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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
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.
Politics
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.”
Immigration
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.
Preparing Your Company
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.
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 – HIGH
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.
This alert 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? 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.
IMPACT – MEDIUM
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.
IMPACT – LOW
British Futures, a nonpartisan, nonpolitical think tank focused on migration and integration issues, has released a report, “Britain’s Immigration Offer to Europe,” which outlines a potential way forward for Brexit negotiators looking to secure access to the European single market without committing to full free movement of people. The report recognizes that the debate has so far focused on either free movement or a “hard Brexit” as mutually exclusive options, but offers a compromise position in which the British public sees more tangible control of migration, and particularly of low-skilled migration, while the remaining 27 EU member states are given sufficient preferential treatment to secure their support.
You can read the full report here.
BAL Analysis: BAL considers the proposals to be well-informed, reasonable, fair and business-friendly, yet it is sufficiently inclusive that it would not necessarily cut overall migrant numbers to the degree that the government and pro-Brexit voters seek, and to that extent may still not be politically viable. The report does not deal with the trickier issues of students, self-sufficient individuals, the self-employed, family or derivative rights, and assumes that those already in the U.K. will be protected with a “fair deal,” and thus only addresses part of the larger EU migration picture post-Brexit. BAL recognizes the difficulty for U.K. and global employers operating in an environment of legal uncertainty post -referendum and welcomes comments from the business community that contribute to the policy debate.
Scottish First Minister Nicola Sturgeon has said she is prepared to push for a possible second referendum on Scottish independence from the United Kingdom as the U.K. prepares to begin negotiations on leaving the European Union.
The U.K. narrowly voted to leave the EU in June, but Scotland’s voters overwhelmingly voted to remain, creating further tension between the devolved Scottish government and the U.K. government in Westminster.
“I am determined that Scotland will have the ability to reconsider the question of independence and to do so before the U.K. leaves the EU if that is necessary to protect our country’s interest,” Sturgeon said Thursday at a Sottish National Party conference.
Background: Publishing a bill for consultation is only a first step toward a second Scottish independence referendum and is no guarantee that a second vote will be held. That said, it is clear that Sturgeon and May do not see eye-to-eye on the best path forward either for Scotland or the U.K. as a whole, particularly on the immigration issue.
Scotland’s economic need to support the oil and gas industry and other sectors that rely on a mobile migrant work force, and a social commitment to reject what some see as xenophobic proposals, put Sturgeon and May, and Scotland and the U.K., on very different political footing.
BAL Analysis: Whether Scotland eventually develops different immigration policies than the U.K, either by achieving independence or through political negotiations, remains to be seen. Separate immigration policies have been put in place for Scotland in the past (e.g., the Fresh Talent – Working in Scotland Scheme). This approach could allow different, and more flexible, treatment of migrants in a post-Brexit U.K. immigration regime.
This alert has been provided by the BAL U.S. Practice group. For additional information, please contact your BAL attorney.
Prime Minister Theresa May and Home Secretary Amber Rudd have laid out plans which suggest the U.K. should prepare for a “hard Brexit”, but critics in Parliament and the business community have warned that such an approach could have dire consequences for the U.K.’s access to the European Union’s single market and the free movement of people.
May said she would invoke Article 50 of the Lisbon Treaty to formally begin the U.K.’s withdrawal from the U.K. no later than March of 2017. She and Rudd have doubled down on a goal of reducing annual migration to the U.K. below 100,000 per year, which would require, at some point, reducing migration from Europe.
The government faces opposition from some members of Parliament, though, who say that Parliament should have a vote on the terms of negotiating the U.K.’s withdrawal from the EU. There’s also a question of whether May herself can trigger Article 50, an issue that will be the subject of a High Court hearing this week.
The good news for now: It appears that even after the U.K. leaves the EU, which will happen no sooner than 2019, EU workers in the U.K. at the time of the Brexit will retain their status – with many believed to be eligible for permanent residence at or before the point when the U.K. leaves the EU. However, there is little clarity over what immigration framework is likely to be implemented post-Brexit.
May said at a Tory Party conference recently that she would not seek a Norwegian or Swiss-style arrangement with the EU, where the U.K. would have access to the single market and retain freedom of movement within Europe.
“It’s not going to be a Norway model,” she said. “It’s not going to be a Switzerland model. It’s going to be an agreement between an independent, sovereign United Kingdom and the European Union.”
May and Rudd would like to reduce annual migration to the U.K. below 100,000 – a goal of former Prime Minister David Cameron’s that he never achieved. This plan could involve abandoning the points-based system for non-EEA nationals and, post-Brexit, EEA nationals as well. Whether a work permit system, with caps on immigration numbers, would be introduced to replace the points-based system remains to be seen.
New Proposals
Rudd outlined plans for reducing European migration in the long term while focusing on other measures in the short and medium term. Specifically, Rudd said the U.K. should:
Rudd also profiled some of the Immigration Act 2016 reforms, including making it a crime for landlords to rent to tenants known to be in the country illegally and requiring immigration checks for taxi drivers. These changes are set to take effect in December.
The proposal to force companies to report the number of foreign workers they employ was particularly controversial, but Education Secretary Justine Greening clarified in recent days that this information would not become public and would only be used by the government to identify areas of skills shortages in the U.K. workforce.
Work Rights Post-Brexit
While the U.K.’s future immigration policies for EU member states have not yet been set, the status of EU workers in the U.K. – and U.K. workers in the EU – will not change until at least 2019. May has said that at the time of the Brexit, “existing workers’ legal rights will continue to be guaranteed in law – and they will be guaranteed as long as I am prime minister.”
Press reports indicate that roughly 80 per cent of EU nationals living in the U.K. could be eligible for permanent residence when the U.K. leaves EU – and that the U.K. might grant the remaining 20 per cent amnesty to stay in the country.
Changes on hold
What seems clear at this point is that the Government is increasingly seeing the development and implementation of its migration policies in the context of the Brexit.
Changes to the Tier 2 visa categories announced in March – before the Brexit vote – were expected to take effect this fall, but no date has been announced yet. The delay is most likely due to the further changes that May has indicated will be made within the Tier 2 categories and, possibly, other changes to the immigration system, but few details are available at this time.
Parliamentary Hurdles
The government is facing opposition from some members of Parliament, both in terms of the substance of its proposals and the process of negotiating the U.K.’s withdrawal from the EU.
“Nobody gave the government a blank check here,” said Sir Keir Starmer, Labour’s shadow Brexit secretary, in an interview with the BBC. “We must have a vote on the opening terms of the negotiation.”
May said a “Great Repeal Bill” would be introduced to remove the 1972 European Communities Act, which gives effect to EU laws in the U.K., from the statute book. The bill would convert existing EU law into British law. It would take effect the day the U.K. leaves the union, but what portions of the law might be changed – and how that would affect migration – remain to be seen. The repeal could provide another opportunity for Parliament to shape the post-Brexit landscape.
“Only Parliament can repeal Parliament’s legislation,” said Scottish Conservative MSP Professor Adam Tomkins. “The government can’t do that and when parliament repeals its legislation it will be parliament that legislates for what replaces the European Communities Act, not Theresa May.”
Legal challenge
There’s also the question of whether May herself can invoke Article 50. May and Attorney General Jeremy Wright have both said that the decision on when to invoke Article 50 rests with the Government. However, a group of Brexit opponents has filed a lawsuit, arguing that Article 50 can only be invoked through an Act of Parliament. A High Court hearing on this question is set for Thursday.
Business
The business community has expressed concerns over the current climate.
“Businesses will not welcome further restrictions on high skilled migration from key trading partners around the world, especially as a series of changes were only announced earlier this year,” Josh Hardie, CBI Deputy Director-General, said in a statement. “At a time when we need strong links globally to seize new opportunities after the referendum, being seen as open to the best and brightest is vital. And we should be clear that business does not see immigration and training as an either/or choice. We need both.”
Companies with concerns about how Brexit-related immigration changes might affect their business are urged to share these with the BAL London Team.
Prime Minister Theresa May has announced that she will invoke Article 50 of the Lisbon Treaty and formally begin the process, no later than March 2017, for the United Kingdom to leave the European Union.
May’s timetable would set up the U.K. to leave the EU around the spring of 2019 following at least two years of negotiations.
Background: U.K. voters narrowly approved the Brexit referendum in June, creating questions about when and how the U.K. would leave the EU – and what the immigration impacts would be. May and Attorney General Jeremy Wright have both said that the decision on when to invoke Article 50 rests with the Government. However, a group of Brexit opponents has filed a lawsuit, saying that Article 50 can only be invoked through an Act of Parliament. A High Court hearing on this question is set for Oct. 13.
BAL Analysis: Brexit negotiations will not begin until next year. The status of EU workers in the U.K. and U.K. workers in the EU has not changed, and no new immigration regime has been formally proposed. Businesses can begin preparing for the post-Brexit landscape, however. BAL is able to assist in a number of ways, including assessing clients’ EU dependency; tracking EEA employees and new hires; and exploring EEA employee options, including the possibility of permanent residency and British citizenship.
What is the change? The United Kingdom is expected to implement a number of changes to Tier 2 skilled worker visa categories this fall, including increasing the Tier 2 (General) salary to £25,000, phasing out the Skills Transfer sub-category as part of a broader overhaul of the Tier 2 (ICT) category, applying the immigration health surcharge to all intracompany transfers and giving extra weight to overseas graduates within the Tier 2 (General) quota.
What does the change mean? The reforms were announced in March and are the first phase of changes to the Tier 2 categories, with additional changes expected to be implemented in April and July of 2017. No exact implementation date has been set, but once the changes go into effect, they will raise costs for employers sponsoring employees and intracompany transfers under the Tier 2 route. Businesses that will be impacted should begin preparing now.
Background: The Home Office announced the changes in Marchafter receiving recommendations from the Migration Advisory Committee, an independent body that advises the government on immigration. Among key changes that are due take effect this fall:
Additional changes will be implemented in 2017. It remains to be seen when, exactly, the autumn changes will be implemented and whether there will be additional changes besides those that were announced in March. BAL Analysis: The changes the Home Office announced earlier this year will increase costs for a number of U.K. businesses. Employers should work with their BAL team to prepare for the changes this fall and next year. BAL will continue to follow events in the U.K. and provide notice to clients when firm implementation dates are announced.