On 29 March 2019, the UK will leave the European Union in a move known as “Brexit”. As we approach “Brexit Day”, business owners may be concerned that understanding over the eventual agreement is limited and there is uncertainty over what steps, if any, they can take in preparation.
As a significant proportion of UK legislation is heavily derived from EU law there is expected to be some impact on trading, worker rights and the free movement of people, regardless of the outcome of the ongoing negotiation process.
In an attempt to respond to concerns from businesses regarding future workforces, a scheme was announced in June 2018 to allow indefinite leave for EU workers with “settled status”. EU nationals who have lived and worked in the UK for five years by 31 December 2020 will be eligible to apply, with applications only being rejected for “very good reasons”.
Furthermore, anyone who has not lived in the UK for the required period by this date can apply for “pre-settled status” which is automatically upgraded once five years’ residency is reached.
The scheme applies to individuals of all EU member states – except Irish workers who are exempt – with rights for workers from Switzerland, Iceland, Liechtenstein and Norway still unconfirmed. Employers are strongly advised to encourage their workers to make an application before the cut-off date of 30 June 2021.
Although individuals may be able to apply after this date to join a family member in the UK, it is currently unknown what procedure, if any, will be implemented for EU nationals at this point. It is highly probable that those without this status will have to meet new visa requirements.
Read more about the impact of Brexit on small UK businesses:
- VAT is too valuable to simply disappear under a no-deal Brexit
- Why aren’t small business owners planning for a “chaotic” no-deal Brexit?
- What we can expect from HMRC before Brexit
Existing worker provisions
When questioned on worker rights, the government has confirmed that the EU Withdrawal Bill 2018, previously referred to as the Repeal Bill, has been constructed to directly transpose EU laws into UK legislation.
Therefore, existing worker provisions will remain the same regardless of the outcome of negotiations, with areas where domestic law exceeds EU law also remaining.
This confirmation has been called into question by legal experts, however, who have argued that the government will have the right to “pick and choose” which EU rights to dilute or scrap post-Brexit.
Whilst it remains to be seen how far the government will seek to develop this area, what is clear is that UK workers will no longer be able to directly refer questions to the European Court of Justice. This removes a reference point for workers who are challenging the interpretation of European laws in their case.
The government has also released guidance on various aspects if there is a “no-deal” situation after the UK leaves the Union. The guidance states all pre-established worker rights will remain and workers will still be covered by existing insolvency laws provided they work in UK-based organisations. Future trading arrangements may require customs declarations to be completed, resulting in the increased employment of customs brokers or warehousing and logistics experts.
What to do now
In the interim, businesses are advised to familiarise themselves with the current trading process with non-EU destinations. A no-deal scenario also casts doubt over the creation of European Works Councils, as the statutory framework for their formation is covered by European law and a separate reciprocal agreement may have to be made with the EU.
It is impossible to predict the outcome of the negotiations with both parties expressing that “nothing is agreed until everything is agreed”.
In her “Brexit blueprint”, released in July of this year, prime minister Theresa May outlined the UK’s stance on Brexit, which included proposals to: keep EU trading regulations but allow the UK to go against them if necessary; allow movement between the UK and EU for job offers; and ensure tribunals referred to EU case law if a judgement involved an EU member state.
These proposals were rejected by EU leaders in September 2018, casting significant doubt over the current status of the deal and the final agreement. Whilst there are several indications of what to expect from March next year, this is still an ever-changing area and should be carefully observed by businesses as it progresses.
Kate Palmer is associate director at Peninsula HR
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