United Kingdom: Brexit Bulletin November 8, 2016

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

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News Summary

A British High Court ruling has thrown Prime Minister Theresa May’s timetable for leaving the European Union into flux and could ultimately give Parliament a stronger voice in shaping the terms of the Brexit.

The court ruled Nov. 3 that Parliament must have a say in determining when Article 50 of the Lisbon Treaty is invoked to formally begin the process of leaving the EU. The government has said it will appeal the decision to the Supreme Court, and a hearing may be held as soon as December.

The ruling does not overturn the results of the referendum, nor does it change the immigration status of U.K. or EU nationals.

Brexit opponents hope, however, that giving Parliament a bigger role will move the government away from a “hard Brexit,” in which free movement rights are cut dramatically, and toward a more nuanced relationship with the EU where benefits of the single market are secured through some sort of preferential immigration deal for EU migrants.

The ruling has the potential to significantly change the Brexit landscape.

And while the legal drama unfolds, interests in Northern Ireland continue their attempts to put a stamp on the pending negotiations. Debate continues on whether a hard Brexit, soft Brexit or something in the middle is best. And the U.K. has moved forward with long-awaited immigration changes even as the immigration system as a whole could be upended through the Brexit process.

Politics

May Still Eyeing March

In response to the High Court ruling, May said in a televised interview that she is still planning on a March timetable.

“I’m clear that I expect to be able to trigger Article 50 by the end of March next year,” she said. “That’s what I’ve said consistently, and I continue to work on that basis.”

Triggering Article 50 in March would set the U.K. up to leave the EU in the spring of 2019.

May said the government has “strong legal arguments” that will go before the Supreme Court, but if the Supreme Court upholds the High Court ruling she expects that the Supreme Court’s judgment will spell out the process for what role Parliament will play.

Shadow Brexit secretary Sir Keir Starmer of the Labour Party, said that while the government can appeal the ruling, giving Parliament a stronger role in the negotiations would benefit the country.

“Would it not be better for the government to stand back and ask itself whether it is right to continue with the approach that it is taking?,” he said. “No one expects the government to reveal the details of its negotiating hand, but there are very big headline issues that matter to everyone in every part of the U.K.”


Northern Ireland, Scotland

The timing of the Brexit and the subsequent negotiations are complicated by the roles that the devolved nations within the U.K. will play.

Days before the High Court ruling in London, the High Court in Belfast ruled that nothing in Northern Ireland’s Good Friday agreement can prevent the U.K. government from triggering Article 50. Scotland, meanwhile, has been angling for an agreement that preserves as many of its ties to the EU as possible.

Scottish First Minister Nicola Sturgeon said she is prepared to push for a second referendum on Scottish independence from the U.K. if necessary to protect Scotland’s interests.

Sturgeon called the U.K. High Court ruling “hugely significant” and said Scottish National Party Members of Parliament “will certainly not vote for anything that undermines the will or the interests of the Scottish people.”

Immigration

A Middle Path?

While May and Home Secretary Amber Rudd are pushing for a hard Brexit, a proposed Brexit deal has been published by nonpartisan think tank British Futures that would strike a middle way between a hard Brexit that would sever links to the single market in order to remove free movement entirely and a soft Brexit that would preserve full free movement rights.

The report asserts that a politically feasible compromise is possible by maintaining some national controls on immigration to satisfy the immigration concerns of the British public while promising enough free movement for Europeans to seal a Brexit deal with EU member states. Specifically, the report proposes that the U.K. give EU countries “preferential” treatment on freedom of movement while introducing a three-tiered U.K. migration system: a route for global talent, free movement for skilled EU workers, and a quota system for low-skilled migrants.

The full report, “A British Immigration Offer to Europe,” can be viewed here.


UK-Ireland Relations

The U.K. Parliament’s EU Select Committee has opened an inquiry into U.K.-Irish relations post-Brexit. The inquiry will consider the impact on the Common Travel Area, trade relations, the challenges posed by the land border between Eire and Northern Ireland (part of the U.K.), and the rights of Irish citizens living in the U.K.

Under the 1972 Common Travel Area legislation, British and Irish citizens enjoy special rights including free movement without the need to present travel documents at the border. Also, by historical agreement, Irish nationals are automatically considered to hold settled status (permanent residence) in the U.K. Some experts have indicated that new legislation may be required to preserve such rights after the U.K. leaves the EU. The committee has finished accepting oral evidence from experts and is now preparing a report.

Regulations on EEA nationals

The U.K. Parliament has adopted new Immigration (European Economic Area) Regulations pursuant to an EU directive on the rights of EEA nationals and their family members and subsequent EU court cases interpreting the directive. The regulations mostly codify previous amendments, but also demonstrate that the U.K. is choosing to interpret and implement European law to limit rights where possible, on the expectation that the EU will have little motivation to enforce EU law against a departing member.

Among the changes, the U.K. may require a specified application form and process for EEA nationals and family members applying for resident permits, the right to appeal has been abolished for extended family members, and it will be easier for the U.K. to exclude or remove an EEA national or family member for “misuse of rights to reside.”

The regulations come into force Feb. 1, 2017, except for a provision that allows the U.K. to deny entry to a non-EEA family member who moves to an EEA country for purposes of “circumventing” U.K. entry rules that apply to non-EEA nationals, which takes force Nov. 25.

Changes to Tier 2 categories

While the Brexit debate grabs headlines, the Home Office continues to quietly roll out changes to Tier 2 categories pursuant to the Migration Advisory Committee report.

The MAC issued its recommendations months before the Brexit referendum in response to the Cameron administration’s call for policies to restrict immigration amid record net migration to the U.K. The MAC took the approach of seeking to limit migration primarily through higher costs to employers.

The biggest changes announced last week include higher salary thresholds for Tier 2 (General) and (Intra-Company Transfer) routes beginning Nov. 24 and closure of the Tier 2 ICT Skills Transfer route – changes that will have a direct impact on the cost of employing high-skilled foreign workers. A summary of upcoming Tier 2 changes may be viewed here.

Although the Brexit is closely tied to immigration and may rewrite the immigration rules entirely, employers should prepare for these changes in the meantime. Further immigration rule changes will be introduced in April next year.

Immigration Act 2016

Employers should also be aware that provisions of the Immigration Act 2016 continue to be phased in. Beginning Nov. 25, harsher rules on enforcing illegal working violations take effect, and additional Right-to-Rent provisions take effect beginning Dec. 1.

Details on the changes may be viewed here.

The overall environment has become stricter. Employers should be aware of the lower burden of proof for prosecutors to find an employer criminally liable for hiring undocumented workers, and assignees should be aware that they will be required to show proof of their status for daily services such as renting a place to live and opening a bank account.

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.
  • Preparing your business for the actions you will need to take for employees who do not yet qualify for permanent residence as well as highlight when they do qualify before and after Brexit.
  • 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.

Copyright © 2016 Berry Appleman & Leiden LLP. All rights reserved. Reprinting or digital redistribution to the public is permitted only with the express written permission of Berry Appleman & Leiden LLP. For inquiries please contact copyright@balglobal.com.

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