EU workers and Brexit - where are we and what can retailers do now?

As we approach the UK's planned exit from the EU later this year, retailers in the UK currently find themselves in a difficult position when it comes to predicting market trends and resourcing businesses accordingly.

In amongst this, issues with recruiting and retaining EU staff adds to the complexity of this area.  The good news is that as "Brexit Day" draws ever closer, policy in this area is becoming clearer.

EU Settlement Scheme

In June 2018, the Government published an EU Settlement Scheme that set out detailed rules on the status of EU nationals post-Brexit.  However, this publication (as with the majority of the Government's Brexit-related correspondence at that time) presupposed that the UK would leave the EU with a fully ratified Withdrawal Agreement – in other words, a "deal" - in place.  With the prospect of a no-deal Brexit now looming ever larger, the Government has since taken steps to clarify how the Settlement Scheme would operate in a no-deal scenario.

As things stand, EU nationals and eligible family members resident in the UK by 29 March 2019 will be able to make an application under the Scheme irrespective of whether the UK faces a deal or no-deal Brexit.  In short; if you employ EU staff on 29 March 2019, they will have a means by which to seek to extend their stay in the UK.

The Scheme will, however, operate slightly differently depending on the nature of the UK's exit:

Deal

• If the UK leaves with a deal, there would be a Transitional Period until 31 December 2020 during which EU law would continue to apply in the UK.  In such circumstances, the Settlement Scheme would actually give those resident in the UK by 31 December 2020 the opportunity to apply under the Scheme.  In a deal situation, EU nationals could therefore arrive in the UK post-Brexit - but still be able to remain in the UK under the Scheme.  It has been suggested that this could result in a rush of inward migration to the UK before the end of 2020 (which could in turn see demand for roles in retail outstrip supply); but current trends still show a decline in EU workers in the UK since the Brexit referendum. 
• In a deal situation, EU nationals resident in the UK by 31 December 2020 would have until the end of June 2021 to actually make their Scheme application.
• EU nationals and eligible family members who have 5 years' continuous residence by 31 December 2020 could apply for "settled status" – effectively permitting them to remain in the UK for an indefinite period.  For those who do not have 5 years' residence, "pre-settled status" can be applied for.  Subject to the fulfilment of certain conditions, this can be converted into settled status at the 5 year threshold.

No-deal

• If there is no-deal, there will be no automatic Transition Period – so the Settlement Scheme would only apply to those resident in the UK by 29 March 2019.  Such individuals would have until 31 December 2020 to make their application.
• Whilst EU nationals that arrive in the UK after 29 March 2019 would not be able to apply under the Scheme, a new immigration system (applicable to EU and non-EU nationals) is not proposed to take effect until 1 January 2021.  Temporary transitional measures would therefore apply to EU nationals arriving between 30 March 2019 and 31 December 2020 if they wish to stay for more than 3 months.  Temporary leave to remain (which would give such individuals the right to work) may be granted for up to 3 years under these arrangements.  However; at the expiry of such leave, EU nationals would need to meet the requirements of the new immigration system in order to lawfully remain in the UK.

There will, however, be some aspects of the Scheme that will operate irrespective of whether we end up with a deal or no-deal scenario.  Applicants will be required to prove their identity, residence and that they are not a serious criminal; applications can predominantly be completed online, Irish nationals do not need to apply (as their status is protected by other means) and there will be scope for certain overseas family members to join EU nationals in the UK after the residence deadlines have expired.  The UK Government has also recently announced that the £65 application fee has been scrapped, which no doubt will be welcome news to those retailers that had already committed to paying the application fees for their staff.  Once settled status is granted, individuals will be able to continue to live and work in the UK - enjoying more or less the same rights as they currently do now.

Despite the ongoing political uncertainty, there are still a number of steps that retailers can take now in order to best prepare for the UK's departure from the EU:

Workforce audit

All employers in the UK should hold right to work paperwork for all staff, which can be used to assess how many staff members are working for the business under EU free movement rules.  Retail is an area with a historically high proportion of EU workers in comparison with other sectors, so keeping this audit up to date will be crucial to accurately assessing your reliance on EU nationals and their family members.

Communication

Applications under the Settlement Scheme will not require much involvement on the part of employers. However, it makes sense for employers to communicate with relevant staff and keep them up to date with developments – albeit businesses should be careful not to provide "immigration advice" that can only lawfully be carried out by regulated firms/individuals.  The UK Government has published a Toolkit to assist with staff communications; but this would need to be amended in the event of a no-deal Brexit.

Personnel files

As noted above, the Settlement Scheme envisages a fairly simple application process.  Data from various government departments and agencies (such as the Department for Work and Pensions and HMRC) will be used to assess residence requirements. However; the Scheme notes that additional supporting evidence can be provided if the information held by these bodies is insufficient or inconclusive. It would therefore be wise for retailers to ensure HR personnel files are accurate and up to date, so that information can be accessed quickly and easily upon request.

Think further into the future

Under proposals published by the UK Government, a system of sponsorship (that currently applies to non-EEA nationals) would be introduced in an amended form for both EU and non-EU nationals from 2021. 

Under current rules, many roles in the retail sector that are essential to business success are considered by the Home Office to be insufficiently skilled to justify sponsorship.  However; the Government's proposals involve the reduction of the necessary skill level, which may open more roles up to sponsorship from 2021.  Of course; those with settled or pre-settled status under the Settlement Scheme would not require to be sponsored.

In addition, the Government has also proposed the introduction of a temporary low skilled worker category (that will be kept under review) in order to assist employers in moving away from low skilled EU labour. Workers under this category would not require to be sponsored by a particular retailer, but could only work in the UK for 12 months. They would then have a 12 month cooling off period outside of the UK before being eligible to apply again under this category.  

Contributor: Fraser Vandal

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at February 2019. Specific advice should be sought for specific cases. For more information see our terms & conditions.