Brexit: BAL Brexit Bulletin March 7, 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 status of the estimated 3.2 million EEA nationals and their family members already living and working in the U.K. continues to be the hot-button issue that may delay passage of the Brexit Bill and the start of official Brexit negotiations this month.

Prime Minister Theresa May has staunchly maintained that any rights of Europeans in the U.K. must be negotiated against the rights of U.K. nationals in mainland Europe, and there have been strong indications that a “cutoff” date will be introduced in line with Article 50 to prevent new arrivals benefiting from automatic permanent residence after five years. However, the House of Lords last week voted to amend the Brexit Bill to include a guarantee of residence for Europeans who are legally in the U.K.

Further, Monday’s report by a cross-party Parliamentary Committee on Exiting the EU has highlighted the government’s responsibility to end uncertainty and unilaterally guarantee the rights of EEA nationals and their family members currently in the U.K. The report urges the government to announce its timetable and intentions on post-Brexit immigration policy “as soon as possible” to ensure new European arrivals are clear on their long-term status. Meanwhile, permanent residence applicants are facing six-month delays and considerable documentary hurdles, albeit the introduction of online systems is bringing hope for processing improvements in the long term.

Politics and Immigration

Guaranteeing rights of Europeans currently in the U.K.

The government’s Brexit Bill, while approved in the House of Commons, suffered its second defeat in the House of Lords on March 7―the final vote was 336 to 268.

Last week, the bill was defeated over the issue of whether EU nationals must be guaranteed their right to remain and obtain permanent residency after the U.K. leaves the EU. The Lords voted 358-256 for an amendment to formally guarantee the rights of the approximately 3.2 million Europeans living within its borders at the outset of Brexit negotiations, rather than forcing them to continue living in uncertainty. The House of Commons previously rejected a similar amendment and could overturn the new amendment.

While the Lords have no constitutional power to prevent the bill from ultimately passing, if it continues to ping pong between the two houses over the terms of any amendment, it will set back the date on which Theresa May is able to trigger Article 50 and the start of official negotiations. The government has postponed its original March 15 target to March 31, 2017. Monday’s report by the House of Commons cross-party select committee has put mounting pressure on MPs to accept the House of Lords amendment to unilaterally guarantee Europeans’ rights.

Home Office processing: Improvements or unfair treatment?

Brexit has created a huge upsurge in demand for non-mandatory residence permits and confirmation of permanent residence which the Home Office has struggled to process. European law requires that applications be processed within six months, a service standard which the Home Office has historically met. Since the Brexit referendum, an initiative now allows Europeans and their dependent family members to use both premium and online application processes. The online process is not available to non-EEA national dependents who are applying separately from the EEA national, or anyone who qualifies on the basis of time spent as a student or as a self-sufficient person. However, it does provide workers with five years of P60s, a streamlined process to obtain recognition of their status. From a practical perspective, the European passport passback service is a useful addition for EEA nationals who do not have a European ID card, and who need to retain their original passport for travel.

Following complaints that the Home Office has erected a “bureaucratic wall” for Europeans applying for confirmation of their right to reside in the U.K., the European Parliament intends to launch a task force to investigate potential “unfair treatment” of Europeans. The task force would likely look into the cumbersome application forms and evidentiary rules which were not made clear at the time migrants moved to the U.K. and now impose strict definitions of “legal” residence. The fact that the Home Office is currently rejecting 30 percent of permanent residence applications demonstrates that European applicants should not presume their eligibility. These applications continue to require focused legal attention and there is sound rationale for seeking to protect their rights prior to the invocation of Article 50.

Status of U.K. nationals in Europe

European leaders have consistently asserted that no negotiations regarding the status of the estimated 1.8 million British citizens currently living and working in Europe can take place prior to the triggering of Article 50. May has steadfastly reiterated her reluctance to issue guarantees for Europeans in the U.K. to allow her to maintain an effective negotiation position. However, given that immigration policy is frequently based on reciprocity, this position appears increasingly counterproductive. A House of Commons report released Monday states that U.K. citizens living in the EU are most concerned about the loss of their right to remain and right to work in the EU, as well as the continued recognition of their qualifications for purposes of work authorization post-Brexit.

Health insurance technicalities

There have been reports in the media that the Home Office has issued warnings to EEA nationals who do not have comprehensive sickness insurance that they may not be able to remain in the U.K. after Brexit. The Guardian reported that a student, in response to a query to the Home Office, “was told that if ‘a student attempting to exercise treaty rights [to live in the UK] does not hold either CSI or EHIC [a European Health Insurance Card for tourist health cover] they will be liable for removal from the UK.’” In an apparent departure from these alarming but isolated cases, the Guardian reported that the Home Office has insisted that EEA nationals will not be deported if they do not have private healthcare.

The Home Office has affirmed their position that anyone who does not have private healthcare (comprehensive sickness insurance), but would need to have this as a student or self-sufficient person to establish a right to reside in the U.K., will not be removed if their permanent residence application fails. However, the legal position is worrying since those without a right to reside in the U.K. could be removed under Directive 2004/38/EC. It is unlikely that the Home Office will embark on a program to remove EEA nationals who do not have the “right of residence,” but there would be implications in terms of not being able to qualify for British citizenship since evidencing and documenting permanent residence is a pre-requisite to citizenship.

Cutoff of residency rights for new European arrivals to the U.K.?

Once May is in a position to invoke Article 50, it is anticipated that she will declare either an immediate or short-term cutoff date for new European arrivals entering the U.K. May cannot legally prevent new arrivals from entering and living in the U.K. until Brexit occurs in 2019; these migrants will continue to be able to use passports for travel and prove a right to work. However, the impact of any cutoff would be to make clear that new arrivals should not expect to qualify for permanent residency based on five years of residence in the U.K. With the U.K. anticipated to formally leave the EU by 2019, those individuals would be subject to any post-Brexit immigration regime, for example allowing a more restricted qualification basis for permanent residence or demanding work permission under Tier 2 on the same terms as third-country nationals.

Post-Brexit immigration rules: All options still on the table

The Home Office has confirmed that it is leaving its options open in formulating how European migrants will be treated under a post-Brexit immigration system. The agency may adopt a system that would give Europeans preference over other foreigners under a dual system, or it could propose a single scheme that would subject all non-U.K. nationals to the same work-permit regime.

Monday’s parliamentary report recognized that a sudden reduction in Europeans in the U.K. would disrupt business across a number of sectors in both lower and higher skilled operations; it recommended that the government maintain preferential treatment for Europeans after Brexit. This year, several further inquiries will seek recommendations on how to shape the new system. In particular, parliamentary subcommittees are conducting inquiries into Brexit’s impact on various aspects of the economy, migration, the labor market and sector-specific industries. The Lords Select Committee on Economic Affairs is holding public hearings this month on how the reduction in net migration will affect wages, different sectors and migrants of high, medium and low skill levels. The EU Home Affairs subcommittee is investigating how Brexit will affect the rights of U.K. citizens to move and work within the EU post-Brexit. And an all-party Parliamentary group is studying Brexit’s impact on small- and medium-sized employers with a particular focus on certain sectors, including technology.

Preparing Your Company

Brexit negotiations will be underway as soon as the U.K. invokes Article 50, which is anticipated by March 31. Businesses should be preparing now for the impact of Brexit on their European and third-country national employees and assignees in the U.K.

The cutoff date for new European arrivals could come as early as this month and, while Europeans will still be able to use passports to live and work in the U.K. without visas, employers should be mindful that new European arrivals after any cutoff date are unlikely to be eligible for permanent residency based on their five years of residency. At the same time, although Europeans who are currently living and working in the U.K. are expected to continue to be able to rely on their five years of lawful residency, the Home Office’s interpretation of what counts as “lawful” and “continuous” residency has become extremely restrictive. Each individual should be carefully assessed against risk of losing eligibility and advised on options post-Brexit.

BAL can assist with a number of services including:

  • Tracking current European employees for dates of eligibility for permanent residency.
  • Planning ahead for new hires who will be subject to work permits under a post-Brexit immigration scheme.
  • Making individual assessments on EEA employee options, including EEA Registration Certificates, U.K. permanent residency, British citizenship or eligibility under the Tier 2 regime.
  • Identifying employees who may be at risk of ineligibility for permanent residency for various reasons, including those who have gaps in their lawful residency or who spent time as a student, self-employed or self-sufficient individual and lacked comprehensive sickness insurance; and advising on appropriate strategies for employees with risky profiles.

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 during 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.

Brexit Timeline

BAL urges companies and employees alike to take an informed and thoughtful approach to Brexit. While the government’s 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 published deadline for invoking Article 50.
  • 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 15-31, 2019: Two-year deadline for concluding Brexit negotiations under European law protocols.
  • 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 planning, please contact us at uk@balglobal.com.

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