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Employment Briefing – July 2017

Employment Briefing – July 2017

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EU citizens, ‘settled status’ and Brexit

Brexit has led to major uncertainty for employers about the position of workers who are […]

Brexit has led to major uncertainty for employers about the position of workers who are EU citizens living and working in the UK. We analyse the government’s recent proposal regarding ‘settled status’ for qualifying EU citizens.

On 26 June 2017, the government published a policy paper titled, “The United Kingdom’s Exit from the European Union: Safeguarding the Position of EU Citizens Living in the UK and UK Nationals Living in the EU”. The paper (still at proposal stage and therefore subject to change) envisages a new residence status in UK law for qualifying EU citizens, described as “settled status”.

What is ‘settled status’?

Settled status appears to be very much like “permanent residence” under the current system. Those who obtain it will be free to reside in the UK in any capacity and will be able to apply for British citizenship when they become eligible.

The current proposal is that if an EU citizen has (and can evidence) five years’ continuous residence in the UK before a set cut-off date (the ‘Specified Date’) and they are still resident in the UK on the date they apply for their new immigration status, they will be eligible for settled status. We do not know what the Specified Date will be, but the government paper states that it will be no earlier than 29 March 2017 (the date that Article 50 was triggered) and no later than the date that the UK formally leaves the EU (the ‘Exit Date’). It could be the Exit Date itself if no agreement is reached with the EU for it to be an earlier date.

All EU citizens (and their families) in the UK at the point of the Exit Date, regardless of when they arrived in the UK, will have to apply to obtain an immigration status in UK law. Given that it would be impossible for all EU citizens residing in the UK to apply on the Exit Date, the government is proposing a period of blanket residence permission which will start immediately on the Exit Date and will run for a period of up to two years (the ‘Grace Period’). All EU citizens who want to remain in the UK beyond the end of the Grace Period must apply for an immigration status under UK law before the end of the Grace Period.

We have set out below what this means for EU citizens, depending on when they arrived in the UK, under the current proposals.

EU citizens who arrived in the UK before the Specified Date and who will have been here for five continuous years before the end of the Grace Period

These EU citizens will be eligible to obtain settled status subject to them being able to evidence the five years’ residence. They will have to apply for settled status under the new UK system and provide the documents specified under that new system in order to obtain settled status.

EU citizens who arrived in the UK before the Specified Date but will not have been here for five continuous years before the end of the Grace Period

These EU citizens will be able to apply for temporary status under the new UK system before the end of the Grace Period in order to remain resident in the UK. Once they have accumulated five years’ continuous residence, they will be eligible to apply for settled status.

EU citizens who arrive/arrived in the UK after the Specified Date but before the Exit Date

EU citizens who arrive after the Specified Date will be able to exercise treaty rights in the usual way up to the Exit Date (if the Specified Date is a date before the Exit Date). Once the exit takes place, free movement rights are likely to end. However, these citizens will not be required to leave the UK immediately – they will be able to stay on during the Grace Period and will need to apply for a temporary residence document in order to give them permission to stay in the UK beyond the Grace Period. If such citizens wish to stay after the temporary permission expires, further permission will need to be obtained but this further permission will be dependent on the rules in force in the UK at that time. This means that such EU citizens are not guaranteed to be eligible to apply for permission to stay in the UK permanently.

EU citizens who want to come and live in the UK after the Exit Date

The ability of such EU citizens to come to the UK to live/work will be subject to the new UK law immigration system which will be put in place once the exit takes place. We still do not know what such a system will look like.

What does this mean for those EU citizens who currently have a document certifying permanent residence?

It is proposed that all EU citizens in the UK who currently have a document certifying permanent residence will have to apply again under the new UK system for settled status. The government paper does mention that the process may be more streamlined for those who already have a document certifying their permanent residence (and such a document is likely to be of assistance in terms of the documentary evidence that EU citizens must provide under the new UK system). However, it suggests that a document certifying permanent residence under the current system may hold little weight following the Grace Period.

Those EU citizens who have obtained British citizenship will be treated in law the same as any other British citizen. An EU national must have a document certifying permanent residence before they can apply for British citizenship. It is therefore worth an individual applying for the permanent residence document if they are eligible (or will become eligible) to apply for British citizenship before the Exit Date. In addition, it may be worth EU citizens applying for the permanent residence document, even if they will not become eligible for British citizenship before the Exit Date, in the hope that it will assist with the settled status application.

Nothing is yet set in stone and we will publish further updates as the government makes further announcements on this topic.

If you have any queries please contact Shabana Muneer.

The General Election result and the Queen’s Speech – what is in store for employment law?

The dust has settled on the General Election and the Queen’s Speech has been delivered […]

The dust has settled on the General Election and the Queen’s Speech has been delivered (setting out the Government’s programme for the next two years) so now is a good time to take stock of what it all means for employment law. Read on for our ‘need to know’ employers’ guide.

The Repeal Bill

The Repeal Bill (formerly referred to as the ‘Great Repeal Bill’) will end the application of EU laws and the jurisdiction of the European Court over UK laws. It will convert EU law into UK law and create powers for the Government to amend these laws in the future. Previous decisions of the European Court will still apply. So, for example, the recent European decisions on the calculation of holiday pay will stand.

So what does this mean in practice? In effect, workers’ rights will be exactly the same after ‘Brexit day’ as they were before but the Government may legislate to repeal or amend employment laws derived from Europe over time. We think it is unlikely that anything will happen fast although there will probably be some de-regulation ‘around the edges’ over the course of time.

Brexit and free movement

How will the election result affect the UK’s exit from the EU? It is possible we will see a “softer” Brexit as the election result arguably demonstrated a rejection by voters to the Government’s “hard Brexit” approach. How this plays out remains to be seen.

The Immigration Bill announced in the Queen’s Speech is stated to “allow the Government to end the EU’s rules on free movement of EU nationals in the UK and make the migration of EU nationals and their family members subject to relevant UK law once the UK has left the EU, whilst still allowing the UK to attract the brightest and the best.”

So, the Repeal Bill will initially preserve UK immigration law but the Government will be able to legislate to repeal EU law on immigration following Brexit. EU nationals may then become subject to the immigration rules which apply to non-EU nationals. This is an issue concerning many employers and we will publish updates as things develop.

Immigration skills charge

No mention was made in the Queen’s Speech of the Conservative’s manifesto pledge to double the recently-introduced immigration skills charge (levied on companies employing migrant workers from outside the EU), to £2,000 a year by 2022 so this proposal appears to have been dropped.

Employment status, zero-hours contracts and the gig economy

The Taylor Review into modern employment practices has made a number of proposals aimed at improving the position of workers in the gig economy.

Amongst other recommendations, the review proposes a right for zero-hours’ workers to request guaranteed hours after 12 months’ service. The Conservatives have pledged that ‘workers should receive a decent wage and that people working in all sorts of jobs are able to benefit from the right balance of flexibility, rights and protections’ so it is likely that we will see some changes being tabled in this area although the Government’s reduced majority may make it harder for it to pass new legislation.

Taxes and Pensions

The personal income tax allowance will be increased to £12,500 with the higher tax rate starting at £50,000. Plans to increase national insurance contributions for the self-employed were scrapped earlier this year although the Chancellor has not ruled out such increases in the future.

Employment Tribunal fees

Neither the Conservative party nor the DUP have any plans to scrap Employment Tribunal fees.

The SNP has stated that it will scrap Employment Tribunal fees in Scotland when responsibility for Employment Tribunals is formally devolved.

Pay

It was confirmed in the Queen’s Speech that the National Living Wage (NLW) will increase to 60% of median earnings by 2020 (currently forecast to be £8.75 per hour) and, after that, by average earnings growth. Both the Conservatives and the DUP pledged in their manifestos to increase the NLW and take action against employers who failed to pay the NLW.

Time off

The Conservatives had stated in their manifesto that they would introduce legislation to allow workers the right to request up to a year’s leave from work to care for a sick relative and would introduce a new statutory right to leave for parents who have lost a child. These measures were not, however, mentioned in the Queen’s Speech.

Discrimination

The Conservative manifesto promised to ‘transform how mental health is regarded in the workplace’ and extend protection against discrimination that occurs because of an individual’s mental health condition where that condition is ‘episodic and fluctuating’. The Queen’s Speech made much less of this issue and simply stated that considerations will include “ensuring that those with mental ill health are treated fairly, protected from discrimination, and employers fulfil their responsibilities effectively”.

The gender pay gap was touched upon in the Queen’s Speech to the effect that the Government would make ‘further progress’ in tackling the gender pay gap and discrimination generally and would work with Sir John Parker, Chairman of Anglo American Plc, to improve the ethnic diversity of boards by 2021.

Overall, it appears that the Conservative’s manifesto pledges in this area have been watered down.

Data Protection

A new Data Protection Bill will be introduced to replace the Data Protection Act 1998. This will implement the provisions of the EU General Data Protection Regulation (GDPR) which comes into force in May 2018, but which the UK had already pledged to preserve post-Brexit to enable continued trading and data sharing. The GDPR represents a huge shake up to data protection laws and it is essential that employers ensure practice and procedure on processing employee data complies with the GDPR. For more information click here.

Scotland

The SNP has stated that it will continue to push for “full devolution of employment and employability policy” to Scotland. This is of significant consequence to employers with operations in Scotland as full devolution would lead to a complete review and overhaul of workplace rights and entitlements.

Conclusion

Unsurprisingly, given Brexit and the Government’s tenuous position in the House of Commons, changes to employment law appear to be towards the bottom of the Government’s ‘to do’ list. Employers may view this as an opportunity to focus on the wider business challenges presented by Brexit and as a welcome pause for breath in the HR arena after a wave of employment law changes over the last few years.

If you would like further advice please contact David Smedley or Andrew Rayment.

The Taylor Review on modern employment practices – what do employers need to know?

The long-awaited Taylor Review on modern employment practices has been published. Our employment team analyse […]

The long-awaited Taylor Review on modern employment practices has been published. Our employment team analyse the key ‘need-to-know’ points for employers.

It is worth noting that, whilst the Review makes proposals for reform, there is no obligation on the Government to implement these proposals. Theresa May’s response on the day the Review was published was perhaps somewhat guarded. She simply stated that the Government will ‘study the report carefully and respond later this year’.

Secondly, whilst the Review may lead to new legislation being tabled, the current political climate means that there is no guarantee that new laws will make it through Parliament. Moreover, some of the proposals are so wide-ranging and complex (for example, amending current legislation on the definition of employees and workers to reflect the principles set down over recent years by the courts) that there must be some doubt over whether the Government will have time to focus on that at the same time as the gargantuan task of negotiating our exit from the EU.

With those points in mind, let’s look at some of the key proposals made by the review.

Key proposals

the three existing ‘statuses’ of ‘employee’, ‘worker’ and ‘self-employed’ be retained but with a new name of ‘dependent contractor’ covering workers who are controlled and supervised by the business engaging them
workers should be treated as ‘employed’ for tax purposes and HMRC should be given enforcement powers in respect of sick pay and holiday pay as well as minimum wage issues
the current laws defining employees and workers should be amended to reflect the principles that have been set down by the courts and tribunals on these definitions. (As we have mentioned above, this is far easier said than done)
a right should be introduced for zero-hours workers to request guaranteed, fixed hours after 12 months in post
the Low Pay Commission should be tasked with examining how a higher rate of minimum wage might be applied to those with non-guaranteed hours to ensure they are not unfavourably treated
workers (or newly named ‘dependent contractors’) should have a right to a written statement of terms and conditions to be given on the first day of employment and this should include a description of the individual’s statutory rights
there should be a ‘stand-alone’ right to compensation if the employer does not provide the written statement
the reference period for calculating holiday pay (where pay is variable) should be increased from 12 weeks to 52 weeks and employers should be able to pay holiday pay on a ‘rolled up basis’
agency workers should have the right to request a direct contract with the end user after 12 months working on an assignment
individuals should be permitted to bring an Employment Tribunal claim to determine their employment status as a preliminary issue prior to a substantive claim without having to pay an issue or hearing fee
the burden of proof should be placed on the employer in an Employment Tribunal claim to prove that the claimant is not an employee or worker.

Walker Morris comment

The Taylor Review calls for clarity above all and this is, without doubt, a laudable aim. The reality is that any changes to the current law would have to be very carefully thought through and drafted to avoid creating further ambiguity or bureaucracy. Few would disagree that the UK economy benefits enormously from having a flexible labour market so the Government will need to guard against creating unintended consequences when deciding which, if any, of the proposals to progress.

If you have any questions about this article please contact David Smedley or Andrew Rayment.

Contacts

David Smedley, Partner, Litigation and Employment

David Smedley
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Andrew Rayment
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