Brexit negotiations continue while the world waits for news. Despite intense interest and speculation, outside observers do not know what the final agreement between the United Kingdom and the European Union will include.
Although there isn’t a clear understanding of what the international business landscape will look like after Brexit, companies can still plan for the future. One legal concept called acquired rights can help guide your understanding of the retained rights of workers and businesses after Brexit.
What Does “Acquired Rights” Mean?
A 2017 report by the European Parliament defines acquired rights as “subjective rights which had their origin under a certain legal system and are intended to remain in force in a different legal system from the original one.” Individual rights were protected in state succession cases in the past. For example, when the Soviet Union broke into multiple independent states, the Soviet citizens in each country did not need to apply for legal status in the new country; the new country simply acknowledged their rights.
However, there are situations when acquired rights may not be respected. This may be the case, for example, if a colony declares independence and then nationalizing certain industries or expropriating the property belonging to foreigners.
It concludes that legal rights are not preserved when those legal systems cease to exist unless they are protected under the new legal system. The authors write, “Rights of a public nature (or of a mixed, public/private nature) do not outlast a change of sovereignty or a succession of states or the termination of an international treaty.”
Hard or Soft Brexit
Many of the freedoms that EU citizens and UK citizens enjoy throughout the region will no longer be protected under EU law when the withdrawal comes into effect. When that happens, there are two options for a departure, a “hard Brexit” or a “soft Brexit.” This article on investor sentiment defines a “hard Brexit” as “no compromise on issues, including the free movement of people, the UK’s departure from the EU single market, and a trade relationship defined by the UK being outside the EU.” A “soft Brexit” will have some form of agreement with close ties between the EU and the UK. The same article notes that most observers believe that a “hard Brexit” is extremely unlikely.
Acquired Rights and Your Workforce
The question, then, is whether the UK and the EU will recognize the rights of each other’s citizens to continue living and working where they currently do. Currently, the UK and the EU’s laws remain in effect, so businesses can find ways to ensure that their workers can remain in the country in which they live.
The House of Lords European Union Committee published a similar report, Brexit: Acquired Rights, that sheds some light on what EU citizens are doing to ensure that they can stay in the UK after Brexit. The Citizens Directive of 2004, which was codified into UK law in 2006, provides for permanent residence status for anyone who lives in any member state for five years under three different situations:
- The person is employed or self-employed
- The person is economically inactive, has the means to support himself, and carries comprehensive sickness insurance coverage
- The person is a student, has the means to support himself, and carries comprehensive sickness insurance coverage
Because this law applies in both the EU and the UK, both groups should be able to apply for permanent residence status for their workers if they meet these conditions. The report also expresses concern for those who will have a difficult time meeting the above conditions, asking the government to ease restrictions to acquiring permanent residence status.
Outside of the five-year window, however, negotiations between the UK and the EU will determine the rights for each of their citizens in each other’s regions.
Acquired Rights and Your Business
Should a hard Brexit take place, real property rights should be respected. The rights of the EU economic region, however, will not be protected as an acquired right. The EU report declares, “The precedents found show that the notion of the maintenance of acquired rights beyond the end of the legal act that creates them is groundless.”
Now is the time to plan ahead to ensure that your business retains access to the markets you want. There are many factors that go into moving workers and offices to make sure that businesses that enjoy access to the single European market will retain access to both after Brexit. Some companies are considering moving workers from London to other European cities so they can have legal entities in both markets.
The uncertainty regarding the final conditions for Brexit is causing consternation for individuals and businesses who want to position themselves well after the UK withdraws. While some had hoped for the concept of acquired rights to protect them, most freedoms enjoyed now will need specific protections in British or European law to continue after Brexit.
Handle Uncertainty in Business Expansion with Ease
Businesses can keep an eye on the changing economic and legal landscape if operating, or planning to operate, in the UK. If you plan to hire in the UK, there are options outside of traditional foreign entity establishment. One option is International PEO (Professional Employer Organization), which is an agile way to employ workers in the UK simply and compliantly through an already-established presence. To learn more about this service, get in touch with our team today.