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Brexit and its Implications for Global Mobility: Where Are We Now?

Sep.08.2020

Brexit was once the topic of every conversation in the United Kingdom (U.K.), but, overshadowed by the COVID-19 pandemic, it’s not something we hear as much about these days. 

The U.K. left the European Union (EU) on January 31, 2020 (bringing to an end 47 years of British membership of the EU and the institutions that preceded it) under the terms of the Withdrawal Agreement, an agreement struck by London and Brussels in October 2019. However, during the standstill post-Brexit transition period, most of the arrangements that were valid during the U.K.’s EU membership have been kept in place. As a result, and until the transition period expires on December 31, 2020, the U.K. must continue to comply with all EU rules and laws which include the rules on freedom of movement, cross border travel and personal rights. This means that up until now virtually nothing has changed for businesses or for the public. 

However, the end of the transition period is in sight, and it will bring significant changes regardless of whether or not an agreement is reached on future trading and other relations. The U.K. and EU have both now ruled out any extension to the Brexit transition period so – barring the unlikeliest of U-turns over the next couple of weeks - we now know that a new post-Brexit landscape will take effect on January 1, 2021.

At first glance, the prospects for compromise look promising. For instance, the U.K. government has indicated its willingness to reduce its demands for full single market access, and to accept some tariffs and quotas on U.K. goods. For its part, the EU has confirmed there is sufficient flexibility within its existing negotiating mandate to compromise.

That said, both sides acknowledged - following the end of the latest round of trade negotiations which began on August 18th – that little progress has been made on the problematic issues of state aid and fisheries, on the subject of which the U.K. has accused the EU of seeking to maintain the status quo. The block’s chief negotiator, Michel Barnier, has meanwhile signaled his own frustrations with the discussions and accused the U.K. of showing no “willingness” to compromise.

The next round of trade talks convenes in London on September 7th, and, with an extension to the Brexit transition period ruled out, time is running out to put a deal in place before the U.K.-EU trade relationship defaults to World Trade Organisation (WTO) terms at the end of the year, imposing a host of tariffs and quotas. EU negotiators have made it clear that any deal will have to be agreed before the end of October to allow time to ratify it. But in the condensed space of the next six weeks, it seems inevitable that a large part of the negotiations will boil down to a choice between “take it or leave it” offers from both sides of the table.

Facing this difficult choice before the COVID-19 crisis struck, the U.K. Government may well have opted for “no-deal.” However, with the economy in a deep recession (the U.K. economic output shrank by a record 20.4% in the second quarter of 2020, pushing the country into the deepest recession of any major global economy) and with the pandemic here to stay, there is real political pressure to press on with a deal firmly on the table.

Planning for Global Mobility in a Post-Brexit World

Considerations for Global Employers Operational in the U.K.

Since the day of the Brexit referendum, multinational companies and global employers have been planning their response to Brexit. On December 31, 2020, the freedom of movement for EU nationals will end. Therefore, as of January 1, 2021, both European Economic Area (EEA) citizens and non-EEA citizens will need immigration permission to live, work or study in the U.K. With some exceptions, the U.K. sponsorship immigration system will apply to both, European and non-European workers as of 2020. We identify below some considerations for global employers operational in the U.K.:

  • Do you have employees with at least five years of continuous legal residence in the U.K., either as an employee or self-employed person? These employees can apply for permanent residence.
  • Non-U.K. employees (and their families) who have currently resided in the U.K. for less than five years should apply to the EU Settlement Scheme to continue living in the U.K. after June 30, 2021.
    • Although these are employee, rather than employer, obligations, we recommend that you discuss these rules with the employees concerned, in order to guarantee continued employment.
  • Apply for a sponsorship license if you wish to hire non-U.K. citizens in 2021. Note that in the new sponsorship regime the skills and salary thresholds have been lowered. This means that roles that were previously not eligible for sponsorship may be eligible as of January.
  • Does your company already have a sponsorship license? Now is a good time to verify whether this license allows you to continue to recruit non-U.K. nationals as of 2021 (do you have sufficient sponsorship certificates, is the license held by the correct legal entity, are all data up to date, etc.).

Within the EU, the freedom of movement for EU nationals will, of course, continue to apply in 2021. Companies wishing to hire non-European workers in an EU member state, however, will need to apply for a single permit. The EU Single Permit Directive provides for a single application procedure, covering both the work permit and the residency permit application. If you need to hire a high-profile non-European employee for your business in Europe/Belgium, we refer to this overview of single permit options for employers.

COVID-19 and Travel (Restrictions)

For non-essential travel to the EU, there is an EU Council Recommendation on the gradual lifting of the temporary restrictions on non-essential travel into the EU. This Recommendation states that, based on the criteria and conditions set out in the Recommendation, as from July 1, 2020, EU member states should begin to lift their travel restrictions at their external borders for residents of certain third countries. The list is updated every two weeks and can be consulted via the Re-open EU application. The Recommendation is, however, not a legally binding instrument, and the member states remain responsible for implementing the content of the Recommendation. Therefore, global employers should always verify local implementation. A member state should not decide to lift the travel restrictions for non-listed third countries before this has been agreed in a coordinated manner.

Impact of COVID-19 Pandemic at the Workplace

The COVID-19 pandemic continues to have a significant impact at the workplace as well, not just limited to the EU, but on a global basis. In addition to potential problems related to transferring employees around the world, with the current travel restrictions, quarantines and stay-at-home orders, global employers should also take into account local measures that impact the workplace in the country/region concerned. Companies should continue to be mindful of mandatory and/or recommended work-from-home orders, health and safety measures to be taken when re-opening the workplace, quarantine obligations for employees, possible temporary company closures (targeted, for instance, in case of local outbreak), the impact of absenteeism, higher employee turnover, employee strikes, and overall compliance throughout the workforce and supply chain.

Please visit our Coronavirus Resource Center for further help in navigating the rapidly evolving business, legal and operational issues associated with the COVID-19 pandemic.

For more information, please contact the professional(s) listed below, or your regular Crowell & Moring contact.

Emmanuel Plasschaert
Partner – Brussels
Phone: +32.2.282.4084
Email: eplasschaert@crowell.com
Nicole Janigian Simonian
Partner – Los Angeles, Shanghai
Phone: +1 213.310.7998
Email: nsimonian@crowell.com
Stefanie Atchinson
Counsel – London
Phone: +44.20.7413.1315
Email: satchinson@crowell.com
Evelien Jamaels
Counsel – Brussels
Phone: +32.2.214.2814
Email: ejamaels@crowell.com
Jackson C. Pai
Counsel – Los Angeles
Phone: +1 213.310.7989
Email: jpai@crowell.com