Brexit Bulletin January 24, 2017

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

The Supreme Court has ruled that Prime Minister Theresa May must obtain the approval of Parliament before invoking Article 50 of the Lisbon Treaty to begin Brexit negotiations. The ruling was expected after a High Court reached the same determination in November.

Despite this news, the U.K. appears headed for a “hard Brexit” that would overhaul the country’s immigration programs. The Supreme Court’s ruling is unlikely to delay May’s timeline of invoking Article 50 by the end of March, and may even bring it forward. Last week, May detailed plans for a hard Brexit, saying the U.K. would leave Europe’s single market in order to regain control over migration from Europe. May stressed that while the U.K. would like to guarantee the rights of EEA nationals in the U.K., it will only do so if there is a reciprocal deal for U.K. nationals in the EU.

Legal

The Supreme Court case was brought by U.K. citizens and other interested parties, including some EU nationals living in the U.K., who argued that it would be unconstitutional for the government to begin withdrawal from the EU without Parliamentary assent. The Supreme Court agreed with this position, rejecting the government’s argument that it could use the royal prerogative to invoke Article 50 without the go-ahead from Parliament.

While the ruling gives Parliament the power to delay triggering Article 50, this action seems unlikely given that conservatives have a working majority in the House of Commons. Brexit minister David Davis said Tuesday that legislation to invoke Article 50 would be introduced “within days.”

“The purpose of this bill is simply to give the government the power to invoke Article 50 and begin the process of leaving the European Union,” he said.

In the wake of the decision, the Labour Party’s Brexit spokesman Sir Keir Starmer continued to push for the government to produce a white paper or other written document outlining the U.K.’s plan for Brexit negotiations with the EU. “A speech is not a white paper or plan,” he said. “And we need something to hold the government to account throughout the process. You can’t have a speech as the only basis of accountability for two years or more.”

The Supreme Court ruling could provide some leverage to a cross-party group of MPs to protect the rights of EEA nationals in the U.K. during negotiations; however, there is no guarantee at this point, and the rights of EEA nationals could emerge as a “bargaining chip” during the U.K.’s negotiations with the EU.

Politics

May’s speech on Jan. 17 confirmed plans for a hard Brexit. “We do not seek to hold on to bits of membership as we leave,” she said. “The United Kingdom is leaving the European Union and my job is to get the right deal for Britain as we do.”

May said the U.K. will leave Europe’s single market and negotiate an entirely new free-trade deal with the EU. This would involve seeking access to the European market without being part of it, thus avoiding associated costs and responsibilities.

May also said the U.K. would make it a priority to protect the Common Travel Area with Ireland, and that the devolved administrations in Scotland, Wales and Northern Ireland would be involved in negotiations.

However, the Supreme Court ruled that the devolved governments do not need to be consulted before Article 50 is invoked, prompting calls from First Minster for Scotland Nicola Sturgeon for a second Scottish independence referendum to allow Scotland a chance to negotiate its place in Europe.

Immigration

Future Migration

Little detail has emerged to answer the key corporate immigration question: What will happen to the 3 million EU/EEA nationals currently residing and working in the U.K., or to the 1.2 million U.K. nationals currently working and residing in the EU? May’s remarks offered little assurance.

“We want to guarantee the rights of EU citizens who are already living in Britain, and the rights of British nationals in other member states, as early as we can,” May said. “I have told other EU leaders that we could give people the certainty they want straight away, and reach such a deal now.”

In practical terms, this means that EEA nationals’ status in the U.K. is largely dependent on the postures of other European governments toward the U.K. As noted, EEA nationals in the U.K. have emerged as a potential “bargaining chip” in upcoming negotiations. Their status, for now, is not guaranteed, and the stricter approach to recent permanent residence applications suggests that up to 1 million EEA nationals in the U.K. could find themselves unprotected when Brexit occurs.

And while May did say she wants the U.K. to be a “friend and neighbour” to the EU, she also said that with respect to Brexit negotiations, “No deal for Britain is better than a bad deal for Britain.” This signals that a hard line will be taken during negotiations.

When planning future migration to the U.K., companies should assume that the principle of free movement and the European legal mechanisms to support it will cease to exist after Brexit. BAL anticipates that future migration from the EU will likely be absorbed into the U.K.’s overall immigration program.

Parliamentary Report Makes Case To Protect The 3 Million

The Lords Select EU Justice Committee previously published an advisory report detailing the “acquired rights” of EU citizens in the U.K. post-Brexit. The report indicates that when the U.K. leaves the EU, any rights of residence in the U.K. stemming from EU law will cease to be enforceable. Recognizing the justified anxiety felt by EU citizens over whether their lives in the U.K. can continue post-Brexit, the report recommends that May make a unilateral commitment to safeguard these rights prior to triggering Article 50 as “morally right,” or at the very least put the rights of EU nationals on the agenda as a preliminary and separate item immediately after Article 50 is triggered.

Comprehensive Sickness Insurance Technicality

The report also highlights the issue of the estimated 1 million EU nationals in the U.K. who are unable to meet the criteria for permanent residence as it currently stands, even though they have lived in the U.K. for the requisite five years and frequently far longer. Apart from the practical bureaucratic barrier of an 85-page application form that is difficult for non-lawyers to negotiate, the technical issue barring qualification for permanent residence frequently revolves around the Home Office’s strict interpretation of the requirement for comprehensive sickness insurance.

Scotland and Northern Ireland

Significant for the oil and gas industry in Scotland and corporations operational in Northern Ireland is the fact that the devolved governments in the U.K. do not need to be consulted over the Article 50 process, which was a unanimous decision by the Supreme Court. Therefore, separate deals or concessions cannot be brokered for those regions.


Preparing for Brexit

Even with Tuesday’s ruling, BAL anticipates that Brexit negotiations will begin soon, setting the U.K. up for a departure from the EU in 2019. Now is the time to begin preparing your business as much as possible for a more restrictive immigration scheme for both existing and future EEA employees.

Employers

BAL can assist your company with a number of services including:

  • Technology solutions for Brexit tracking and reporting.
  • 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.

Employees

Employees can also take steps to prepare for Brexit, including making sure they are aware of their legal status in the U.K. and whether there is a basis on which they can claim to be a “qualified person” under EU law. Employees should make sure they possess:

  • Evidence of their date of arrival in the U.K. (e.g., travel records).
  • U.K. housing records (e.g., chain of tenancy or mortgage documents).
  • U.K. tax records (e.g., P60s for each year in the U.K.).
  • Contracts, payslips and bank statements to demonstrate periods in which they were working in the U.K.
  • Comprehensive sickness insurance, including either private insurance or evidence of registration in their home country, to cover any periods of time as a student or self-sufficient person.

Critical Dates

BAL urges companies and employees alike to take an informed and thoughtful approach to Brexit. While the hardline approach is not encouraging, the status of EEA nationals in the U.K. has not changed and will not change for some time. Below is a timeline of key dates:

  • March 31, 2017: Theresa May’s deadline for invoking Article 50 and notifying the European Council of the U.K.’s intention to leave the EU.
  • September 30, 2018: EU’s chief Brexit negotiator Michel Barnier’s deadline for finalizing terms of the U.K.’s exit from the EU.
  • March 31, 2019: Theresa May’s deadline for concluding negotiations over Brexit.
  • April 2019 (TBD) : The U.K.’s exit from the EU, following ratification of Brexit by all other member states.

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 © 2017 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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