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Brexit and your workforce

The end of the post-Brexit transition period is fast approaching and employers with globally mobile employees are understandably concerned about what happens next regarding their employees’ social security status, tax liabilities and healthcare rights.

The transition period will end on 31 December 2020 and the deadline for extending it has now gone. Negotiations on the trade deal are still ongoing, with many items remaining unclear.

Social Security for workers currently working abroad

HMRC has confirmed that it considers workers currently posted to another EU location to be protected by the Withdrawal Agreement.

This states that individuals “shall be covered for as long as they continue without interruption to be in one of the situations…. involving both a Member State and the United Kingdom”.

This means that a posted worker with a valid A1 certificate who remains on their posting should continue to be covered by that A1. Social security will remain payable in the home country rather than the host country.

However, the European Commission has confirmed that in the event of no agreement being reached then from 1 January 2021 the EC Regulations 883/2004 will not apply in for workers posted from the UK in an EU member state.

In view of this, whilst HMRC has been positive about the Withdrawal Agreement covering posted workers who started their posting before 1 January 2021, it is unclear if the EU Commission and/or other EU states will agree.

Employees’ Tax Liabilities

Brexit should have no impact on an individual’s personal tax liabilities as liability to tax is governed by double tax agreements which are agreed individually between the UK and the other party. These have never been subject to EU rules.

UK legislation originally determined the eligibility of non-UK residents to the tax-free Personal Allowance by whether or not they were EU nationals. This would have caused the unusual situation of non-UK resident EU citizens benefitting from the Personal Allowance while non-UK resident UK citizens would not. The legislation has now been amended to ensure non-UK resident UK nationals are eligible for the Personal Allowance.

Access to healthcare

Employees will be anxious about their access to healthcare post 1 January 2021. The two current EU schemes are the European Health Insurance Card (EHIC) and the S1 reciprocal schemes. The EHIC provides access to healthcare services across the EU for a period of fewer than three months whilst the S1 scheme allows individuals to receive ongoing health and social care in another country. Services received are at the cost of the home country.

As well as the personal impact, loss of or reduced access to healthcare will have a cost implication for employers and employees as requirements increase to purchase travel and/or health insurance.

Recruitment and the EU Settlement Scheme

Laura Darnley, Legal Director at Brabners makes some interesting suggestions for employers.

“Employers who have EU, EEA or Swiss citizens on their staff should provide them with information regarding the EU Settlement Scheme so that they can determine whether or not they need to apply for pre-settled or settled status by the deadline, which is 30 June 2021. However, employers need to be careful not to provide immigration advice unless they are qualified to do so; this is a regulated activity and providing immigration advice without being qualified to do so is a criminal offence.

“If you will be transferring EU, EEA or Swiss citizens to the UK in the near future, it would be worth making sure that start dates fall before 31 December 2020 if at all possible so that individuals can establish residency in the UK before 31 December 2020 and qualify for the EU Settlement Scheme.

“Any EU nationals who are starting with the business on or after 1 January 2021 who are not eligible under the Settled Status scheme will require a visa/some form of immigration permission to enable them to work in the UK. Typically, this will be a Skilled Worker visa.  In order to access the Skilled Worker visa route, employers need to pre-register with the Home Office to become licensed sponsors. These applications should be made as soon as possible to prevent disruption to business plans next year. With effect from 1 January 2021, businesses will be severely limited in their talent pool without a sponsor licence, as, in most cases, they will no longer be able to recruit non-UK, non-settled nationals.”



The information was correct at time of publishing but may now be out of date.

Posted by Cowgills
10th December, 2020
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