning for an eventual deal on citizens’ rights.

BAL anticipates the following changes:

  • The U.K. government is likely to introduce a simpler process to apply for permanent residence. This is being referred to as “settled status.” It is proposed that this document will be required, even by those already holding an EEA permanent residence card. BAL believes this could be subject to change.
  • Irish nationals will continue to be exempt, as they are currently, from requirements of applying for residency status.
  • A cut-off date will be established and any EEA national arriving after this date will be subject to the work permit scheme in force at that time and will not benefit from the transition provisions for EEA nationals. This date is proposed to be between March 29, 2017 and Brexit day (estimated March 29, 2019).
  • EEA employees who arrive before the cut-off date will be allowed to apply for settled status after five years’ residence in the UK or apply for limited leave to remain (a type of visa with an expiry date) and settled status thereafter.
  • EEA employees will not find themselves immediately out-of-status on Brexit day, as the U.K. government has signaled it will provide a grace period of up to two years post-Brexit that would enable them to continue working while they apply for immigration status.

BAL recommends:

  • Employers should continue to track and document EEA nationals’ dates of lawful presence in the U.K. for purposes of proving five-year residency.
  • Employers should continue to review talent acquisition plans and their reliance on EEA national employees in light of Brexit.
  • Employers should reconsider whether to financially support their employees obtaining a permanent residence card at this time, given that the current process is lengthy and document-intensive, and they will likely be required to repeat the process (under a streamlined system) in the future.
  • Companies planning to move new EEA hires to the U.K. should consult BAL about the timing of such moves and the risks of employees losing future rights to reside.

Immigration

Where the UK and EU stand on citizens’ rights

The U.K.’s proposal, released June 26, confirms that the government seeks to end free movement rights of EU nationals post-Brexit. After Brexit day, EU nationals would be required to apply for an immigration status.

The proposal indicates that the U.K. and EU remain deeply divided on several key issues involving citizens’ rights. Below is a summary of where the parties currently stand on citizens’ rights.

Issue UK position EU position
Right to reside EU nationals who arrive before a cutoff date and who accrue five years of U.K. residency will be granted permanent residency (“settled status”). Those arriving before a cutoff date who haven’t reached five years may apply for temporary residency until they accrue five years. Those arriving after the cutoff date but before Brexit day will have a grace period of two years to acquire a work permit or leave the country. EU nationals and family members who have resided in the U.K. during its membership in the EU should retain rights to reside under EU law in perpetuity.
Cutoff date Cutoff date would be negotiated and should fall between March 29, 2017 (Art. 50 trigger date) and Brexit day (estimated March 29, 2019). Cutoff date should be no earlier than Brexit day.
Who is covered EU nationals would be required to apply for and obtain either settled status, limited leave to remain leading to settlement under the new proposals or another immigration status under U.K. law after Brexit day. EU nationals and their non-EU family members, regardless of nationality, should retain current rights after Brexit. Those arriving in the U.K. after Brexit day (and likely any transition period) would be subject to new rules.
Irish citizens Irish nationals would not be required to apply for settled status. Their rights as immediate permanent residents would be preserved under the Common Travel Area arrangement and the Ireland Act 1949. Brexit would also not affect the rights of Northern Ireland under the Belfast Agreement. The position of Irish citizens is the same as other EU nationals, but the EU acknowledges the different status they have under U.K. domestic law.
Non-EU family members Family members joining EU citizens before the cutoff date would be eligible for settled status in due course (even if the five years falls after Brexit day). Those arriving after the cutoff date would be subject to the same criteria as British citizens applying for family members, including a more restricted definition of eligible “family members” and a minimum income criterion under U.K. laws. EU nationals who have resided in the U.K. during its membership should retain all EU rights relating to their family members. Under EU law, family members include children up to the age of 21 (18 in U.K. domestic law) and includes parents and other extended family members.
Reciprocity Any offer on EU citizens’ rights in the U.K. is contingent on reciprocal treatment of U.K. citizens in the EU. The EU recognizes that U.K. citizens currently in the EU should retain their existing rights, and seeks reciprocal guarantees of the rights of EU citizens in the U.K.
Enforcement EU citizens’ rights would be codified in U.K. law, and enforced by British courts, not the European Court of Justice. The European Court of Justice would continue to hold jurisdiction over EU nationals and family members.

Politics

Responses to UK’s offer

The responses to the U.K.’s offer signal that many of the proposals are unlikely to be accepted by the EU. The EU’s Brexit negotiator Michel Barnier said on Twitter that “more ambition, clarity and guarantees [are] needed.” Labour Party leader Jeremy Corbyn called the proposal “too little, too late.” And the3million organization representing EU nationals in the U.K. said the proposal “has done very little to lift anxiety among those most affected.”

Hard v. Soft Brexit

Inside Theresa May’s cabinet, divisions are emerging over her hardline Brexit approach. Brexit Secretary David Davis advocates a hard break from free movement, from the single market and customs union, and from the jurisdiction of European courts. Chancellor Philip Hammond, concerned about business disruption and hitting companies with sudden tariffs and staff shortages, is pushing for a softer Brexit, with a longer transition period (up to four years) during which single market and customs union membership would continue.

Preparing your Company

BAL views the U.K. proposal as setting a baseline for further negotiations, and the goalpost will continue to shift as Brexit talks ensue and the EU makes a counter-offer. The U.K.’s offer falls far short of the EU’s stated positions on citizens’ rights, and, as a result, an eventual deal could look far different from the proposal. Nevertheless, the U.K. proposal contains some key elements that suggest how employers and EEA nationals may approach Brexit planning at this time. Employers are not encouraged to pursue residency applications for EEA nationals under the current system, and should take a wait-and-see approach as the government proposes to roll out a streamlined application process. However, BAL recommends that companies continue to track current EEA national employees and assess the timing and EU-makeup of their talent acquisition plans.