What UK startups need to know about freedom of movement post-Brexit


At the beginning of September the UK government announced that current freedom of movement rules "will end on 31 October when the UK leaves the EU", causing ripples of panic throughout the business community. Subsequent reports suggested that the risk of legal challenges make an abrupt end to freedom of movement this month unlikely.

Home secretary Priti Patel finally provided an update on 25 September, describing the Home Office's plans for immigration in the event that the UK leaves the EU without a deal, in a letter which was issued by The Home Affairs Committee.

In the letter, the home secretary confirms that much of the UK's existing free movement framework will remain in place after 31 October, even in the event of a no-deal Brexit, after which parliament will be required to pass primary legislation to repeal the existing rules.

This means, as it stands, that free movement of EU citizens will not end automatically if there is a no-deal Brexit on 31 October as the EU law will have to be replaced, but existing citizens must still apply for settled status with the Home Office by December 2020 in order to remain in the country longer-term.

"For those [European Economic Area] citizens who arrived just before exit, a used travel ticket confirming previous inbound travel to the UK will be treated as evidence of residence for the month of entry," the home secretary's letter also confirmed.

After that December 2020 deadline any European Economic Area (EAA) citizen wanting to live and work in the UK will either need to hold pre-settled status or settled status, European temporary leave to remain or any new status created by the proposed government changes to the current immigration system.

The government has repeatedly asserted its preference to introduce an "Australian-style" immigration system post-Brexit, "that prioritises skills and what people can contribute to the UK, rather than where they came from," a Home Office spokesperson told Techworld.

Read next: What the UK tech industry thinks of the 'unicorn visa'

In a blog post for TechUK published last month, Vinous Ali, associate director for policy at the technology industry trade body wrote: "As things stand Parliament has legislated for freedom of movement to continue after the UK leaves the EU, this was done in the Withdrawal Act which transposed EU law onto the UK statute book to ensure a smooth transition.

"There is legislation currently working its way through parliament to end freedom of movement by repealing Section 7 of the Immigration Act 1988, in the form of the Immigration and Social Security Coordination (EU Withdrawal) Bill, but with the government in a state of flux, it is unlikely to get passed before 31 October."

Naomi Hanrahan-Soar, managing associate at law firm Lewis Silkin told Techworld: "It would be unlawful to change the immigration law that dramatically by secondary legislation and there isn’t practically enough time to get new primary legislation through at this stage.

"Proper time and consideration should be given to a new immigration system and if that means extending free movement a little longer, they should not be averse to doing that."

What is under threat?

What is at threat here is that any EU, EEA and Swiss citizens that have settled in the UK under previous freedom of movement rules will have to apply for settled status in order to live and work in the UK after Brexit.

The Home Office announced on 15 August that over 1 million people have been granted settled or pre-settled status under the EU Settlement Scheme, but many are only being given temporary status for five years. There are an estimated 3.3 million UK-based EU citizens, who previously did not have to register their presence in the UK.

Minister of State for the Home Office Brandon Lewis said: "EU citizens have made incredible contributions to our country – which is why I’m so pleased that over 1 million people have been granted status, enshrining their rights in law."

As Ali at TechUK wrote: "That does leave approximately 2 million EU citizens who have yet to register. If the UK intends on enforcing immigration rules immediately after the 31 October, this leaves ‘unregistered’ EU citizens and employers in a precarious position."

"For something as fast-moving as the tech sector you can see that talent going elsewhere," she added when speaking to Techworld.

A fact sheet issued by the Home Office states that: "EU citizens will still be able to come to the UK on holiday and for short trips, but what will change is the arrangements for people coming to the UK for longer periods of time and for work and study. Details of other changes immediately after 31 October and improvements to the previous government’s plans for a new immigration system are being developed."

Just saying there will be a new immigration system without any level of detail this close to the Brexit deadline isn't exactly putting people's minds at ease however.

Josh Hardie, deputy director-general of the Confederation of British Industry (CBI), said: “Businesses and workers know the immigration system is changing. Yet announcing that the existing arrangements may end before a replacement has been designed, delivered or tested will only cause confusion.

“Now is the time for Government to reduce uncertainty, not add to it unnecessarily and hinder no-deal preparations. Taking time to prepare a new system will help protect the UK's attractiveness. Firms will need at least two years to adapt to any new immigration system. Most importantly, getting it right matters to millions of people."

Mike Cherry, chairman of the Federation of Small Businesses (FSB) adds: “A sudden end to free movement on 1 November will make a bad situation worse. Business owners need time to prepare for such a radical change, particularly as 95 percent of small employers have no experience of using the points-based element of our immigration system."

For existing employees there is some short term clarity around the settlement scheme, but little detail regarding their long term status in this country. Many business owners will also be concerned for their ability to hire and retain EU nationals after 1 November with no clear guidance in place. That means the picture remains very unclear for the UK's startup founders and employees.

How are startups reacting?

For startup founders, many of whom are themselves from the EEA, or employ many people who are, the current situation is great cause for concern.

Tractable, a UK-based tech company that develops AI-powered accident and disaster recovery technology for the insurance industry, was cofounded by French and Romanian nationals, and has a staff which is predominantly from outside of the UK.

Adrien Cohen, cofounder of Tractable, told Techworld that the company has not been impacted by Brexit, will continue to operate as an international company, and that "London is still an amazing place to scale a tech business."

That being said, "what Brexit and, more specifically, threats to freedom of movement do, is create an unwelcome element of uncertainty to everyone’s day-to-day lives. Most of our workforce aren’t British, and that includes all of Tractable’s founders. All of us have little to no clarity over what happens next. Ultimately, I am sure that the UK wants to keep our incredibly talented and skilled workers here – after all, they all add a huge amount of value to the economy – but this ongoing doubt does nothing to help anyone plan for the future.”

Startups may also not have the human resources department or internal expertise to deal with sudden changes like these, leaving them scrambling to deal with yet another disruptive Brexit impact.

Alex Depledge, the serial founder and current CEO and cofounder of architecture software platform Resi told Techworld: "Isn’t the truth in all of this that businesses have not realised that no-deal is likely and none of us are ready? The business lobby has always triumphed in most cases … this has to be the biggest miss for them in decades. No business is ready and now we are all scared of what Brexit looks like on the other side."

Depledge has had to call special meetings with staff members who have moved to London from the EU to ensure they have applied for the right to settle here after Brexit. "Most haven’t, which means worst case I could have 20 percent of my staff at risk on 31st October," she said.

Freddy Kelly, founder and CEO at Credit Kudos, told Techworld: "Obviously, we always want to attract the best talent regardless of their nationality. We don't currently have any EU nationals working for us, however, we've been in the process of hiring under the T2 visa (non-EU) programme and are concerned that Brexit will drastically reduce the number of applications we receive.

"Most fintechs in London are offering services internationally or have plans to. I think that with regulatory passporting likely – read certain – to be withdrawn, it's likely lots of these firms will move greater numbers of their employees to EU states in order to retain this capability."

What you can do

Immigration lawyer Hanrahan-Soar advises EEA nationals and their family members who are already here "to try to apply for settled status/pre-settled status prior to any post-Brexit travel if possible, and ideally before 31 October to assist in the practicalities for proving the right to work, rent and bank."

She also advises employers that have EEA nationals planning to move to the UK to try and bring them in prior to Brexit.

TechUK provides legal advice for startups, with a helpline for confused EEA employees or those with complicated circumstances. They also provide hands-on support filling out the settled status application.

With the situation remaining stubbornly opaque, all startups can do is plan accordingly for the increasingly depressing possibility of a no-deal outcome on 31 October and ensure all staff know what they need to do to remain in the UK after that date, including registering for settled status. Beyond that, the situation remains anyone's guess.

This story, "What UK startups need to know about freedom of movement post-Brexit" was originally published by Techworld.com.


Copyright © 2019 IDG Communications, Inc.

Shop Tech Products at Amazon