How to protect your cross-border staff and keep operations running smoothly under both scenarios.
Preparing for no deal has to be the prudent course for any business as the Brexit deadline looms. However companies with a multi-national workforce, or one with staff in EU countries, should also develop parallel plans in the event that the EU and UK sign a withdrawal deal before 31 October. The UK entering a transitionary period does not necessarily mean a smooth continuation of the status quo when it comes to who you can employ and how.
If we do get transition on the basis of something similar to the current withdrawal agreement (though maligned, it is not necessarily dead), then much of the EU and UK employment landscape would continue as before, though with some caveats that are worth noting.
First, employers shouldn’t relax for too long. Article 50 might have been extended by six months, but the end of the transition period has not been. It remains 31 Dec 2020 – giving businesses a mere 14 months to adjust to whatever comes afterwards. The two sides could agree to extend the transitionary period up to 2022, but it’s not a given.
Second, the uncertainty around Brexit will continue to unsettle staff whether they are EU nationals in the UK, British nationals working in the EU or workers regularly travelling across borders. Offering support via regular communication is vital.
Social security arrangements would be affected by no-deal since all previous EU agreements rules coordinating the coverage of social security between the UK and other EU states would cease (for example for a cross-border work from the UK to Germany). The two sides might agree to fall back on bi-lateral agreements the UK held with countries prior to the EU agreements coming into force. But, the UK does not have a bilateral agreement with all European countries. Moreover, where they exist and are agreed still to be in force, they are typically not particularly helpful in preserving home country coverage for long periods.
Or, as an alternative the UK and EU have expressed an intent to make a special agreement. The UK has published draft legislation which imports the EU Regulations into UK law, thus indicating the UK’s preferred approach post-Brexit, but makes this contingent on reciprocity from other EU countries, which may or may not be forthcoming, and will need to be negotiated with each country individually.
The withdrawal agreement prolongs the application of EU coordination rules until December 2020 (or later extension), which would provide welcome certainty for a period. Some transitional rules also help to avoid a cliff-edge shift in social security positions at 31 December 2020, but these are not entirely clear and careful analysis will be required to ensure compliance at this point.
States such as Germany which had been limiting A1 applications to 29 March 2019, and which then confirmed it would issue to 31 May (likely in case the UK did not participate in the EU elections) will now issue A1s to 31 October 2019. This gives rise to the need to make extension applications for previously issued A1s.
We keenly await more detail on future social security arrangements. However, given that policymaking is in flux on both sides (with the contest to become PM in the UK and the EU distracted by the appointment of a new Commission), businesses cannot wait for clarity.
Our advice is to make sure your ‘house is in order’. For example, ensure all staff who travel or are resident abroad have the right paperwork in place now. It may become essential in the future to support individual positions and evidence contributions/entitlements.
Though the numbers of EU nationals leaving the UK have not reached the levels some predicted, the picture varies significantly by sector. For example in financial services, a number of staff moved in anticipation of a hard Brexit on 29 March this year and further moves will obviously depend on the eventual deal or lack thereof.
As well as departures we may also see moves into the UK as organisations with no current UK base require a presence here.
Brexit has led to companies developing some forward thinking mobility policies to cope with a greater churn of staff in and out of the UK. For example, some of those leaving at short notice have experienced difficulties in coordinating the wider family’s move (because of issues like schooling). In response, companies have adopted commuting or short term role processes to allow the employee time to settle, and the family to follow later. Most mobility teams won’t have faced these challenges yet, but they need to work through the implications now since a sudden (and potentially significant) exodus could place a real strain on operations.
One tangible impact of Brexit on our immigration system in the UK has been the start of its EU Settled Status scheme. EU nationals seeking certainty on their rights to work and live in the UK should be reviewing the requirements now and employers need to consider if they have a moral obligation to support affected staff – and their families – even if they may not have a legal one.
Employers should also consider British workers with EU nationals attached to them – this group is largely invisible to employers but they are none-the-less as vulnerable to worry and upset as EU nationals are.
The situation for British nationals in the EU is less clear, though existing rules on Permanent Residence status continue to be available to qualifying individuals. We urge anyone who is potentially affected to understand their rights and how they can secure them.
The threat of chaos in a no-deal situation has already led many EU states to introduce temporary measures, for example creating transition periods that give British citizens in the EU time to register themselves.
However, every EU state is different, in some the transition window is particularly short, and these measures could change again as we approach 31 October.
KPMG’s Global Mobility and Immigration practices team have years of experience helping companies to solve the challenges of cross-border working.
If you need advice on how to protect your cross-border staff and keep operations running smoothly in both a no-deal or a transition, we would be delighted to help. Please contact us at email@example.com.
© 2020 KPMG LLP, a UK limited liability partnership, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.