What is the background to this?

The UK public voted to leave the EU in a referendum on 23 June 2016. Following the results of the referendum the UK will soon begin negotiating its exit from the EU. This will inevitably involve deciding upon the status of current EU nationals residing in the UK, and to what extent they will continue to enjoy their current freedom of movement rights following the UK’s exit.

The below analysis discusses some issues which may become more common as time passes, however it is important to state that there is a lot of uncertainty of what the landscape will look like for EU nationals in the UK once we have left the EU. Therefore, the issues discussed below are within the current equality framework. Further the wide-reaching impact of these issues necessitates their discussion in broad and general terms, however each real scenario will be fact specific and the below discussion may not be relevant in all circumstances. Specific legal advice should always be sought. 

Lastly, there is a lot of sensitivity surrounding the UK’s exit from EU, particularly in the wake of the hate crime which immediately followed the referendum results. Therefore, employers need to be mindful that their actions may engender upset and discomfort from its staff, and complaints, even legal action, may still be brought regardless of whether the employer’s actions are legally correct or not.

Should employers be ‘auditing’ their EU national employees to see if any of them now have permanent residence or British citizenship?

All employers must already establish an employee’s right to work in the UK at the outset of their employment, if they are to have a defence to a civil or criminal sanction for employing an illegal worker. Where an employee establishes their right to
work by way of their EU nationality (commonly called ‘exercising one’s treaty rights’), and appropriately evidences this, there is no requirement for an employer to then continue to audit or check their status. The only exception is Croatian nationals, for whom a different regime exists.

The situation is different for employees who are non-EU nationals or who are non-EU family members of EU nationals. If employees only have limited leave to remain, or a time-limited EU residence card, then the expiry of their visas should be carefully diarised in order to ensure that extension applications are made in good time and you are not inadvertently employing someone whose permission/right to reside and work in the UK has expired. If the Home Office does discover an employee who does not have the right to work, this could give rise to a civil penalty (if the correct checks were not undertaken), and possible criminal sanctions if it was done knowingly (or, for employment after 12 July 2016, if the employer had reasonable cause to believe that the employee was an illegal worker). 

Equally, unless provided for in an employee’s contract of employment or in a company policy, there is nothing compelling an EU employee to provide information relating to their on-going immigration status. Indeed prior to the referendum there would be little reason for an employer to enquire into the status of an EU national other than the initial pre-employment checks.

The government issued a statement on 11 July 2016 saying that ‘there has been no change to the rights and status of EU nationals in the UK’. In light of this and the sensitivity surrounding the issue, a pragmatic approach would be to maintain the status quo and not make further enquiries into the status of EU national employees. Employers should already know which employees are EU nationals, by virtue of the pre-employment checks. There is no need to undertake a further audit, other than the requirement of checking and ensuring that there is a copy on file of the employee’s passport or other specified proof of right to work in the UK. For non-EU national family members of EU nationals the Home Office has an online checking service, that verifies whether a given employee has the right to work where they have an outstanding residence document application. Employers should ensure that these checking procedures are being firmly followed.

Common sense suggests that it would be a good idea for employers with a large EU workforce to have the relevant details of such staff on hand and easily accessible, however the current requirements regarding retaining proof of the right to reside and work in the UK should make any audit process relatively painless. In the event that the immigration rules regarding EU nationals change in the coming years, we can only hope that the government will provide us with plenty of warning. It is also anticipated that a lot of EU nationals will be applying either to confirm their current right to reside under EU law, or in some cases for limited or indefinite leave to remain under the UK’s Immigration Rules, and to subsequently naturalise as British citizens as soon as they are able to. Some employers may want to consider offering support in the various Home Office application processes, by way of paying for expert immigration advice, and funding the cost of obtaining British citizenship. 

Should employers assist employees in making applications for permanent residence cards or naturalisation?

Subject to certain criteria, EU nationals who have continuously and lawfully lived in the UK for at least five years automatically acquire the right to permanently reside. EU nationals do not need to apply for a permanent residence card to acquire this right.

Broadly, an EU national is able to apply for naturalisation as a British citizen once they have acquired permanent residence and then lived for one further year in the UK. They must also have obtained a document certifying permanent residence from the Home Office by the time that they apply for naturalisation.  

There is no requirement for an employer to assist an EU national with their application for a permanent residence card or naturalisation. Whether an employee obtains a document certifying permanent residence or not will not currently affect their ability to work, as the law has not yet changed. However, employers with a large EU national employee base may consider that providing support and assistance to their EU employees makes good business sense. It will certainly help create some loyalty and good will following the Brexit announcement back in summer 2016. There is also the obvious business interest in supporting these applications, simply to help ensure that employers don’t suddenly find themselves with a dramatically depleted workforce as a result of a sudden change in EU nationals’ rights to live and work in the UK. Only time will tell how any such changes will affect business’s ability to recruit and retain key personnel.

If employers are assisting EU national employees as above, could that be problematic if they are not paying for non-EU national employees to get indefinite leave to remain or naturalisation?

This question is more complex than it at first appears and there are many unclear and untested issues in play. First, the complaints which are most likely to arise out of this are claims of discriminatory treatment on the basis of the protected characteristic of race. The definition of ‘race’ has been found to be quite wide and includes ethnicity and nationality. Article 20 TFEU confers separate and additional citizenship of the EU on each person holding the nationality of a Member State. It is therefore likely that EU nationality/citizenship would be considered as falling within the ambit of the protected characteristic of race.

A hopefully simpler way to discuss this question is with reference to a hypothetical example, which I include below.

Employee Z is a national of an EU Member State and has exercised her treaty rights in the UK for six years, and currently works for ABC ltd. ABC offers to pay for the cost of an application for naturalisation of employee Z, which includes the cost of an application for a permanent residence card and naturalisation and the lawyer’s costs in assisting employee Z. Employee Z’s application is successful and she obtains British citizenship. 

Employee Y is a national of a non-EU Member State who currently has limited leave to remain in the UK as the spouse of a British citizen and, knowing about the assistance employee Z received, asks ABC to provide similar assistance with his applications for indefinite leave to remain, and, subsequently, naturalisation. ABC declines to assist. 

In the above scenario, employee Y’s situation does not seem comparable with that of employee Z, as the immigration rules each is subject to are substantively different. However, the policy of assisting employee Z and not employee Y is directly as a result of employee Y’s race/nationality. Further, ABC’s policy or practice of assisting EU nationals with their applications would not apply to employee Y (being a non-EU national and therefore falling outside of its scope) and is potentially indirectly discriminatory towards non-EU nationals. I would therefore advise employers to ensure that any choice policies support all employees requiring immigration support, not just EU nationals so as to avoid any potential claims of direct or indirect discrimination.

Are there any circumstances where it could be lawful to not recruit EU nationals or to extend employment contracts if they are unsure about their future status?

It is not lawful to discriminate against employees at recruitment stage on the basis of their EU nationality. Being an EU national is arguably a protected characteristic on the grounds of nationality/race and as such is protected from unlawful discrimination. As the law currently stands, a job applicant who is not recruited or an employee whose contract is not being extended because they are an EU national would have a claim for race/nationality discrimination. It would be premature and unfair to take steps to deplete EU nationals from a workforce, particularly given that the law regarding their right to reside and work in the UK has not yet changed. Indeed, it is highly unlikely that any change will occur until after the UK invokes Article 50 TEU and ceases to be a member of the EU. The most prudent approach would be to maintain the status quo. 

The rules surrounding EU nationals’ right to work will, to a greater or lesser extent, inevitably change once the UK has negotiated its exit from the EU. Employers should ensure they are up to date on the changes which will affect their workforce. Rather than attempt to pre-empt the new rules which, are incredibly uncertain right now and could result in employers facing employment litigation, it would be prudent to wait for, and react to the new rules once they are issued and seek specific legal advice. Employers should maintain fair recruiting practices and not differentiate applicants based on their protected characteristics.

This article was first published by LexisNexis.