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On January 31, 2020, the United Kingdom formally left the European Union after 47 years of membership. However, for a transitional period that will end on December 31, 2020, it will still be covered by all current agreements including membership in the European Single Market and European Union Customs Union and rights such as freedom of movement of workers throughout the EU. The only real change that took effect on January 31 is that the UK will no longer play a part in any EU decision-making processes and will no longer have representation at the European Parliament.

Has the UK avoided a no-deal Brexit and can employers breathe a collective sigh of relief?

The EU Withdrawal Agreement Act approves the terms of the UK’s exit payments to the EU, the customs arrangements that will apply to Northern Ireland in the long term, and a transition period of 11 months (commencing on January 31, 2020) during which the UK and the EU will attempt to negotiate the terms of their future relationship. If they fail to agree on such terms, Great Britain (but not Northern Ireland) will revert to World Trade Organization trade rules in its trade with the EU. This is what has been more colloquially known as a “hard Brexit.”

What are the practical ramifications of Brexit for employers in the UK?

While the UK’s exit from the EU, in theory, opens up the way for the government to amend or revoke employment laws without any input from Europe, wholesale changes affecting employers are not expected immediately in either scenario.

While Brexit will allow the UK government to make alterations to employment laws, fundamental aspects of UK employment law, such as protection from unfair dismissal and discrimination, are unlikely to be altered.

The UK will cease to be automatically affected by European legal developments at the expiration of the transition period. The UK will then be exempt from forthcoming EU legislation such as the work-life balance directive for working parents and caregivers, and the draft directive on gender balance at board level.

One area that will see immediate changes upon the UK’s exit from the EU is the operation of European Works Councils (EWCs). The exact impact is currently unclear, but in the event of a deal, UK-based EWCs will continue to operate until the end of the transition period. However, in a no-deal scenario, employers whose EWCs are based in the UK will need to reestablish their EWCs in EU member states; otherwise, the employers will be in breach of EU law, which mandates that all EWCs be based in member states. Additionally, employers with EWCs based in EU member states may want to give thought to the status of any UK representatives serving on their EWCs. One potential option is to retain UK delegates on EWCs but define a new status of “observer” for these members.

Businesses operating in the United Kingdom may also want to consider the immigration implications for their current workforces under both scenarios:

  • If the UK leaves the EU on December 31, 2020, under a deal, EU, EEA, and Swiss nationals who are residing or working in the UK before that date will have until June 30, 2021, to apply to remain in the country under the EU Settlement Scheme.
  • If the UK leaves the EU without a deal, EU, EEA, and Swiss nationals who are residing or working in the United Kingdom before the exit date will have until December 31, 2020, to apply to remain in the country under the EU Settlement Scheme. EU, EEA, and Swiss nationals who move to the United Kingdom after that date would need to apply for a three-year temporary immigration status, known as European temporary leave to remain, or Euro TLR.

In either case, there will not be any immediate changes to the rights and status of EU, European Economic Area (EEA), and Swiss nationals residing or working in the United Kingdom on January 31, 2020.

Will the UK remain under EU trade rules until the end of December 31, 2020, and, if so, what details need to be worked out?

The UK will remain party to EU trade rules under the proposed deal until midnight on December 31, 2020. If, however, the UK leaves the EU without a deal, the UK will crash out of all EU trading arrangements and default to Word Trade Organization rules at 11:00 p.m. on January 1, 2021.

The latter scenario will mean that all goods entering and exiting the UK will require extra customs paperwork and checks and may lead to long queues at ports.

What are some dos and don’ts for employers at this stage in light of the likely upcoming Brexit?

Employers may want to think about encouraging the EU, EEA, and Swiss nationals whom they employ to apply for the EU Settlement Scheme. Employers can consider providing assistance to their staffs with applying for the scheme or pointing staff to the guidance available via the UK Home Office’s website.

Employers may also want to consider the position of any UK national they employ in another EU member state. Employers could consider holding briefings for UK citizens working in the EU in order to inform them of changes to residency and visa requirements. Arrangements will vary depending on the particular country in which employees are based. The EU has advised all member states to provide residence permits to UK citizens residing in other EU countries on January 31, 2020, as a short-term measure. However, there is a lack of clarity about the longer-term arrangements, as each member state will set its own policy for UK citizens working in that country. Employers may want to review the summary of the latest position for each member state published by the European Commission.

Employers may also want to take note that UK citizens will be exempt from EU visa requirements for up to 90 days, which will include business-related activities such as meetings and speaking at conferences.

Wholesale changes to employment law in the UK are unlikely. As mentioned above, the one immediate change to the law will be that UK-based employees will lose the right to request their employers form European Works Councils.