Nearing Brexit Milestone, COVID-19 Clouds UK Labor Picture

By Dinah Wisenberg Brin November 6, 2020
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Blocks saying December 31

​Companies with U.K. workforces may not experience employment-related legal issues if the country fails to reach a trade agreement with the European Union before the Brexit transition period ends on Dec. 31. But the resurgent pandemic is making a smooth transition more difficult. Employers may want to take certain steps now, especially given immigration uncertainties.

"Whether or not the U.K. reaches a deal with the EU [European Union], there will be very little immediate impact on employment law or pensions law," said Laura Morrison, managing practice development lawyer in Dentons' people, reward and mobility practice in Edinburgh.

In either scenario, she explained, the vast majority of current EU law will convert into domestic law in the United Kingdom. "This will preserve all the current employment protections that stem from EU law," Morrison said. After the transition period ends, the laws may diverge, depending on terms of the eventual trade deal.

The U.K. government would have to repeal and replace some existing laws—such as the Equality Act 2010, which implements the U.K.'s laws against discrimination—in order to change the protections that were guaranteed by EU law, noted Tahl Tyson, an attorney with Littler in Seattle.

That's not to say that a no-deal Brexit wouldn't create some problems for employers and workers when the transition period ends. And uncertainty over the regulatory framework surrounding the U.K.'s withdrawal from the EU comes as the country faces a sharp resurgence in coronavirus cases.

Oct. 15 Deadline Passed Without a Deal

More than two years after citizens voted to leave the EU, a process known as Brexit, the U.K. officially withdrew on Jan. 31, entering an 11-month transition period, during which the nation and EU officials were to agree on rules governing trade, immigration and other important aspects of their reworked relationship.

U.K. Prime Minister Boris Johnson's Oct. 15 deadline for reaching a trade agreement passed without a deal, but media reports indicated negotiations with the EU may continue for a few more weeks.

In September, Johnson proposed legislation that would change aspects of the U.K.'s withdrawal agreement with the EU, including a treaty pertaining to Northern Ireland. "That has thrown everything up in the air again," Tyson said.

COVID-19 Complications

Meanwhile, the U.K. government announced on Oct. 15 that several areas across the country, including London, would move to high COVID-19 alert levels for at least two weeks in response to a rapidly rising infection rate. Some areas have been placed on very high alert. On Nov. 5, the areas went into lockdown.

The coronavirus situation could add a layer of difficulty for companies bringing workers into the U.K. from the EU.

New Immigration System

Deal or no deal, a new immigration system will be in place for people arriving in the U.K. as of Jan. 1, 2021, when free movement between the U.K. and EU nations will come to a close, the legal experts noted.

As of that date, an EU national seeking to work in the U.K. will need to have a job offer from an approved sponsor and apply under a new points-based visa system.

Pandemic-related border closures have led to a significant drop in EU and non-EU migrants to the U.K., Morrison noted.

Some sectors, such as hospitality and higher education, rely heavily on EU migrants, but typically salaries or skill levels in many roles are low. The significant drop in immigration is likely to mean these sectors will struggle to fill vacancies under the post-Brexit immigration system once the economy starts to recover post-COVID-19, she said.

Littler's Tyson noted that EU citizens residing or working in the U.K. before the transition ends can apply to stay in the country under the EU Settlement Scheme and suggested they do so before the transition ends.

"There are deadlines involved in establishing residency in the U.K. before the end of the transition period. What happens if the border is slammed shut because of COVID?" Tyson asked. "It's just incredibly complicated, and it changes every day."

Jurisdictional Questions

Similarly, she said, a no-deal Brexit could generate questions about the jurisdiction governing enforcement of employment contracts, possibly forcing parties to look at relevant treaties if they exist. "Sometimes there's no clear answer," she said.

Morrison noted that failure to reach a trade deal before the transition period ends could affect employee protections in case of business insolvency.

If a U.K. employer becomes insolvent, U.K. and EU employees working for the employer in an EU country may not be covered under that country's national guarantee fund, she explained.

The government has confirmed that employees living and working in the U.K. for a U.K. or EU employer will continue to be protected in the same way as they are now, according to Morrison. Whether employees working in an EU country for a U.K. employer are protected, however, will depend on how that country has implemented the EU's insolvency directive, she said.

Action Steps

Legal experts also recommend that employers with European Works Councils (EWCs) and trade unions with EWC agreements review their agreements now, since there will be no reciprocal EWC arrangements between the EU and U.K. after the transition period.

Employers that expect to continue recruiting from the EU should apply now for a sponsor license, said Jess Pattinson, U.K. head of mobility for Dentons in London. The process can take several weeks, and processing times may increase as Jan. 1, 2021, nears, she said.

"Employers should keep open lines of communication" with their EU national employees, Pattinson said, "and consider what support they can offer them."

Dinah Wisenberg Brin is a freelance reporter and writer based in Philadelphia.

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