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IMPACT – HIGH
Prime Minister Theresa May said Tuesday the United Kingdom will leave Europe’s single market, confirming plans for a “Hard Brexit” that would dramatically reshape the U.K.’s economic and immigration relations with the rest of Europe.
May’s remarks set out her government’s Brexit strategy in the most detailed terms offered to date. The U.K. intends to invoke Article 50 of the Lisbon Treaty to formally begin the process of withdrawing from the European Union by the end of March. That would set off a two-year negotiating period that would have the U.K. leave the European Union in 2019.
“We do not seek to hold on to bits of membership as we leave,” May said. “The United Kingdom is leaving the European Union and my job is to get the right deal for Britain as we do.”
Among other points, May said:
May also stressed that while the U.K. wants to be the “friend and neighbor” to the EU, it would look beyond Europe to the wider world as well, taking an international, not isolationist, approach.
Background: The U.K. narrowly voted to leave the EU in June of 2016, in part due to popular disapproval of the “free movement of people” from within the EU and the overall difficulties of managing immigration in the U.K. May has kept her cards close to the vest ahead of the triggering of Article 50. She bowed to pressure Tuesday to provide a more detailed plan, but did not satisfy demands from some corners. May has not, for example, provided a detailed white paper or other written document to submit to MPs for consideration, as some have called for.
What’s clear, however, is that the government will pursue a “Hard Brexit.” Chancellor Philip Hammond separately confirmed, “We cannot be members of the single market because of the political lines around the four key freedoms that the other leaders have set.” One of those freedoms is the free movement of people, which would prohibit the U.K. from controlling migration from Europe if it were to remain a part of the single market. Instead, the government is aiming for a free-trade deal with the EU, leaving the immigration of EEA nationals and their families outside of any trade agreement that might be reached.
BAL Analysis: Brexit will affect all aspects of the U.K. economy, legal system and immigration scheme. May’s remarks all but dashed hopes for a “Soft Brexit,” in which free movement policies and the jurisdiction of the European Court of Justice would remain in place. It is safe to assume that future migration from EU member states will be subsumed in the U.K.’s overall immigration framework. The failure, so far, to offer guaranteed relief for the 3 million EEA nationals currently in the U.K. is a disappointment. Additionally, fear of “cliff edge” change immediately after Brexit has not been allayed, as May made it clear the U.K. should not accept a “purgatory” of long-term transitional arrangements.
BAL continues to follow all Brexit developments and continues to consult both with clients and the government, when possible. Additional Brexit coverage is available in BAL’s Brexit Bulletin. BAL is available to provide analysis for your particular business. Please contact uk@bal.com to discuss strategic planning and the options available to your company.
This alert has been provided by the BAL Global Practice group in the United Kingdom. For additional information, please contact 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.
The following is a roundup of recent developments concerning Brexit negotiations and the United Kingdom’s withdrawal from the European Union.
News Summary
Last week, the Supreme Court heard final arguments in a case over whether Parliament must have a say in the triggering of Article 50 EU exit procedures. The government brought the appeal after a High Court ruled that Prime Minister Theresa May could not unilaterally trigger Article 50 without Parliament’s approval. The outcome, expected in early January, will certainly impact the timing and tenor of Brexit proceedings.
The lack of any published Brexit strategy is putting Theresa May’s government under increasing strain. New government figures showing that net migration to the U.K. remains historically high are fueling Brexiters’ demand for change, while all indications from the European Commission and EU leaders show a hardline stance whereby negotiations can only take place within strict Article 50 procedures and timelines, with no flexibility on the issue of the “fundamental” right of free movement for EU citizens.
Immigration
Net migration remains high
Net migration remains at record high levels, hitting 335,000 in the previous year ending in June 2016, according to the most recent government figures. This is the second highest net migration number on record. The Brexit has created a rush to file, and the flow of EU nationals moving to Britain also hit a record number at 284,000. The latest migration figures show that almost 100,000 EU citizens living in the U.K. have applied to the Home Office to secure their status. This surge in applications guarantees that a backlog will develop in a system that has historically processed just 25,500 permanent residence applications per year.
Demand for documentation
Home Secretary Amber Rudd signaled that the U.K. will gradually move to a system that will require EU nationals currently in the U.K. to be documented, rather than allowing them to continue to rely on passports or ID cards alone. Rudd has refused to provide specifics, stating only that there will need to be “some sort of documentation” and that such a system would be introduced “in a phased approach.”
Consequences of new regulations for EEA nationals
The Home Office has implemented new Regulations on EEA Nationals that impose stricter rules on EU/EEA nationals seeking permanent residence permits in the U.K. Applicants should be aware that the Home Office is scrutinizing applications more closely, requesting additional documents, and is expected to reject more applications under these new regulations. As a result of the spike in permanent residence applications, applicants are unlikely to receive decisions within the six-month service standard.
Legal
Supreme Court hears Brexit challenge
The Supreme Court has concluded hearings on an appeal of the successful Brexit challenge. The full eleven-member court will decide the constitutional law question of whether the Government must first get Parliament’s assent before invoking Article 50, or whether powers of royal prerogative are sufficient. The case is not about whether Brexit occurs, but how it occurs. If the Supreme Court upholds the lower court’s decision, as expected, MPs will have a greater role in shaping Brexit negotiations. The ruling is expected in early January.
New legal challenge disputes EEA exit
A fresh legal challenge, meanwhile, alleges that the government cannot use the Brexit referendum to withdraw from the European Economic Area without the consent of Parliament. The think tank British Influence has lodged a complaint asserting that the Brexit referendum was a vote on whether to leave the European Union, not the European Economic Area to which the U.K. also belongs; therefore, the U.K. would need to hold another referendum on EEA membership and get Parliament’s approval to trigger separate withdrawal procedures under Article 127 of the EEA Agreement. The government argues that the U.K.’s membership in the EEA hinges on its EU membership, such that once it leaves the EU it will also no longer be a member of the EEA.
Politics
“Cake and eat too” strategy
A leaked note indicating that the U.K.’s strategy in Brexit negotiations is to “have its cake and eat it,” put the Government on the defensive. The “cake strategy” refers to the Brexiters’ aspirations to benefit from the single market while abrogating freedom of movement.
A tough stance from EU chief negotiator
In his first press conference on Dec. 6, the European Commission’s chief Brexit negotiator, Michel Barnier made clear that the unity and interests of the EU are his priority, not placating the British. He categorically rejected any option that would allow the U.K. to curb free movement of EU citizens while retaining access to the single market: “The single market and four freedoms are indivisible. Cherry-picking is not an option.” He also set out a stringent timetable for negotiations to conclude by October 2018 to allow time for the EU Parliament, the EU Council and U.K.’s Parliament to implement Brexit by March 2019, two years from when article 50 is set to be triggered.
Status of current EEA migrants in U.K.?
The status of EU nationals residing in the U.K. remains a contentious issue. Keir Starmer, shadow secretary for Brexit, has demanded that May unequivocally guarantee the status of EU migrants already living in Britain as a gesture of goodwill prior to invoking Article 50. May, however, has been reluctant to confirm the status of EEA migrants already living in the U.K. unless British nationals who have settled in the EU are assured the same rights. In an open letter to Downing Street, a group called “the3million,” representing the estimated 3 million EU nationals currently residing in the U.K., have asked for a public guarantee that they will not be treated as pawns in the negotiations.
Preparing Your Company
Brexit negotiations can only begin once the U.K. invokes Article 50. However, now is the time to begin preparing your business as much as possible for a more restrictive immigration regime for both existing and future EEA employees.
BAL can assist with a number of services including:
BAL strongly urges clients to provide any feedback to the BAL London Team, which will inform our government relations strategy and allow us to lobby for positive business-friendly reforms, where feasible, on your company’s behalf.
Should you have any questions or require more information on how BAL can help with Brexit strategic planning, please contact us at uk@bal.com.
Copyright © 2016 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
What is the change? An employment tribunal has found that a company was justified in terminating an employee who had a legal right to abode (to live and work) in the U.K. in fact, but failed to provide specific documentary evidence in line with the right-to-work guidance when requested by the employer.
What does the change mean? The case helps define the steps an employer should take to verify an employee’s right to work under immigration laws and the point at which an employer may terminate an employee without running afoul of employment laws. It also reminds foreign national employees of the need to have specific documentation evidencing their right to work.
Background: The case, Baker v. Abellio London Ltd., involved a bus driver who held a Jamaican passport and a right of abode and was thus entitled to live in the U.K. and freely work for any employer in the U.K. However, during right-to-work immigration checks, the employer found that the employee’s passport containing the right-of-abode endorsement authorizing work had expired. The employee renewed his passport, but did not obtain a new right-of-abode endorsement as requested. As such, the employer was able to terminate employment for failure to evidence the employee’s right to work in line with the specific guidance, despite there being no doubt in fact that he had the right to work in the U.K.
An employment tribunal found that the dismissal was fair because the employer had taken the following steps:
BAL Analysis: While the decision is by a first-tier tribunal that is likely to be appealed, it provides some important guidelines and reminders to human resource professionals who are required to balance employment law protections for employees against company obligations under the immigration rules on right-to-work checks. The decision demonstrates that greater support is likely to be shown to employers – who face a £20,000 fine for employing an illegal worker unless they establish a statutory excuse by adhering to the prescribed right-to-work check procedures – and that a dismissal for failing to provide documentation can in some circumstances be proportionate and fair.
What is the change? Applicants for U.K. visas should prepare for slower processing heading into the Christmas and New Year’s holidays.
What does the change mean? Visa applications centers and premium service centers will close or operate on limited hours or staffing from Dec. 23 to Jan. 2, and applicants should plan for longer timelines when booking their visa appointments and planning business schedules over the Christmas period.
Background: Because Christmas falls on a Sunday this year, official public (bank) holidays will be observed on Dec. 26 (Boxing Day) and Dec. 27 (in lieu of Christmas). Additionally, many visa application centers may be closed or observe half days on Dec. 23 and 24 or operate at reduced capacity during the period Dec. 28-30. Because New Year’s Day also falls on a weekend, this public holiday will be observed and visa centers closed on Jan. 2.
BAL Analysis: Applicants should plan to book their appointments as early as possible and recognize that they may not be able to get an appointment on their preferred date during the Christmas period. In addition, applicants should not book holiday travel without close consultation with their BAL representative.
What is the change? U.K. Visas and Immigration has introduced a fee-based priority service for A-rated sponsors of Tier 2 and Tier 5 workers to make certain change of circumstances requests.
What does the change mean? For an additional fee, mandatory change of circumstances Sponsor Management System updates will be processed in just five working days. This add-on service applies to in-year CoS allocations, follow-on CoS allocations, addition of a new Level 1 user, or replacement of an authorizing officer. The service does not apply to restricted certificates of sponsorship.
BAL Analysis: The service benefits A-rated sponsors who are not registered as premium sponsors. Premium sponsors are already given faster consideration of changes of circumstances. Although at an added cost, the new service means that employers are able to manage their compliance obligations as a licensed sponsor with greater ease and ensure that the Sponsor Management System is more responsive to business changes and needs.
A British High Court ruling has thrown Prime Minister Theresa May’s timetable for leaving the European Union into flux and could ultimately give Parliament a stronger voice in shaping the terms of the Brexit.
The court ruled Nov. 3 that Parliament must have a say in determining when Article 50 of the Lisbon Treaty is invoked to formally begin the process of leaving the EU. The government has said it will appeal the decision to the Supreme Court, and a hearing may be held as soon as December.
The ruling does not overturn the results of the referendum, nor does it change the immigration status of U.K. or EU nationals.
Brexit opponents hope, however, that giving Parliament a bigger role will move the government away from a “hard Brexit,” in which free movement rights are cut dramatically, and toward a more nuanced relationship with the EU where benefits of the single market are secured through some sort of preferential immigration deal for EU migrants.
The ruling has the potential to significantly change the Brexit landscape.
And while the legal drama unfolds, interests in Northern Ireland continue their attempts to put a stamp on the pending negotiations. Debate continues on whether a hard Brexit, soft Brexit or something in the middle is best. And the U.K. has moved forward with long-awaited immigration changes even as the immigration system as a whole could be upended through the Brexit process.
May Still Eyeing March
In response to the High Court ruling, May said in a televised interview that she is still planning on a March timetable.
“I’m clear that I expect to be able to trigger Article 50 by the end of March next year,” she said. “That’s what I’ve said consistently, and I continue to work on that basis.”
Triggering Article 50 in March would set the U.K. up to leave the EU in the spring of 2019.
May said the government has “strong legal arguments” that will go before the Supreme Court, but if the Supreme Court upholds the High Court ruling she expects that the Supreme Court’s judgment will spell out the process for what role Parliament will play.
Shadow Brexit secretary Sir Keir Starmer of the Labour Party, said that while the government can appeal the ruling, giving Parliament a stronger role in the negotiations would benefit the country.
“Would it not be better for the government to stand back and ask itself whether it is right to continue with the approach that it is taking?,” he said. “No one expects the government to reveal the details of its negotiating hand, but there are very big headline issues that matter to everyone in every part of the U.K.”
Northern Ireland, Scotland
The timing of the Brexit and the subsequent negotiations are complicated by the roles that the devolved nations within the U.K. will play.
Days before the High Court ruling in London, the High Court in Belfast ruled that nothing in Northern Ireland’s Good Friday agreement can prevent the U.K. government from triggering Article 50. Scotland, meanwhile, has been angling for an agreement that preserves as many of its ties to the EU as possible.
Scottish First Minister Nicola Sturgeon said she is prepared to push for a second referendum on Scottish independence from the U.K. if necessary to protect Scotland’s interests.
Sturgeon called the U.K. High Court ruling “hugely significant” and said Scottish National Party Members of Parliament “will certainly not vote for anything that undermines the will or the interests of the Scottish people.”
A Middle Path?
While May and Home Secretary Amber Rudd are pushing for a hard Brexit, a proposed Brexit deal has been published by nonpartisan think tank British Futures that would strike a middle way between a hard Brexit that would sever links to the single market in order to remove free movement entirely and a soft Brexit that would preserve full free movement rights.
The report asserts that a politically feasible compromise is possible by maintaining some national controls on immigration to satisfy the immigration concerns of the British public while promising enough free movement for Europeans to seal a Brexit deal with EU member states. Specifically, the report proposes that the U.K. give EU countries “preferential” treatment on freedom of movement while introducing a three-tiered U.K. migration system: a route for global talent, free movement for skilled EU workers, and a quota system for low-skilled migrants.
The full report, “A British Immigration Offer to Europe,” can be viewed here.
UK-Ireland Relations
The U.K. Parliament’s EU Select Committee has opened an inquiry into U.K.-Irish relations post-Brexit. The inquiry will consider the impact on the Common Travel Area, trade relations, the challenges posed by the land border between Eire and Northern Ireland (part of the U.K.), and the rights of Irish citizens living in the U.K.
Under the 1972 Common Travel Area legislation, British and Irish citizens enjoy special rights including free movement without the need to present travel documents at the border. Also, by historical agreement, Irish nationals are automatically considered to hold settled status (permanent residence) in the U.K. Some experts have indicated that new legislation may be required to preserve such rights after the U.K. leaves the EU. The committee has finished accepting oral evidence from experts and is now preparing a report.
Regulations on EEA nationals
The U.K. Parliament has adopted new Immigration (European Economic Area) Regulations pursuant to an EU directive on the rights of EEA nationals and their family members and subsequent EU court cases interpreting the directive. The regulations mostly codify previous amendments, but also demonstrate that the U.K. is choosing to interpret and implement European law to limit rights where possible, on the expectation that the EU will have little motivation to enforce EU law against a departing member.
Among the changes, the U.K. may require a specified application form and process for EEA nationals and family members applying for resident permits, the right to appeal has been abolished for extended family members, and it will be easier for the U.K. to exclude or remove an EEA national or family member for “misuse of rights to reside.”
The regulations come into force Feb. 1, 2017, except for a provision that allows the U.K. to deny entry to a non-EEA family member who moves to an EEA country for purposes of “circumventing” U.K. entry rules that apply to non-EEA nationals, which takes force Nov. 25.
Changes to Tier 2 categories
While the Brexit debate grabs headlines, the Home Office continues to quietly roll out changes to Tier 2 categories pursuant to the Migration Advisory Committee report.
The MAC issued its recommendations months before the Brexit referendum in response to the Cameron administration’s call for policies to restrict immigration amid record net migration to the U.K. The MAC took the approach of seeking to limit migration primarily through higher costs to employers.
The biggest changes announced last week include higher salary thresholds for Tier 2 (General) and (Intra-Company Transfer) routes beginning Nov. 24 and closure of the Tier 2 ICT Skills Transfer route – changes that will have a direct impact on the cost of employing high-skilled foreign workers. A summary of upcoming Tier 2 changes may be viewed here.
Although the Brexit is closely tied to immigration and may rewrite the immigration rules entirely, employers should prepare for these changes in the meantime. Further immigration rule changes will be introduced in April next year.
Immigration Act 2016
Employers should also be aware that provisions of the Immigration Act 2016 continue to be phased in. Beginning Nov. 25, harsher rules on enforcing illegal working violations take effect, and additional Right-to-Rent provisions take effect beginning Dec. 1.
Details on the changes may be viewed here.
The overall environment has become stricter. Employers should be aware of the lower burden of proof for prosecutors to find an employer criminally liable for hiring undocumented workers, and assignees should be aware that they will be required to show proof of their status for daily services such as renting a place to live and opening a bank account.
Brexit negotiations will begin once the U.K. invokes Article 50, but now is the time to begin preparing your business for what lies ahead. BAL can assist with a number of services including:
BAL strongly urges clients to provide feedback on both Brexit and additional Tier 2 changes with the BAL London Team.
Should you have any questions or require more information on how BAL can help with Brexit planning, please contact us at uk@bal.com.
The Brexit Bulletin has been provided by the BAL Global Practice group in the United Kingdom. For additional information, please contact uk@bal.com.
What is the change? As the phased rollout of the Immigration Act 2016 continues, labor market enforcement provisions will take effect on Nov. 25 and Right to Rent provisions on Dec. 1.
What does the change mean? The definition of illegal hiring has been broadened, making it easier for U.K. employers to be found in violation of hiring illegal workers and be subject to higher criminal and commercial penalties, including closure of their business. The U.K. may become a more hostile environment for migrants generally, with increased administrative hurdles when seeking to rent property, open bank accounts or secure driving licenses.
Below are some of the key provisions that relate to illegal working and restricting undocumented workers’ access to services:
Illegal Working
Right to Rent and registration checks
The Immigration Act restricts illegal migrants’ access to services, including the ability to rent a residential property. The “Right to Rent” regime, which is detailed here, requires landlords to obtain proof of a tenant’s immigration status before the tenancy commences, similar to employers’ obligations to conduct Right to Work checks. The rules impact the timing of an assignee’s ability to secure housing depending on the willingness of landlords to arrange accommodation prior to visa approval or biometric residence permit collection (which can take some weeks after arrival in the U.K.).
The Act also introduces a number of additional checks when migrants seek other services such as opening a bank account or obtaining a driver license. Assignees should be aware of these new obligations, and in most cases will need to wait until the biometric residence permit is available (two to four weeks) before applying for such services. Employers should be prepared to confirm an assignee’s status if requested by a bank, the Driver and Vehicle Licensing Agency, or the assignee.
Other sections of the Act deal with enforcement powers, detention and bail and appeals rules, border security, fees and welfare of children, with lesser impact on employers, but which nonetheless demonstrate a punitive migration regime in which global employers and employees must operate.
BAL Analysis: U.K. companies should be aware of the increased enforcement environment against illegal working and violations of labor market laws. Corporate employers should also be aware of how this more hostile approach will impact their employees, albeit indirectly, as it increases the administrative burden on assignees moving to the U.K. and on recruiters and HR personnel responsible for ensuring that right-to-work documentation is fully in place. The stricter enforcement measures also directly increase the costs a business must bear in order to employ migrant workers. BAL can assist employers in reviewing their policies and conducting compliance audits.
What is the change? On Thursday, the Home Office announced that the first phase of Tier 2 changes following the Migration Advisory Committee’s recommendations will be implemented between now and April 2017.
What does the change mean? Companies should plan for higher salary thresholds for high-skilled foreign employees and assignees in the Tier 2 (General) and (Intra-Company Transfer) categories and should prepare for the closure of the Tier 2 (Skills Transfer) sub-category. The changes also include giving extra weight to overseas graduates within the Tier 2 (General) quota.
Below are the key changes and implementation dates relevant to business immigration.
Tier 2 (General):
BAL Analysis: The higher salary thresholds will increase labor costs for businesses. Companies should anticipate the additional salary increases in April of next year.
A British High Court has ruled that the government cannot trigger procedures to begin withdrawal from the EU without a vote by Parliament. The court rejected the government’s argument that the Crown’s prerogative powers authorize Prime Minister Theresa May to begin Brexit procedures on her own.
The government vowed to appeal to the Supreme Court. In the meantime, the court’s decision blocks May from unilaterally invoking Article 50 of the Lisbon Treaty, which begins formal withdrawal procedures from the EU, and could delay or thwart eventual Brexit negotiations.
The court reasoned that when the U.K. joined the EU, Parliament took the “major step” of passing as primary legislation the 1972 European Communities Act, which transposed EU law into domestic law, and therefore it is “not plausible” that Parliament intended that the Crown be able to unilaterally undo the Act under its prerogative power.
Key points:
Background: The legal challenge was brought by several U.K. citizens and other interested parties, including EU nationals living in the U.K., who argued that it was unconstitutional for the government to begin withdrawal from the EU without Parliamentary assent. Under Article 50, withdrawal procedures begin when a state formally notifies the EU that it intends to leave. The notification sets off a two-year negotiations period.
The court ruling will further delay the already contentious Brexit proceedings, as European leaders have said that negotiations on the terms of a Brexit deal will not begin until the U.K. triggers Article 50.
The full court decision may be viewed here.
BAL Analysis: Although the ruling is a victory for Brexit opponents, it will be appealed and does not overturn the referendum result. If the ruling is upheld by the Supreme Court, Parliament could potentially vote against withdrawing from the EU, but many Members of Parliament recognize that the democratic consensus is to leave the EU and may instead use their vote in Parliament to gain influence over the terms of the Brexit negotiations. The expectation is that Parliamentary debate would move the government away from a “hard Brexit,” in which free movement rights are cut dramatically, toward a more nuanced relationship with the EU where benefits of the single market are secured through some sort of preferential immigration deal for EU migrants. The spike in the value of the pound immediately following the result suggests that markets have a renewed confidence in the U.K. steering toward a more business-friendly course in the eventual Brexit negotiations.
What is the change? British consulates have been unable to finalize the processing of certain points-based visa applications because their internal points-based system checker is temporarily unavailable. The problem arose Tuesday and appears to be affecting British consulates across the globe.
What does the change mean? Issuance of Tier 2, Tier 4 and Tier 4 (non-YMS) visas may be delayed.
Background: UK officials said in an email that consulates were having problems with their internal PBS checker, which is used to process certain points-based visa applications. The problem appears to be global and not isolated to any particular consulate or region. It remains unclear how long the checker will remain down.
BAL Analysis: Businesses may need to adjust schedules and start dates if delays are prolonged. BAL will continue to monitor the situation and provide additional information as it becomes available.
This alert has been provided by the BAL Global Practice group. For additional information, please contact BerryApplemanLeiden@bal.com.