Brexit : What happens now that the UK has voted to leave the EU?

30 Jun 2016

Castegnaro Newsflah 30.06.2016

Lorraine Chéry

By: Andrew Osborne, Lewis Silkin, our Ius Laboris firm in the UK 

The UK population voted to leave the European Union (“EU”) on 23 June 2016, but nothing will happen for employers and employees overnight. The referendum itself does not have any legal effect and is simply an indication of the wishes of the voting public. In order to actually exit the EU, the UK government must trigger the leaving provisions in Article 50 of the Treaty on European Union (2009) by notifying the European Council of its withdrawal. David Cameron announced this morning, 24 June 2016, that he is resigning in 3 months. Cameron said he will not trigger the leaving provisions in Article 50. Therefore, it will be left to Cameron’s successor to initiate the process of the UK leaving the EU. 

Once the notification to the European Council has been made, however, the EU and the UK have two years to negotiate an agreement setting out the arrangements for its withdrawal. These negotiations shall take “account of the framework for its future relationship with the Union.” If alternative arrangements have not been agreed by the end of the two year period, then the UK will simply cease to be a member of the EU from this date (unless the European Council and the UK agree to extend the two year negotiation period). 

During these negotiations, the UK will remain a part of the EU and it will effectively be business as normal. Employee rights and freedom of movement for workers within the EU will remain: UK nationals will be able to travel freely and work in the rest of the EU and EU nationals will be able to do the same in the UK. UK and EU nationals will continue to enjoy freedom of movement rights until the UK completes the legal processes for leaving the EU. 

If a Brexit is eventually formalised, it is possible (though probably politically unlikely) that the UK and the EU will negotiate to maintain freedom of movement. The UK could negotiate to maintain freedom of movement rights with the EU has a whole, or it could negotiate with particular EU countries to maintain freedom of movement rights with them (though this, again, is probably politically unlikely). Under the latter scenario, only nationals of those EU countries with which the UK negotiates freedom of movement rights would be able to work in the UK without a visa, and vice versa. 

If the UK leaves the EU and does not negotiate to maintain freedom of movement rights, EU workers might be required to apply for visas under the UK Immigration Rules. UK nationals living in the EU would similarly have to apply for visas to work there. Subjecting UK and EU workers to the immigration requirements that currently apply to third country nationals would be costly to international employers. The costs of sponsoring a skilled worker plus two family members for 5 years in the UK is currently £6,652 and will rise to £11,652 when the Immigration Skills Charge comes into effect in April 2017. 

Low-skilled workers are unlikely to satisfy the eligibility requirements for UK work visas. Therefore shortages of low-skilled workers might result from a Brexit. Employers might face higher costs as they raise salaries to attract the labour that they need. 

EU-derived employment law will continue in effect in the UK unless and until it is specifically repealed by the UK government. 

We have written in more detail on the possible implications of a Brexit for UK immigration law here and on the employment law implications here.