The EU- UK Trade and Cooperation Agreement: Implications for employment and immigration

On December 31 the UK parliament implemented the European Union (Future Relationship) Act 2020. This makes provision to implement into UK law the three main future relationship agreements with the EU including the EU Trade and Cooperation Agreement (TCA). What does the TCA mean for employment and immigration law?     

Employment:

A significant portion of UK employment law is derived from and grounded in EU law. Under the EU Withdrawal Agreement all EU employment legislation which had effect on December 31, 2020 is adopted into UK law and so workers' rights which existed prior to the end of the implementation period continue to have effect in domestic law as retained EU law.

The main concern with regard to employment law was that there should be a level playing field with regard to labour and social standards. This would mean a reciprocal commitment from both parties not to reduce the level of protection for workers or fail to enforce employment rights in a manner that has an effect on trade. Part 2, Title XI Chapter 6 TCA sets out that the parties agree that they will not weaken or reduce, in a manner affecting trade or investment between the parties, its labour and social levels of protection below the levels in place at the end of the Transition Period. This is in line with similar “non-regression” clauses in other FTAs. One outstanding point covered the level of protection for worker’s rights going forward. In the TCA both parties will retain the reasonable discretion to make their own decisions on how they regulate rights going forward.  This means that retained EU law will not have a special place on the UK’s statute books.  Originally there was protection for EU derived workers' rights going forward in the Withdrawal Agreement.   However, these clauses were removed from the final form of the EU (Withdrawal Agreement) Act 2020.  The Government has stated that it would introduce an Employment Bill which will protect workers' rights, but this Bill has yet to be implemented.

It is yet to be seen what changes will be made to workers’ rights going forward.  Any changes are likely to be to legislation that the government considers imposes additional red tape on employers, such as those relating to working time (getting rid of the 48 hour limit on weekly working time and simplifying the calculation of holiday pay)  or allowing agreed changes to terms and conditions of employment following a transfer under the Transfer of Undertaking Regulations.  However this will have to be balanced against the difficulties of removing workers’ rights.

Immigration

The biggest impact on UK immigration is that free movement of people from the EU to the UK and vice versa ended at 11 pm on December 31, 2020.  With effect from January 1, 2021 the government has replaced the free movement of people with a points-based system under which EU and non-EU citizens will be treated equally.  The TCA does not affect these new Immigration Rules.  However, provisions are made in relation to social security coordination which will ensure that individuals who move between the UK and the EU in the future will have their social security position in respect of certain important benefits protected.

All EU nationals who had the right to enter the UK before the end of the implementation period can apply under the EU settlement scheme for settled status (where they have been resident in the UK for five years) or pre-settled status (where they have been resident for less than five years).

For those who don’t have settled or pre-settled status the new single immigration system post-Brexit, means that an employer wishing to employ EU citizens will need to have a sponsor licence and pay the Immigration Skills Charge (£1,000 per worker per year).  Where the worker is entering under the skilled worker route then, from January 2021 the job will need to be at a required skill level of RQF3 or above (equivalent to A level); this has been reduced from degree level under the current system. There will be an applicable English language requirement, as well as a relevant salary threshold (higher of £25,600 or typical rate for the job). Points may be 'traded' on specific characteristics if the salary threshold is not met (but must still be over £20,480).  The rules are slightly different if the applicant is entering by way of an intra-company transfer.

The main areas of  concern is whether employers will be able to have access to the requisite number of low-skilled workers, as pursuant to the current points based system, employers cannot sponsor these.

This update also features as a post in our Global Workplace Insider.