BREXIT - 18.10.2019

What to do with workers post-Brexit?

With the Brexit deadline finally looming (probably), you’re sure to start receiving questions from concerned workers about their status etc. Whether the UK leaves with or without a deal, what answers can you give them?

Remaining in the UK: if we have a deal

Settled status. The EU Settlement Scheme which is open until 30 June 2021, allows existing EU, EEA or Swiss nationals residing in the UK on Brexit day to apply for the indefinite right to remain, known as settled status after we leave the EU. Settled status will only be granted to those who have resided in the UK for five years as at Brexit date. The five-year rule is based on five continuous years where they have lived for six out of each twelve months in the UK (including the Channel Islands and the Isle of Man). There are a few reasons why you can have a break of up to twelve months that would not break continuity, e.g. childbirth, studying or being posted overseas. Once someone has settled status they are eligible to apply for British citizenship.

Pre-settled status. Anything less than five years will mean individuals will be granted pre-settled status. They can re-apply once they have the requisite five years, or they can wait until they do have five years’ residence and apply immediately for settled status. With pre-settled status you can only remain in the UK for a further five years, but during this time individuals are able to work, study, have access to state benefits and can travel out of the UK for up to two years.

No need for settled status. British and Irish citizens, and those who already have indefinite leave to remain, do not need to apply. Family members of British and Irish citizens or those with indefinite leave to remain should still apply. There is no charge to apply.

Pro advice 1. Indefinite leave to remain is usually indicated by a stamp in the individual’s passport or a letter from the Home Office.

Pro advice 2. If as an employer you reimbursed or directly paid for EU settlement scheme fees for anyone before they were abolished, this is a benefit in kind. It must be included on the employee’s P11D or in the company’s PAYE settlement agreement.

Remaining in the UK: if we have no deal

This scheme will still be open to the same individuals and they will need to be residing in the UK by 31 October. However, the deadline for applying will be 31 December 2020.

Documentation

In order to make an application, as well as their identity documents, individuals need to prove that they have continuous residence. One of the ways of doing this is to supply their NI number. If they are unsure what their number is, they might ask you. Many employees will have their NI number on their payslip or can print it out if they have activated their personal tax account.

Don’t want to apply?

Applying for settled status is a highly personal decision and some people may decide it’s not right for them. You must not take any action against those who choose not to apply as they have the right to work in the UK freely until 31 December 2020, deal or no deal - action could be classed as discrimination under the Equality Act 2010 .

Pro advice. Given the political climate be aware of bullying and harassment as people have very strong views. Ensure your policies and expectations of behaviour in the workplace are communicated to everyone.

Commuting employees

It is relatively common to find individuals who come to the UK to work during the week and return home to the EU at the weekends. The government calls these frontier workers and they have no need to apply for settled status.

Continuing employment

You can continue to employ EU and EEA nationals that are already part of your workforce on Brexit day. If the UK were to leave the EU without a deal freedom of movement will end from 31 October. This will mean that no EU nationals from outside the UK will be able to arrive and begin working here without a visa. EU nationals that are already here will continue to be entitled to all employment rights including those under the Employment Rights Act 1996 and the Working Time Regulations 1998 .

Pro advice 1. Consider now what the loss of this pool of workers would mean for your business.

Pro advice 2. Introduce new right to work checks for EU and EEA nationals from exit date.

EU, EEA and Swiss workers

Currently, the EU Social Security Contribution Regulations allow employees moving around the EU and the EEA to be covered by the social security system of one country and only pay contributions in one country. To indicate this so-called continuing coverage employees must have an A1 certificate.

If there is a deal the current position is that the government is aiming to protect UK nationals by setting up new reciprocal agreements with individual countries to maintain the current position until at least 31 December 2020. If there is no deal the Social Security Coordination (Regulation (EC) No 883/2004, EEA Agreement and Swiss Agreement) (Amendment) (EU Exit) Regulations 2019 will come into force immediately and aim to protect rights in respect of social security. However, there is no certainty that this will mean individuals will only pay one lot of social security if reciprocal agreements are not in place in time. HMRC has provided the following advice:

  • if the A1 was issued in the UK, the individual will continue to pay UK NI
  • if they are in the EU, EEA or Switzerland after exit day they may also have to pay social security contributions in the host country (see Follow up for contact details of the relevant authorities)
  • Form CA3822 can still be used to make applications for continuing coverage although it is likely that the A1 form that is then issued will change.

For any travel to the EU, EEA or Switzerland after exit day employees will need:

  • a passport that has at least six months left on it and is less than ten years old (even if it has six months or more of validity left)
  • appropriate travel insurance with healthcare cover because European Health Insurance Cards (EHICs) may not be valid. Particular focus should be given to getting cover for pre-existing medical conditions as these are covered by the EHIC regime but often are not in standard travel insurance policies
  • an International Driving Permit to drive in some countries.

Employees working in Ireland

Whether there is a deal or not, employees working in Ireland will be unaffected as the UK and Ireland Convention on Social Security comes into force on exit day (see Follow up ).

But is HMRC right?

Many NI specialists believe that the reciprocal social security agreements that were in place prior to the establishment of the common market were never repealed so will simply come back into force. It’s another example of the complexities of disentangling our long-standing relationships with so many countries. HMRC has produced two of its Brexit bulletins for employers and we are also due a routine Employer Bulletin in October 2019 so maybe there will be more detail at this point.

Alert service

It’s important to keep abreast of this fast-moving situation given the impact on costs for both employers and employees and the level of uncertainty that they will be feeling. Sign up to HMRC’s alert service so you are aware as soon as any new information is published (see Follow up ).

Contact details of A1 issuing countries

UK and Ireland Convention on Social Security

HMRC’s alert service

Whether the UK leaves the EU with a deal or not, EU nationals who are here on Brexit day have the right to continue working until 31 December 2020 whether they have applied for settled status or not.

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