United Kingdom: Brexit Bulletin December 13, 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

Last week, the Supreme Court heard final arguments in a case over whether Parliament must have a say in the triggering of Article 50 EU exit procedures. The government brought the appeal after a High Court ruled that Prime Minister Theresa May could not unilaterally trigger Article 50 without Parliament’s approval. The outcome, expected in early January, will certainly impact the timing and tenor of Brexit proceedings.

The lack of any published Brexit strategy is putting Theresa May’s government under increasing strain. New government figures showing that net migration to the U.K. remains historically high are fueling Brexiters’ demand for change, while all indications from the European Commission and EU leaders show a hardline stance whereby negotiations can only take place within strict Article 50 procedures and timelines, with no flexibility on the issue of the “fundamental” right of free movement for EU citizens.

Immigration

Net migration remains high

Net migration remains at record high levels, hitting 335,000 in the previous year ending in June 2016, according to the most recent government figures. This is the second highest net migration number on record. The Brexit has created a rush to file, and the flow of EU nationals moving to Britain also hit a record number at 284,000. The latest migration figures show that almost 100,000 EU citizens living in the U.K. have applied to the Home Office to secure their status. This surge in applications guarantees that a backlog will develop in a system that has historically processed just 25,500 permanent residence applications per year.

Demand for documentation

Home Secretary Amber Rudd signaled that the U.K. will gradually move to a system that will require EU nationals currently in the U.K. to be documented, rather than allowing them to continue to rely on passports or ID cards alone. Rudd has refused to provide specifics, stating only that there will need to be “some sort of documentation” and that such a system would be introduced “in a phased approach.”

Consequences of new regulations for EEA nationals

The Home Office has implemented new Regulations on EEA Nationals that impose stricter rules on EU/EEA nationals seeking permanent residence permits in the U.K. Applicants should be aware that the Home Office is scrutinizing applications more closely, requesting additional documents, and is expected to reject more applications under these new regulations. As a result of the spike in permanent residence applications, applicants are unlikely to receive decisions within the six-month service standard.

Legal

Supreme Court hears Brexit challenge

The Supreme Court has concluded hearings on an appeal of the successful Brexit challenge. The full eleven-member court will decide the constitutional law question of whether the Government must first get Parliament’s assent before invoking Article 50, or whether powers of royal prerogative are sufficient. The case is not about whether Brexit occurs, but how it occurs. If the Supreme Court upholds the lower court’s decision, as expected, MPs will have a greater role in shaping Brexit negotiations. The ruling is expected in early January.

New legal challenge disputes EEA exit

A fresh legal challenge, meanwhile, alleges that the government cannot use the Brexit referendum to withdraw from the European Economic Area without the consent of Parliament. The think tank British Influence has lodged a complaint asserting that the Brexit referendum was a vote on whether to leave the European Union, not the European Economic Area to which the U.K. also belongs; therefore, the U.K. would need to hold another referendum on EEA membership and get Parliament’s approval to trigger separate withdrawal procedures under Article 127 of the EEA Agreement. The government argues that the U.K.’s membership in the EEA hinges on its EU membership, such that once it leaves the EU it will also no longer be a member of the EEA.

Politics

“Cake and eat too” strategy

A leaked note indicating that the U.K.’s strategy in Brexit negotiations is to “have its cake and eat it,” put the Government on the defensive. The “cake strategy” refers to the Brexiters’ aspirations to benefit from the single market while abrogating freedom of movement.

A tough stance from EU chief negotiator

In his first press conference on Dec. 6, the European Commission’s chief Brexit negotiator, Michel Barnier made clear that the unity and interests of the EU are his priority, not placating the British. He categorically rejected any option that would allow the U.K. to curb free movement of EU citizens while retaining access to the single market: “The single market and four freedoms are indivisible. Cherry-picking is not an option.” He also set out a stringent timetable for negotiations to conclude by October 2018 to allow time for the EU Parliament, the EU Council and U.K.’s Parliament to implement Brexit by March 2019, two years from when article 50 is set to be triggered.

Status of current EEA migrants in U.K.?

The status of EU nationals residing in the U.K. remains a contentious issue. Keir Starmer, shadow secretary for Brexit, has demanded that May unequivocally guarantee the status of EU migrants already living in Britain as a gesture of goodwill prior to invoking Article 50. May, however, has been reluctant to confirm the status of EEA migrants already living in the U.K. unless British nationals who have settled in the EU are assured the same rights. In an open letter to Downing Street, a group called “the3million,” representing the estimated 3 million EU nationals currently residing in the U.K., have asked for a public guarantee that they will not be treated as pawns in the negotiations.

Preparing Your Company

Brexit negotiations can only begin once the U.K. invokes Article 50. However, now is the time to begin preparing your business as much as possible for a more restrictive immigration regime for both existing and future EEA employees.

BAL can assist with a number of services including:

  • Assessing your company’s current and projected future EEA population, including EEA nationals as well as their family members.
  • Tracking existing EEA employees and any new hires, with clear banding in terms of rights and eligibility for long-term stay.
  • Identifying when permanent residence can be achieved for individuals and any documentary risks that can be resolved prior to application.
  • Identifying requirements for EEA Registration Certificates and any documentary risks that can be resolved prior to application.
  • Exploring other EEA employee options, including eligibility under Tier 2 or other points-based system routes.
  • Offering a range of services to support employees, from providing a dedicated employee news service and lower-touch advice to directly supporting applicants and providing higher-touch, fully-managed applications and services.

BAL strongly urges clients to provide any feedback to the BAL London Team, which will inform our government relations strategy and allow us to lobby for positive business-friendly reforms, where feasible, on your company’s behalf.

Should you have any questions or require more information on how BAL can help with Brexit strategic planning, please contact us at 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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