The end of free movement - what employers need to know

The end of free movement - what employers need to know

Webinar: the impact of COVID-19 on immigration

The Brexit transition period ended on 31 December 2020. Despite the fact that a trade deal has been agreed, free movement for European nationals ended at 11pm on 31 December 2020. This will have a significant impact on virtually all employers, as many employers employ European nationals. It also means that British nationals no longer benefit from free movement to work, study or visit European countries without restrictions. 

There are now different immigration rules applicable to European nationals depending on whether the European national first arrived in the UK before or after 11pm on 31 December 2020. It will therefore be important for employers to know when the person first entered the UK. It is also important to consider how these changes impact right to work checks. We set out below the key issues employers should be aware of.

European nationals and family members who entered the UK before 11pm on 31 December 2020


In most cases these individuals will need to apply for pre-settled or settled status under the EU Settlement Scheme (the Scheme) in order to continue to live and work in the UK long term. The deadline for applying under the Scheme is 30 June 2021. There is a narrow exception where individuals may be able to apply after 30 June 2021 but they would need to show that (i) there are reasonable grounds for missing the deadline and (ii) that the application was made within a reasonable period from the deadline date. It is unclear how this will operate in practice and we strongly recommend that wherever possible applications are submitted before 30 June 2021. The application is usually submitted online and there is no fee.

There are a few limited exceptions. For example, those with indefinite leave to remain and those who are Irish nationals do not need to apply under the Scheme. However, those with permanent residence must still apply and family members of Irish nationals will also need to apply.

Settled status

Individuals who have been "continuously resident" in the UK for at least five years should be eligible for settled status. "Continuously resident" means that the individual has been present in the UK for at least six months in every 12 month period. If the person is absent from the UK for longer than six months in any 12 month period, this will usually break continuity, except in very limited circumstances. If continuity of residence is broken it is unlikely that the individual will be eligible for settled status. The exceptions are limited and include one period of up to 12 months absence for an important reason (for example, childbirth, serious illness, study, vocational training or an overseas work posting), compulsory military service of any length, time spent abroad as a Crown servant, or as the family member of a Crown servant and time spent abroad in the armed forces.

Once a person obtains settled status, they may be away from the UK for a total of five consecutive years. After this, settled status will lapse.

Pre-settled status

If the individual has been in the UK for less than five years, they should be granted pre-settled status. However, if you have not been physically present in the UK for at least one day in the six month period immediately prior to submitting your application we recommend you take advice. It is important to note that pre-settled status is granted for five years and, at present, it seems that this cannot be extended. It is therefore vital for individuals to safeguard their continuous residence so that they are able to apply for settled status after five years in the UK. As above, in order to be able to apply for settled status they must not spend more than six months in any 12 month period outside of the UK.

If an individual obtains pre-settled status, employers should therefore consider the implications of the length of any international secondments or regular business travel on that person’s future eligibility to apply for settled status. In addition, if an individual is absent from the UK for a continuous period of more than two years, their pre-settled status will lapse altogether.

Can settled/pre-settled status be cancelled after it is granted?

In some cases, pre-settled or settled status may be cancelled. For example, settled or pre-settled status may be cancelled where false representations were made or misleading information or documentation was submitted when obtaining pre-settled or settled status, whether or not the applicant was aware of this. As the decision as to whether or not to grant settled status is primarily made on the basis of HMRC records, there is a risk that some people may be granted settled status even though they do not qualify for it (for example, because they spent more than six months outside of the UK but were paid by a UK company). Their leave could potentially be cancelled if this later comes to light.

The rules also allow for leave to be cancelled where the individual no longer meets the requirements under the Scheme. For example, where a family member of an EEA or Swiss national with pre-settled status is no longer considered a family member for example, through separation or divorce from the EEA or Swiss national.

This highlights that once granted, pre-settled or settled status is not necessarily a secure status.

Take care if offered pre-settled status

An increasing number of EEA and Swiss nationals are being offered pre-settled instead of settled status when they apply online. For those who have already been living in the UK for five years and who believe they are eligible for settled status but who are offered pre-settled status through the online application, we advise that they do not simply accept this. We recommend that they seek legal advice before proceeding. This is because, although the Home Office has continued to state that the application process is a quick and simple one, individuals are in some cases not being offered settled status even though they are eligible for this status under the legislation. 

European nationals and family members who arrive in the UK after 11pm on 31 December 2020

Importantly, these individuals will not be able to apply under the Scheme. In order to live and work in the UK they will need to apply under the new Immigration Rules. These come into effect from 1 January 2021 for European nationals.

In many cases, employers will need to sponsor European nationals under the new Skilled Worker category and they will require a sponsor licence. If your business does not already have a sponsor licence we recommend you consider applying for one as soon as possible. Before applying for the licence you should also ensure you are aware of the various obligations sponsors must adhere to and ensure you are able to comply with these obligations as failure to do so can lead to the licence being revoked.

It’s also worth bearing in mind that businesses will need to allow time for the European nationals to submit their immigration applications before they are able to start work. Further, it costs thousands of pounds to sponsor someone for five years so these additional costs will need to be factored into recruitment budgets.

Further details about sponsorship and the new Immigration Rules can be found in our article here.

Right to work checks

We recommend that employers carry out right to work checks before an employee starts work. These checks are important because they mean that the employer should have a statutory excuse against a civil penalty of up to £20,000 if it is later discovered that the person is working in the UK illegally. Further, if employers are not carrying out right to work checks correctly the Home Office may take compliance action if the employer is a sponsor.

Employers should consider how they will approach right to work checks for European nationals now that free movement has ended.

Existing employees

The Home Office’s guidance currently states: “You have a duty not to discriminate against EU, EEA or Swiss citizens. You cannot require them to show you their status under the EU Settlement Scheme until after 30 June 2021.” There is effectively a grace period for employers until 30 June 2021.

This means that employers cannot force their existing EU citizen workforce to submit EU Settlement Scheme applications or to provide evidence that they have obtained settled or pre-settled status. However, employers can certainly encourage them to do so and provide information and support to them on how to apply. We also recommend employers encourage employees to inform them once they have been granted settled or pre-settled status and encourage them to provide evidence of this.

Notwithstanding this grace period, we recommend you emphasise to your European workforce that they must ensure they apply for pre-settled or settled status by 30 June 2021. If they do not do so it is likely they will be in the UK illegally after 30 June 2021 and as an employer you may not be able to continue to employ them after that date. However, we recommend taking advice before you start any dismissal process.

Employees who start work on or after 1 January 2021

The current Home Office guidance also gives rise to a number of concerns when it comes to hiring European employees who start work in the first half of this year. This is because, during the period from 1 January 2021 to 30 June 2021, there will be two groups of European nationals in the UK. Broadly, the first group are those who came into the UK by 31 December 2020. They will be here legally during that six month period with the right to live and work here. However, those entering the UK for the first time after 31 December 2020 must have immigration permission to live and work here. If a business employs someone who starts in, say, March 2021 the employer has no way of knowing which category they fall under simply by looking at their passport.

We anticipate there will lead to a number of issues arising.

For example, when carrying out the right to work check, an employer cannot just "blindly" copy a document and rely on this if the employer is aware that the individual does not actually have the right to work. Where an employer knows or has reasonable cause to believe the individual does not have the right to work, in the worst case scenario they can be the subject of criminal prosecution as well as being issued with a civil penalty. For example, if there is an email on the file showing that the employer knows the EU national arrived in the UK for the first time after 31 December 2020, simply copying the passport or national ID card will not provide a defence against prosecution or a statutory excuse against a civil penalty.

Also, an EEA or Swiss citizen who arrives in the UK from 1 January 2021 onwards without permission to work in the UK under the new immigration system, may ultimately suffer a detriment if their employer relied on the right to work grace period guidance, as it would mean that person spent a period of time working here illegally. For example, if questioned in the future on returning to the UK, changing employer after the grace period or even when applying for indefinite leave to remain after five years in the UK, they may well encounter difficulties. 

The Home Office has stated that employers will not be required to carry out retrospective checks on existing employees when the grace period ends on 30 June 2021. However, what happens if the employer later gains knowledge that the person does not in fact have the right to work in the UK? At that stage, the employer may have to terminate the person’s employment. 

Our view is that, regardless of the slight risk of a discrimination allegation, it is important that all candidates/recruits are asked at the same stage of the recruitment process for evidence of their right to work during the interview stage of the recruitment process. It’s important to check the right to work as early as possible and before the first day of employment.

At the very least we suggest employers ask EEA and Swiss nationals when they first arrived in the UK to work out if this was before or after the end of the Brexit transition period. If they arrived after 31 December 2020 we recommend you ask for and obtain evidence of their right to work and it is likely you will need to sponsor them. If they arrived before 1 January 2021 you should encourage them to provide details of their settled or pre-settled status if they have already applied or remind them they must apply by 30 June 2021. Employers can use the online checking service to confirm that an employee or applicant has settled or pre-settled status and therefore has the right to work in the UK. However, up to 30 June 2021, employees and applicants do not have to agree to share their status using the online checking service.

We also strongly recommend that the offer letter and employment contract for all employees makes it clear that employment is conditional on the person having the right to work and on the employee providing evidence to the employer’s satisfaction of that right to work.

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