Since the result of the EU referendum was announced on 24 June 2016, one of the biggest concerns for EU citizens currently living in the UK, and businesses who employ them, is what their status will be post-Brexit.  The UK Government has consistently stated that it wishes to safeguard the rights of those EU citizens who are currently in the UK and wish to remain after the UK’s withdrawal from the EU.  However, this has always been subject to the UK being able to negotiate similar safeguards for British citizens living in the EU.

The economic reasons for granting EU citizens who are currently in the UK the right to remain post-Brexit are almost beyond debate.  There are currently almost 3.5 million non-EEA nationals in the UK; around 2.4 million of them in work.  If all these workers were suddenly required to leave the UK, the effect on the UK economy would be cataclysmic.

In terms of the financial services industry, according to the Office for National Statistics, it is one of the biggest employers of EU nationals in the UK.  The financial and business services sector is the second biggest employer of EU nationals in the UK, second only to the wholesale and retail trade, hotels and restaurants sector, with over 380,000 EU nationals working in the industry.  Half of them are working in London making the financial and business services sector the largest employer of EU nationals in the capital.

Consequently, from the very beginning of the Brexit negotiations, the financial services industry has been particularly concerned about whether EU workers working in the sector, particularly those who are highly skilled, will be able to remain in the UK once it leaves the EU.

On 8 December 2017, the UK and the EU finally reached an agreement on the rights of EU citizens post-Brexit. 

EU citizens’ rights post-Brexit

In summary, the following agreement was reached for EU citizens and their family members who wish to remain in the UK post-Brexit:

• Those who arrive in the UK by 29 March 2019 and have been continuously and lawfully living in the UK for five years or more will be able to apply for ‘settled status’, which will enable them to reside in the UK indefinitely. This means that they will be free to reside in the UK, able to access public funds and services and eventually apply for British citizenship.
• People who arrive by 29 March 2019 but who will not have completed the five year qualifying period for settled status by the time the UK departs the EU, will be able to apply for a temporary residence permit which will enable them to remain in the UK until they have reached the five year threshold for applying for settled status.
• Family members who are living with, or join, EU citizens in the UK before 29 March 2019 will also be able to apply for settled status after five years in the UK.
• After 29 March 2019, close family members (defined as spouses, civil partners and unmarried partners, dependent children and grandchildren, and dependent parents and grandparents) will be able to join EU citizens who arrive in the UK before 29 March 2019, provided the relationship existed on 29 March 2019 and continues to exist when they wish to come to the UK.

EU nationals with settled status and temporary residence permits will continue to have the same access as they currently do to healthcare, pensions and other benefits.  Those with a temporary residence permit will effectively be able to continue to exercise EU free movement rights in the UK post-Brexit provided they continue to hold that document.

The UK has stated that it expects also to extend this offer to resident nationals of Norway, Iceland and Lichtenstein (who are part of the EEA) and Switzerland (which is not part of the EU or the EEA).

Temporary residence permits / settled status

The UK intends for there to be a grace period after the UK formally leaves the EU during which EU nationals and their family members will apply for temporary residence permits or settled status. The length of this grace period is yet to be formally agreed with the EU but the UK is currently stating that it will last for two years.  During this period, although EU nationals will technically be subject to UK immigration law, they will automatically be granted “deemed leave” on 29 March 2019 and this status will enable them to continue to live, work and study in the UK as if they were continuing to exercise free movement rights in the UK.

The UK Government is likely to start accepting applications for settled status and temporary residence permits towards the end of 2018.  It is aiming to develop a straightforward, on-line application system.  The Immigration Minister has stated that the application form will have a maximum of eight questions, the cost of the application will be up to £72 and a decision should be made within two weeks.  In order to facilitate the process, the Home Office will work with other government departments, such as HMRC, to verify the identity of applicants and to obtain existing government data. This should minimise the amount of documents the applicants will be required to submit.

Furthermore, the criteria for qualifying for settled status will effectively be the same as for obtaining permanent residence under EU law, which are that the EU national must have been continuously resident in the UK exercising an EU Treaty Right, such as employment, self-employment, study, self-sufficiency or as a job seeker, for five years.  However, the UK Government has stated that it will take a more pragmatic approach to dealing with applications.  For example, normally EU nationals who have been studying or self-sufficient in the UK for five years will only be deemed to hold permanent residence if they have held comprehensive sickness insurance for that period.  The UK Government has stated that this requirement will not apply to settled status applications.  It has also said that, for those who are in employment or self-employment, it will not apply the requirement that the work must be genuine and effective and not marginal or supplementary.  In other words, it will not be assessing if the work involves so little time and money that it is unrelated to the lifestyle of the worker.

This approach is to be welcomed as there are many EU nationals who have been in the UK for over five years who do not meet these requirements, who therefore are not deemed to hold permanent residence in the UK, even though they have never sought assistance from the state.

Documents certifying permanent residence

Under EU law, EU nationals who are deemed to hold permanent residence may apply for a Document Certifying Permanent Residence (DCPR) in order to evidence this status, although this is not mandatory.  The UK Government has stated that these documents will cease to be valid when the UK leaves the EU.

However, the UK Government has confirmed that those who hold a DCPR will be able to use a simplified procedure to exchange this for a new settled status document free of charge.

Processing of applications

The UK Government is very aware of the logistical challenges it faces in issuing temporary resident permits and settled status documents to the 3 million EU nationals who are currently in the UK by the end of March 2021.  As well as developing a new on-line system, the UK Government is also looking to more than double the number of personnel at the Home Office who process immigration applications.

An end to uncertainty?

Undoubtedly, a huge sense of relief has been felt by EU citizens who wish to remain in the UK post-Brexit, and those who employ them, that the UK and the EU have finally reached an agreement on EU citizens’ rights.  The agreement represents a middle ground between the two negotiating positions and has enabled both sides to say that they have reached a “good deal”.

There is clearly still a lot of work to be done by the UK Government in defining in more detail the criteria for obtaining a temporary residence permit and settled status and in putting in place procedures which will enable it to process the large numbers of applications involved before the end of the grace period.

Furthermore, the UK Government has yet to publish any proposals for what the UK immigration requirements will be for those EU citizens who arrive in the UK after 29 March 2019 and wish to remain in the UK after the end of the grace period.  The current UK economic migration system only effectively provides routes of entry to highly skilled migrants but, given the number of EU citizens working in medium and low skilled occupations, it will be vital that the system is adapted to enable employers to recruit non-UK nationals to fill vacancies at those skill levels as there are unlikely to be sufficient local workers to satisfy the demand.

Many EU citizens who have already completed five years of continuous residence in the UK may still wish to obtain a DCPR, given that the UK Government has stated that it will be possible to exchange this for a settled status document using a simplified procedure.  The UK Government has already streamlined the procedure and documentation required for these applications which means that they are currently being processed in around two months.  EU nationals may also keep their original passports throughout the consideration process, thereby retaining their ability to travel overseas.  It is also worth noting that EU nationals must first obtain a DCPR before they may be eligible to apply for British citizenship.

Many employers are providing assistance to their EU work force in preparing these applications and it will certainly be important for employers to encourage their EU staff to apply for temporary residence permits or settled status as soon as possible once the Home Office starts accepting these applications.  This will hopefully ensure that they receive their documents substantially before the end of the grace period and avoid the inevitable last minute rush.

Consequently, although the agreement reached on 8 December represents a huge step forward in clarifying EU citizens rights post-Brexit, there is still a long way to go before EU citizens, and the UK businesses who employ them, know precisely on what basis EU citizens will be able to live and work in the UK in the future.

To contact the author:

James Perrott, , Head of immigration team at Macfarlanes: [email protected]