Planning for Brexit - Employers and their mobile employees

28.05.2019

With Brexit now scheduled to take place in October 2019 (though it could be earlier in some scenarios), and with the risks of a 'hard Brexit' appearing very real, employers need to consider a number of issues with regard to their mobile employees - whether a UK individuals working in the EU or EU employees working in the UK.

UK Employees in the EU

You need to ensure that your UK employees in Europe are informed of the issues that arise for them including:
 
  • The EU Settlement Scheme and local country rules (for UK citizens already living in the EU);
  • The limitations of the EU's proposed "temporary leave to remain" arrangements.

Assess the impact of BREXIT on existing and planned assignments

Is there any value in bringing the start of planned assignments forward - i.e. so that they start before the 31st October 2019. This should, for example, help ensure assignees have existing working rights in that the host location without the need of obtaining visas / work permits etc.

Other issues to consider include:
 
  • UK residency rights compromised by accepting an overseas assignment – potential to restructure planned assignments so that indefinite leave to remain rights in the UK are retained.
  • UK residency status for EU citizens with a UK employment contract – restructure or end their assignments so that they can return to the UK without any issues.

Short term business visitors ("STBV")

In practice, one would hope that even with a no-deal Brexit little 'paperwork' would be required with regard to genuine 'business trips' - whether that is for UK employees going to the EU or EU employees coming to the UK. However, employers should understand in advance about the nature of any planned business trips and recognise the difference between:
 
  • Legitimate business trips - i.e. something which should not require a work permit or visa; and
  • Individuals undertaking 'work' in the other jurisdictions and hence subject to what might be a lengthy and expensive visa application process. The costs (time delays and additional financial outlay) should be closely considered by businesses when budgeting for new projects.


Social security


Whilst the UK remains a member of the EU, employees (whether in the UK or elsewhere within the EU/EEA including Switzerland) are covered by the EU Social Security Regulations. This means, for example, that 'double charges' should not arise, as the regulations make it clear that social security is only ever payable in one location.

However, if the UK were to leave the EU in a no-deal Brexit, the EU regulations should innately fall away. In this situation, companies/employees could easily face 'double charges' on the same income with regard to at least some of their international employees. In practice, the UK has said that in the case of a no-deal Brexit, it would continue to follow the EU regulations for an interim period even in the case of a no-deal Brexit for EU employees – but how long that 'interim period' would be has yet to be confirmed.

Whilst the EU has indicated that it would like the individual member states to continue recognising the A1 certificates for ‘existing assignees’ from the UK for an ‘interim period’, there is actually no obligation on the various member states to follow this guidance from the EU. Moreover, the EU guidance is focused on protecting the position of existing assignees and business travellers to the EU, rather than any new (post-Brexit) assignees or business travellers. Therefore, the risk of double social security liabilities would certainly exist with UK employees who are working in the EU.

Whilst this area is subject to ongoing uncertainty, employers may want to consider the following options:

 
  • Is there any value in bringing forward assignments/business traveller arrangements –having assignees starting their assignments before Brexit, so that they can continue to benefit from any ad-hoc interim arrangements that are put in place;
  • Understand whether particular assignments or business traveller arrangements would be covered by any alternative agreements – e.g. the Social Security Agreements the UK signed with some EU member states in the 1950s and 1960s and which could be used, in some situations, on a go forward basis;
  • Reviewing budgets – for a comprehensive understanding of additional costs that could arise from a social security perspective; and
  • Consider whether it is appropriate to re-structure future assignment arrangements – localise employees rather than traditional assignments.

All of the above options need careful consideration, but can help avoid or minimise unnecessary costs in the correct circumstances.
 

Summary

Whilst companies of all sizes (and in particular small and medium-sized enterprises), have often delayed making pro-active plans in respect of Brexit, given the uncertainties that exist in this regard about exactly what any formal agreement/position will look like, the fact that the October 2019 deadline will rapidly approach means it is important for companies to now pro-actively review their options and next steps.

The risks of continuing to wait could result in significant issues for employees and represent a real threat to employers, looking to be a ‘best in class’ and an ‘employer of choice’.

For more information, please contact Robert Salter or Andy Timpson.

This article is taken from the latest edition of our Employer Review newsletter. If you would like to recieve future editions of this publication, please register your details below:

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