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The following is a roundup of recent developments concerning Brexit negotiations and the United Kingdom’s withdrawal from the European Union.
News Summary
European Union leaders have adopted Brexit negotiating plans and indicate they will focus on the rights of EU citizens, the Irish border and U.K. payments to the EU when formal negotiations begin.
Voters in the U.K. are preparing for a June 8 election, with Prime Minister Theresa May looking like the odds-on favorite to win reelection and perhaps strengthen her Brexit negotiating hand. May released a Conservative manifesto Thursday, calling for a dramatic reduction in migration to the U.K., doubling the levy companies pay to employ non-EU nationals and promising to put off a second Scottish referendum. The Labour Party has said it would scrap the Conservatives’ “hard Brexit” approach, while the Liberal Democrats say they would give U.K. voters the opportunity to accept or reject a final Brexit deal.
Early data points on Brexit’s impact on the business community are not promising. One report says recruiters are having trouble finding qualified candidates across industries, while another suggests that London may lose as many as 9,000 banking jobs to continental Europe. Businesses along the Ireland-Northern Ireland border face uncertainty. And a letter from Japan to the U.K. and EU reveals how closely non-EU countries are watching developments.
Immigration
EU adopts Brexit guidelines
At a special summit on Brexit on April 29, EU leaders quickly adopted the negotiating framework proposed by European Council President Donald Tusk and chief negotiator Michel Barnier. Under the guidelines, before negotiating future relations with the U.K., the EU-27 and the U.K. must first conclude negotiations on three issues: the rights of EU citizens, the Irish border question, and settling the U.K.’s financial bill with the EU. Barnier made a trip to the Irish border earlier this month where he said he would work hard to prevent a hard border but that some controls may be inevitable in order to meet EU border management requirements.
EU nationals in the U.K.
The rights of EU nationals in the U.K. may prove to be a thornier issue to negotiate than anticipated, as both sides have hardened their demands. May has refused to extend a unilateral guarantee to the approximately 3 million EU nationals living in the U.K., insisting on reciprocal rights for 1 million Britons in the EU, while Barnier seeks an “iron clad guarantee” of EU citizens’ rights before the parties move on to negotiate a trade deal. Both sides have drawn up lists of the various rights of EU citizens, including rights related to labor issues, social security benefits and residency, each of which must be negotiated. Barnier has insisted that the EU Court of Justice continue to protect the rights of EU citizens and their family members after Brexit; May’s hard Brexit plan seeks to end the European Court of Justice’s jurisdiction over the U.K.
Logistical hurdles
The Institute for Government, meanwhile, issued a report highlighting the administrative and logistical challenges of developing and implementing a new immigration system. “The scale of the task makes successful implementation of a new immigration regime by April 2019 unfeasible,” the report said, “not just for government, who will need to design and deliver the regime, but also the employers, landlords and providers of public services who both rely on the system and support its functioning.” The report noted that May has discussed the possibility of an “implementation phase” during the period between when the U.K. formally leaves the EU and when it takes complete control over its immigration regime, but EU leaders have said the U.K. would be required to accept EU laws on migration during such a transitional period.
Politics
Election manifestos
While the U.K. and EU continue their pre-negotiation posturing, U.K. voters are preparing to head to the polls June 8. Prime Minister Theresa May, viewed widely as the frontrunner, released a Conservative Party manifesto Thursday that contained a number of immigration-related measures, including:
May called for the snap election in the hopes of securing a mandate to deliver on Brexit. Her renewed pledge to reduce net migration to the U.K. from the hundreds of thousands to the tens of thousands raised some eyebrows. The promise has been a mantra of the Conservative Party since David Cameron vowed to slash immigration before his unexpected election win in 2010. George Osborne’s London Evening Standard ran an editorial that called the pledge unrealistic and suggested it lacked support in May’s cabinet.
The Labour party released its manifesto Tuesday, pledging to scrap the Conservatives’ approach to Brexit. Labour said it would immediately guarantee existing rights for EU nationals in the U.K., a welcome pledge for those who are affected or who believe it is important to guarantee such rights. It rejected what it calls “bogus immigration targets” in favor of developing new migration systems with input from business, trade unions, the devolved governments and other stakeholders. Labour says it accepts the Brexit referendum result, but that it would reject May’s hard Brexit approach and would work on “retaining the benefits of the Single Market and the Customs Union.”
The Liberal Democrats go a step further in their manifesto, saying they want to put another referendum before U.K. voters, giving them the option to accept or reject the final agreement the U.K. reaches with the EU. This could create additional uncertainty, but it remains to be seen what the public thinks is the most sensible approach on Brexit. Ultimately, the party in power after the election will determine how immigration policy is shaped for years to come.
Macron on Brexit
The French presidential election results brought a sigh of relief in Brussels. With Emmanuel Macron’s win, not only has the EU averted another possible defection from the bloc, but also gained a pro-European partner in Paris. Macron advocates a strong EU and has said the EU-27 should be “tough” on the U.K. and “extremely rigorous” about the consequences of leaving the EU. However, he also indicated in February that he would be inclined to guarantee the rights of U.K. citizens already living in France.
Business
Formal Brexit negotiations have not even begun yet, but some data suggest that U.K. businesses are already experiencing negative repercussions. A Markit/REC Report on Jobs released May 9 found that while unemployment is at its lowest rate since 2005, recruiters are having a tough time finding suitable job candidates in such fields as engineering, IT and nursing. REC Chief Executive Kevin Green cited “Brexit uncertainty” as a problem, saying that people are both less likely to come to the U.K. from Europe and are less likely to leave their current job.
Reuters, meanwhile, reported that London’s largest banks are planning to move about 9,000 jobs to continental Europe in the next two years. The BBC reported that questions about the border with Ireland remain a concern for border towns, with the Ulster University Economic Policy Centre issuing a study finding that businesses along the Ireland-Northern Ireland border currently benefit from €3 billion (£2.5 billion) in cross-border trade. Such reports emphasize the need for the U.K. government to consider carefully its approach to Brexit negotiations, as this could influence where businesses decide to place staff in Europe, even before the U.K. formally leaves the EU.
With that in mind, non-EU countries are following Brexit negotiations closely. In a 15-page “Message to the United Kingdom and the European Union,” for example, the Japanese government made a number of requests of the EU and the U.K., ranging from providing adequate notice about any policy changes to maintaining an immigration system that allows companies to have access to high-skilled foreign workers. “Uncertainty is a major concern for an economy,” the memo said. “We hope that predictability is secured whereby all stakeholders, not just the negotiating parties, have a clear idea of the post-Brexit landscape.”
Preparing Your Company
While the future is uncertain, many companies have begun taking proactive steps to support their EU employees and to plan for eventual changes to free movement. BAL continues to provide Brexit-related services at varying levels depending on individual corporate needs. Brexit immigration planning may include:
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 checking whether they can claim to be a “qualified person” under EU law. Employees should ensure they possess:
BAL encourages and welcomes communicating with the BAL London team regarding Brexit developments, as we continue to work with the Government to prepare for reforms.
Should you have any questions or require more information on how BAL can help with Brexit planning, please contact us at uk@bal.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@bal.com.
IMPACT – MEDIUM
European Council President Donald Tusk said in a letter Friday that the European Union’s Brexit negotiations with the United Kingdom should initially focus on guarantees for EU nationals in the U.K., the U.K.’s financial obligations to the EU and preventing the establishment of a hard border between the Republic of Ireland and Northern Ireland.
The letter was sent to European Council members a day before EU officials will meet to adopt guidelines for the EU’s Brexit negotiations, and Tusk repeated that the EU will focus on negotiating the U.K.’s departure from the EU before it begins talks on the EU and U.K.’s future relationship. “Before discussing our future, we must first sort out our past,” he said.
Key Points:
BAL Analysis: While negotiations have not yet formally begun, Tusk’s letter offers an indication of the line of negotiation that the EU is likely to pursue. The EU and U.K. both appear interested in an agreement that would protect the status of EU and U.K. nationals in the U.K. and EU, though no guarantees have been made yet. The EU’s positioning speaks to the concerns businesses and EU nationals have about the future status of EU nationals in the U.K., as immigration continues to be at the heart of Brexit talks.
BAL will continue to follow Brexit-related immigration developments and keep clients informed on key developments.
This alert has been provided by the BAL Global Practice group in the United Kingdom. For additional information, please contact uk@bal.com.
This alert has been provided by the BAL U.S. Practice group. For additional information, please contact BerryApplemanLeiden@bal.com.
Prime Minister Theresa May has called for an early election, hoping to consolidate support behind her as the U.K. Government prepares for two years of Brexit negotiations with the European Union.
The election would be held June 8. May previously said she did not support an early election, but indicated Tuesday she would push for an election to seek popular support for decisions she will make in negotiating the U.K.’s departure from the EU.
“The country is coming together, but Westminster is not,” May said, criticizing the Brexit posture of Labour, the Liberal Democrats and the Scottish National Party.
Key points:
Background: The U.K. invoked Article 50 of the Lisbon Treaty on March 29, officially signaling the country’s intent to leave the EU. The EU has indicated it will pursue a hard line in Brexit negotiations, signaling the bloc would force the U.K. to accept EU laws and budget fees if the U.K. seeks the kind of implementation phase May has said she supports. May’s call for an election came just before formal negotiations are set to begin next month.
BAL Analysis: May’s push for a June 8 election carries no immediate immigration consequences. No matter what the election’s outcome, changes to the U.K. and EU’s immigration policies toward each other must be negotiated over the next two years. The election could have significant consequences in terms of the line of negotiating the U.K. will take, but how that will affect post-Brexit U.K.-EU relations is yet to be determined.
IMPACT – HIGH
What is the change? The Home Office has updated guidance for sponsors stating that UK Visas and Immigration may begin conducting compliance visits at any office where migrant workers are working, including third-party locations such as client sites.
What does the change mean? The guidance says it is a sponsor’s “responsibility to ensure that the third party is aware of the possibility of unplanned and unannounced visits and checks being conducted at their premises” and to ensure cooperation with authorities.
Background: The guidance states that during compliance visits officers may want to: verify information provided in sponsor license applications, check that sponsors are complying with their sponsorship duties, interview migrant workers, interview any employees involved in recruitment of migrant workers, inspect records, or check on other workers to make sure sponsors are complying with obligations to prevent illegal work. The guidance makes it clear that compliance officers “may visit you and any physical addresses where your migrant workers carry out their work,” including third-party sites.
BAL Analysis: The consequences of failing to meet sponsorship obligations or providing misleading or inconsistent information can be severe. The Home Office states that discrepancies uncovered after a visa decision has been made will lead to action against a sponsor. This may include prosecution, curtailing sponsorship and refusal of future applications. BAL is able to assist sponsors in preparing for compliance visits at their place of business or at third-party sites. All sponsors should be aware of the movements of their sponsored employees and prepare third-party sites for possible site visits.
EU member states are expected to sign off on a set of tough Brexit negotiating points, including a requirement that the U.K. accept EU laws and budget if it seeks a transitional “implementation phase” following the U.K.’s break from the EU in the spring of 2019.
Background: The U.K. has indicated that it will pursue a “hard Brexit,” where it leaves Europe’s single market and retakes control of its migration processes for EU nationals. The U.K. invoked Article 50 March 29, officially signaling the country’s intent to leave the EU after the U.K. narrowly voted to leave the bloc in 2016.
BAL Analysis: While negotiations have not yet formally begun, the EU has indicated that it will take a hard line with the U.K. The U.K. may push for a transitional phase under which free movement would continue for a set amount of time after the U.K. officially leaves the EU, but it is unclear whether the government would be willing to accept the costs associated with such an arrangement that, for now, the EU has indicated that it would seek to impose. Businesses will hope for a transitional phase to adjust to big changes that look set to lie ahead for the U.K, and recent guidance from the Government regarding the rights of EU nationals could be seen as a move to reassure businesses and EU nationals that the law remains unchanged until formal Brexit.
The U.K. Government formally invoked Article 50 on March 29, officially notifying the EU of its intention to withdraw from the bloc and setting off a two-year negotiation period.
Prime Minister Theresa May has reportedly indicated that free movement for EU nationals could continue during a transitional “implementation phase” immediately following the U.K.’s break from the EU in the spring of 2019 to allow companies to plan for new rules.
Scotland’s Parliament, meanwhile, approved a measure in favor of a second referendum on Scottish independence from the U.K., while May continues to suggest she will block such a vote until Brexit is completed.
BAL held a webinar on March 23 to discuss how companies have begun planning for Brexit and immigration changes affecting their EU and non-EU workforces, as well as sharing an analysis from BAL’s Brexit benchmarking report.
Brexit formally underway
Brexit proceedings formally began on March 29 when the U.K. delivered a letter of intent to withdraw from the EU. The EU responded by issuing draft negotiating guidelines on Brexit for the EU-27 members. While May has indicated her desire for parallel negotiations on withdrawal and a deal on a new relationship, the EU guidelines make clear that it will take a “phased approach” in which the U.K.’s disentanglement from the EU is first settled before any future relationship can be agreed upon.
Free movement: Post-Brexit transition period?
May indicated that she would not rule out an extension of free movement during a transitional period (which she preferred to refer to as an “implementation phase”) after a Brexit deal is reached, allowing businesses time to adjust to new rules.
“Once we’ve got the deal, once we’ve agreed what the new relationship will be for the future, it will be necessary for there to be a period of time when businesses and government are adjusting systems and so forth, depending on the nature of the deal, a period of time during which that deal will be implemented,” May said to reporters while on a trip to the Middle East.
This signals a recognition that there are many businesses in the U.K. relying on an EU workforce, that a considerable amount of planning will need to go into any new system, and that managing existing and new EU entrants into the U.K. and any controls will need to be balanced against business needs. There are few details on how an implementation phase will operate, but it is thought that the “four freedoms,” including the free movement of people, may continue during that period—particularly since May has suggested that a new trade deal with the EU is unlikely to be finalized until formal Brexit in 2019.
U.K. White Paper on Great Repeal Bill
The U.K. government has published a white paper on the Great Repeal Bill that will eventually repeal some 12,000 European regulations from the British statute book on the day the U.K. leaves the EU. The paper sets out how the government plans to ensure an orderly conversion of EU law into domestic law.
Importantly, the U.K. Government will introduce an immigration bill so that nothing in law will change for any EU national, whether already in the U.K. or moving from the U.K., without Parliamentary approval.
Scotland
Independence referendum
The day before the U.K. triggered Article 50, the Scottish Parliament voted in favor of a second independence referendum by spring 2019 when the terms of a Brexit deal will be clearer. The motion requires approval by the U.K., and May has repeatedly said that “now is not the time” for Scotland to vote on breaking away from the U.K. In 2014, Scottish voters opted by 55 percent to remain in the U.K., but that was before the U.K. voted to leave the EU.
BAL Webinar Highlights
BAL held a webinar for clients on March 23 looking at Brexit and Tier 2 Skilled Worker reforms and their impact on companies. Here are some of the highlights of the webinar, led by BAL Managing Director for Europe, Emily King:
The results of BAL’s Brexit benchmarking survey, released in tandem with the webinar, indicate that many companies have begun taking proactive steps to support their EU employees and to plan for eventual changes to free movement.
BAL continues to provide Brexit-related services at varying levels based on individual corporate needs. Brexit immigration planning may include:
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:
BAL encourages and welcomes feedback on Brexit and Tier 2 changes with the BAL London Team, as we continue to work with Government to prepare for reforms.
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@bal.com.
What is the change? The U.K. Government has set out proposed changes to immigration, visa and nationality fees as well as to fees for premium services.
What does the change mean? The new fees will take effect April 6. Fees for visitors, workers and students will increase by 2 percent. Naturalization fees will increase by almost 4 percent. Fees for settlement and indefinite leave to remain will jump by 22.5 percent, which officials say reflects the benefits associated with these applications (e.g., education, public services and access to the U.K. labor market). Premium services will also see big increases (23 percent). There will be no increases to fees for applications under the sponsorship system, e.g., the fees for certificates of sponsorship and sponsor licence applications will remain the same.
Additional information: Fees will increase across a number of visa categories and immigration services, including the following:
*A £55 discount applies for main applicants under the Council of Europe Social Charter (CESC).
A full list of the visa and immigration fees is available on this U.K. government website.
BAL Analysis: The proposed fee increases will impact business costs for certain applications, e.g., indefinite leave to remain applications. Affected employers and individuals should therefore take note of the fee increases and plan accordingly.
The United Kingdom has provided formal notice of its intention to leave the European Union.
The U.K. invoked Article 50 of the Lisbon Treaty on Wednesday, setting up a two-year negotiation period over both the U.K.’s departure and future relationship with the EU. A six-page letter signed by Prime Minister Theresa May was delivered to European Council president Donald Tusk shortly before 12:30 BST.
“The Article 50 process is now underway, and in accordance with the wishes of the British people the United Kingdom is leaving the European Union,” May said in Parliament, after the letter was delivered. “This is an historic moment from which there can be no turning back.”
Tusk spoke before cameras shortly after receiving the letter.
“There is no reason to pretend that this is a happy day, neither in Brussels nor in London,” he said. “After all, most Europeans – including almost half the British voters – wish that we would stay together, not drift apart.”
The U.K. narrowly voted to leave the EU in June 2016. By triggering Article 50, the U.K. has put in motion a series of events as it moves toward a break with the EU in 2019.
Key dates:
BAL Analysis: The U.K.’s departure from the EU will mean the end of “free movement” for EU nationals and their non-EU family members, and could well trigger an overhaul of the U.K. immigration landscape for all foreign nationals working in the U.K. More will be known about what any future system will look like as negotiations progress, but the invocation of Article 50, while historic, does not immediately change the status of EU nationals in the U.K. or U.K. nationals in Europe. Free movement is set to continue until the day of Brexit in 2019.
For May, the key objectives in the negotiations will include controlling migration outside of the free movement directive for new arrivals and securing reciprocal rights of U.K. citizens currently in Europe against European citizens currently in the U.K. May is under pressure to confirm the right to remain for the 3.2 million Europeans in the U.K. within the first few months of negotiations, but it remains to be seen if this is possible or politically expedient.
May will also have to grapple with a push for a second independence referendum in Scotland, after the Scottish parliament voted this week in favor of holding a vote on independence at some point in late 2018 or early 2019, once the terms of the Brexit deal are known. Scotland voted to remain in the EU and, at minimum, is seeking a differentiated agreement on free movement.
The Scottish parliament has voted in favor of a second independence referendum.
The vote came a day before the United Kingdom invoked Article 50 of the Lisbon Treaty to formally begin the process of leaving the European Union and gave First Minister Nicola Sturgeon authority to negotiate with the U.K. over an independence vote.
Sturgeon remains at odds with U.K. Prime Minister Theresa May, however. Sturgeon has said she will push for a vote at some point in late 2018 or early 2019, before the U.K. leaves the EU but after it becomes clear what the terms of departure will be. May has said “now is not the time” to discuss a second independence referendum.
BAL Analysis: Scottish independence offers a possibility of greater protection for European migrants in Scotland and the continuation of free movement. It also opens the door for a revised immigration policy for all foreign nationals, as Scotland’s specific immigration needs and demand for workers both in lesser populated areas and in key industries such as the North Sea oil and gas industry have often not been met by the U.K.’s more restrictive immigration policies. That said, any potential second independence vote will not occur for at least 18 months, and there are no immediate immigration impacts to the Scottish parliament’s vote Tuesday. While the strength of anti-Brexit feeling may increase the odds of a Scottish independence vote passing, many steps remain before a second referendum can be put before voters.
This alert has been provided by the BAL Global Practice group in the United Kingdom. For additional information, please contact your BAL attorney.
After a turbulent political period following the Brexit referendum, the U.K. government is due to officially notify the European Union of its intention to withdraw from the bloc on March 29. On that date, Prime Minister Theresa May will formally invoke Article 50 of the Lisbon Treaty, setting off a two-year negotiation period before Brexit can occur in 2019. Negotiations will be guided by 12 key principles, including controlling migration to the U.K. outside of the current Free Movement rules, but also protecting the rights of those already in Europe (and conversely the U.K.).
To view the March 2017 Brexit Global Trends Benchmarking Report, please fill out the form below:
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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@bal.com.