Brexit: What’s currently going on?

‘Brexit’. Arguably, the most popular portmanteau of a generation, beating the likes of ‘Brangelina’, ‘Hangry’ and ‘Obamacare’. Since the EU Referendum on 23 June 2016, you were unlikely to go a single day without hearing Brexit mentioned on the news. That all changed when the Covid-19 pandemic placed the UK in lockdown resulting in Brexit being confined to the middle pages of the tabloids.

So, what is going on with Brexit?

The transition period can no longer be extended

Passed on the 23 January 2020, the European Union (Withdrawal Agreement) Act 2020 means the UK has now left the European Union with a divorce deal. Under the deal, there is currently a transition period running from Brexit day (31 January 2020) until 31 December 2020. This means nothing much has changed and EU law continues to apply in the UK, including freedom of movement.

The Act provides that the UK and EU could agree before 1 July 2020 to extend the transition period by up to a further two years. However, the UK Government confirmed in June 2020 that it would not be seeking an extension to the Brexit transition period, ignoring calls for an extension from the First Ministers of Scotland and Wales, Nicola Sturgeon and Mark Drakeford. In a tweet on 12 June 2020, Cabinet Office Minister Michael Gove confirmed that “the moment for extension has now passed. On 1 January 2021, we will take back control and regain our political and economic independence.”

This means that we remain in the EU’s single market and customs union until 31 December 2020 only – but then what happens?

No deal remains a real possibility

The UK now has less than six months to negotiate, agree and implement terms which will govern the future trading relationship between the UK and EU. The Covid-19 pandemic has made this timetable complicated to say the least.

Talks between the EU and UK have stalled recently, with several issues delaying negotiations. The most contentious issues relate to level playing field demands, fishing policy and the overall governance to be guaranteed for any future deal. Unless talks gain traction, it is clear that both parties will be hard pushed to finalise a deal before the end of the year. Failure to do so means a ‘no-deal’ exit, with barriers to trade immediately erected between the UK and the EU. The EU and the UK will trade on World Trade Organisation terms, meaning tariffs and customs red tape.

EU Settlement Scheme here to stay

Any failure to conclude a future relationship agreement will not, however, affect the EU Settlement Scheme and the deadline for EU citizens and their non-EU family members to apply for Pre-settled or Settled status under the Scheme. The deadline to submit the form is 30 June 2021, provided the EU national is residing in the UK by 31 December 2020. This is all set out in the citizens’ rights section of the Withdrawal Agreement so will remain in place whether or not a deal about the future relationship is reached.

Accordingly, UK businesses wishing to continue to employ/hire EU/EEA nationals beyond 1 January 2021 can do so on two conditions:

• They must be living in the UK by 31 December 2020
• They must apply for Pre-Settled or Settled Status to remain in the UK under the EU Settlement Scheme. This must be done by 30 June 2021

EU is in a deep recession

While the UK economy is far from stable, the European Commission recently announced that: “Given the severity of this unprecedented worldwide shock [COVID-19], it is now quite clear that the EU has entered the deepest economic recession in its history. With the economic uncertainty caused by COVID-19 having a global impact, it would be in both parties’ interests if a modicum of stability could be achieved with an exit deal.  It remains to be seen whether the adverse economic effects of Covid-19 will have any bearing on EU/UK negotiations as we head into the final quarter of 2020.

The new UK Points-Based Immigration System

On 13 July 2020, the government published further details on what the UK’s post Brexit immigration landscape will look like. Snappily titled the UK’s Points-Based Immigration System, the bulky 130-page document does not contain a lot more detail than the proposals released earlier in the year.

The most significant change is that EU citizens newly arriving in the UK from 1 January 2021 will need immigration permission to live, work and study in the UK. If UK businesses want to hire EU citizens who were not living in the UK by 31 December 2020 and therefore do not already hold pre settled or settled status, they will need a sponsor licence and will have to pay the Immigration Skills Charge of £1,000 per worker, per year (discounted to £364 per year for charities and small/medium sized businesses).

Other key takeaway points are:

• The Immigration Health Surcharge will remain, currently £400 per year of visa for most visa routes
• The Resident Labour Market Test will be abolished
• The current cap on Tier 2 (General) visas will be ‘suspended’, suggesting it will be reintroduced at some point in the future
• Migrants looking to come to the UK under the Skilled Worker route must be offered a job at the lower skill threshold of RQF level 3 (equivalent to A-levels)
• The minimum salary threshold will be the higher of £25,600 per annum or the rate for the specific role. A new system of ‘tradeable’ points will be brought in for those earning below this sum. Public sector roles will be subject to a minimum salary threshold of £20,480.

The introduction of a new immigration system is unlikely to be plain sailing. Combine this with the possibility of a no-deal Brexit, a fragile post Covid-19 economy and a potential second Covid-19 ‘wave’ and lockdown, the latter half of 2020 looks like it will be no smoother than the first half for the United Kingdom. We would therefore strongly recommend that if you wish to hire any new EU/EEA nationals from 1 January 2021 you should obtain a sponsor licence now under the current immigration system. Our dedicated Immigration team at Doyle Clayton can assist and make a sponsor licence application for your business. We can also help give your employees guidance and assistance with applying under the EU Settlement Scheme, which many employers are doing.

For further information please contact our Head of Business Immigration Anita de Atouguia or your usual business immigration team contact.