Shara Pledger on Brexit and Free Movement

Theresa May’s mantra that ‘Brexit means Brexit’ has been lambasted for having no real meaning, but the UK government has been clear that Brexit will mean the end to the EU concept of Free Movement in the UK. Free Movement is sometimes misunderstood as giving an EU national the right to live anywhere, but this is an over simplification of a more complicated idea. Free Movement comes with conditions, the basic premise being that EU nationals are able to move within the EU member states only to carry out qualifying activity. The most common of those activities is work, and the impact of Brexit on a UK employer’s ability to recruit EU workers is the focus of this article.

In early September, the Guardian newspaper published a leaked Home Office document entitled Border, Immigration and Citizenship System After the UK Leaves the EU. Although the government had already released official guidance on its post-Brexit immigration plans, that guidance was rather vague. The leaked paper gave us a much clearer idea of how the British government sees immigration for nationals of the EU27 in a post-Brexit world.

Change will be managed in three phases; the first ensuring EU citizens already resident in the UK may remain, and possibly seek settled status; Phase Two follows the UK's withdrawal from the EU and introduces a temporary 'implementation period' to replace Free Movement; Phase Three will signal the introduction of new rules to 'control the type and volume of both temporary and permanent migration from the EU'.

For EU nationals already present and working in the UK, their future may not be dramatically changed by Brexit. Those individuals should fall into Phase One of the government’s plan, which will culminate in the introduction of a new Immigration Bill providing an avenue to settlement for those meeting Home Office requirements (yet to be finalised). This new ‘settled’ status is something for which individuals will have to apply, and Phase One is scheduled to last for two years to allow those applications to be made.

Phase Two is envisaged to take effect from Brexit day in March 2019, applying to new EU migrants as opposed to those already here in the UK. During Phase Two, EU citizens will come and go under a system of 'deemed leave to enter', which will provide a transitional period to allow UK businesses to move towards a new permanent system for EU workers (Phase Three). Phase Two is already proving controversial however, as ‘low skilled’ workers will be restricted more heavily than those with formal qualifications, including a two-year cap on their UK residence (higher-skilled applicants are likely to qualify for longer-term permission). The leaked paper also makes clear that post-Brexit, UK employers will be expected to seek to fill vacancies with UK workers before looking to candidates from elsewhere in the world. This is similar to the current approach to non-EU worker sponsorship, which generally requires a Resident Labour Market Test before sponsorship may be offered.

Phase Three will take effect from 2021, and will be the permanent immigration system in place from that time onwards. The Home Office paper does refer to temporary and permanent migration from the EU, indicating that in some cases, a settlement route will remain open. The Migration Advisory Committee is currently undertaking a review of the potential impact of Brexit on the UK economy, with a view to reporting to the government next year. Their findings may influence the details of Phase Three, which are not yet confirmed. The leaked paper does however indicate that the government will look to limit migration by some family members of EU nationals, and that an income requirement could be introduced to bring EU migration in line with other immigration routes.

While the details in the leaked paper are not yet confirmed as government policy, they have raised worrying questions in some industries. Employers of high volume ‘low skilled’ labour (including those working in hospitality, agriculture, construction and manufacturing) are concerned that the limits on new migration from Phase Two will discourage and overly restrict the flow of new workers that are essential. Employers of ‘high skilled’ EU staff (the NHS, academic institutions, banking and finance, etc) are similarly worried that the curbs on migration of family members and the additional measures being introduced will narrow their pool of future candidates.

The UK now has more people at work than ever before - an employment rate of 75%, the highest since such records began in 1971. Whilst we remain a member of the EU, unemployment stands at a 42-year-low of 4.3%. There are around 774,000 current job vacancies, more than can be filled by suitably-qualified British citizens. Following the referendum, tens of thousands of EU citizens are leaving us and fewer are arriving. Net migration to the UK has fallen to the lowest level for three years as thousands of EU citizens have left the country. Figures released by the ONS showed net migration stood at 246,000 in the year ending in March 2017 - down 81,000 compared to the previous 12 months.

More than half the drop was due to an increase in the number of EU citizens leaving Britain and fewer arriving. Around 10,000 EU doctors, nurses and staff have already left the NHS in the past year, and applications from the rest of the EU for nursing jobs in the NHS have dropped by over 95%. Maybe not a statistically significant figure for an employer of 1.5 million staff, but enough to exacerbate existing shortages.

So, what can businesses do now to be prepared for Brexit day? The most important thing is to stay informed. The leaked document in September poses more questions than it has answered, but this is the clearest picture we have yet been given of how things might look post-Brexit. The final version of the paper is not due for publication for a further year (late autumn 2018 is the projected date), which is only a few months before Brexit day, leaving little time to prepare. Monitoring – and possibly influencing - the debate will give business the best chance to assess how their workforce and growth might be affected.

If you have not already done so, we also recommend speaking with your EU workforce and supporting them as Brexit day approaches. Many people are deeply concerned by the government’s handling of the Brexit negotiations, and are not confident that their rights to remain in the UK will be protected. Helping those individuals to understand whether they are affected (Irish nationals are not, for example), and what steps they may need to take in future (such as the proposed application for settled status) may help them to feel more secure. It still remains open to EU nationals to apply for residence documents to confirm their current status, and those documents will remain valid until Brexit day. After this, it is likely that having already secured a document will be of use when applying for the new settled status, so an application now may help to alleviate current concerns and be of practical benefit in the future.

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