The EU Settlement Scheme – what employers need to know

With the end of free movement looming, individuals who are citizens of the EU, the EEA or Switzerland will have to apply to the UK Home Office’s EU Settlement Scheme if they wish to retain their residence rights after 31 December 2020.

Here are some key facts for employers compiled by our Tax Partner, David Gillies:

• If you are an employer and you have employees who are citizens of countries in the EU, the EEA or Switzerland, those employees need to apply to the EU Settlement Scheme for either “settled” or “pre-settled” status if they wish to retain their residence rights after the end of December 2020. Applications under the scheme must be made by 30 June 2021 at the latest.
• It is important for employees to be aware that, even if they were born in the UK they will still need to apply under the scheme if they are not a British citizen.
• Employees who already have indefinite leave to enter the UK, indefinite leave to remain in the UK or who have British or Irish citizenship still need to use the scheme, but the application process is different.
• Settled Status
  In order to qualify for “settled” status, the employee must be living in the UK by 31 December 2020 and must have a continuous 5 year period of UK residence. For these purposes a year of UK residence means at least 6 months in any 12 month period spent in the UK. Achieving “settled” status will give the employee indefinite leave to remain in the UK and the right to apply for UK citizenship.
• Pre-Settled Status
  An employee who does not qualify for “settled” status should qualify for “pre-settled” status. In order to achieve “pre-settled” status the employee must be living in the UK by 31 December 2020 but does not have to have 5 years continuous residence. “Pre-settled” status grants the individual limited leave to remain. “Pre-settled” status is granted for 5 years but the individual can reapply to change their status to “settled” status once they have accrued five years of continuous residence.
• If the employee does not qualify for either “settled” status or “pre-settled” status because he or she was not living in the UK at 31 December 2020, the new points-based immigration system will apply from 1 January 2021.
• The points-based immigration system will also apply to any employees who could have qualified for “settled” or “pre-settled” status but failed to do so before 30 June 2021.

Employers need to be aware of the EU Settlement scheme and will need to ensure that key staff who are citizens of the EU, the EEA or Switzerland will qualify for “settled” or “pre-settled status” and have applied by 30 June 2021. There is no requirement for them to wait, they can apply now. In fact, it may be a good idea for them to do so as the Home Office admits that the scheme is currently prone to delays due to Coronavirus measures.