The United Kingdom (UK) and the European Union (EU) have finally reached a post-Brexit trade deal. The UK left the EU on 31 January 2020, but remained tied to the EU during a transition period until 31 December 2020.
As of 1 January 2021, the UK is officially a third party to EU dealings. But what impact will the deal have on people strategy, employee benefits and insurance?
Immigration system post-Brexit
A new immigration system was established by the UK on 1 January 2021, to unify the immigration regime of EU and non-EU immigrants.
The rights of EU citizens currently living and working in the UK remain the same until 30 June 2021. This date may be extended as a result of COVID-19 outbreak. EU citizens may apply for the EU Settlement Scheme and qualify for settled or pre-settled status to continue living and working in the UK after 30 June 2021. A minimum of five year’s residency is required to qualify for the settled status and less than five years for the pre-settled status. Similarly, under the EU Settlement Scheme, UK citizens living and working in the EU will need to adjust their immigration status by 30 June 2021.
Employers won’t be allowed to require EU citizens to show their status under the EU Settlement scheme until 30 June 2021, or longer if extended. However, UK employers might want to share with their EU, EEA, and Swiss employees working in the UK the EU Settlement scheme employer toolkit prepared by the UK government to ensure their employees change their status by 30 June 2021.
From 1 January 2021, UK citizens moving to the EU and EU citizens moving to the UK are subject to each country’s immigration regime. Employers based in the UK are required to have a sponsor license to be able to hire EU, EEA and Switzerland citizens. A sponsor license is not needed to hire Irish citizens and individuals with settled or pre-settled status under the EU Settlement Scheme.
The EU has agreed to add the UK to the EU’s list of visa-exempt countries. Therefore, UK citizens now have the right to travel to the EU for up to 90 days without a visa within any 180-day period. However, UK citizens will need to ensure they have at least six months left on their passport. That passport will also need to be less than 10 years old even if it has six months or more left.
The data flow between the EU and the UK will continue on the current basis for up to six months until the EU issues a decision validating the adequacy of the UK law to protect the personal data rights of EU citizens. The “adequacy decision” is expected to be positive as the UK applies the General Data Protection Regulation (GDPR). Once the decision is in force, UK employers will be required to put in place standard contractual clauses and transfer tools as required for all non-EU countries.
Most UK employment law derives from the EU, which includes data protection regulations, working time, holidays, holiday pay, parental and maternity leave, TUPE (Transfer of Undertakings), agency workers, part-time and fixed-term employees, collective redundancy, and some anti-discrimination regulations. All legislation remains in full force unless amended or repealed by the UK government. However, employers need to be aware that the interpretation of EU-derived UK legislation will diverge in the future from other EU countries since the UK is no longer required to align its legislation with EU Court of Justice (EUCJ) decisions.
Insurance and employee benefits
Social health insurance
European Health Insurance Cards (EHIC) issued to UK citizens before 31 December 2020, will remain in force until their expiry date. These cards cover emergency care as well as maternity and preexisting conditions and enable EU nationals to receive treatment on the same basis as the citizens of the EU country they are visiting.
Once the EHIC expires, UK citizens and residents (not insured by an EU country) traveling to the EU can apply for the UK Global Health Insurance Card (GHIC). These cards offer the same coverage as the EHIC and cover only public medical healthcare.
EU nationals who were living in the UK before the end of 2020 were able to continue using the UK National Health Services for their healthcare while resident there. EU nationals visiting the UK from 1 January 2021, can access UK healthcare using their EHICs.
Private health insurance
UK private health insurance does not normally cover care outside of the UK unless the coverage includes an international coverage extension. Where reimbursement for overseas treatment is offered, terms and conditions remain unchanged as there is no distinction amongst territorial jurisdictions (that is, all territories outside of the UK are considered overseas).
Employee benefits and travel insurance
EU employees working in the UK can be covered under a UK sitused travel insurance policy. Eligibility for coverage is based on being away from the country of residence and not related to the country of citizenship.
The GHIC is not an alternative to travel insurance as it does not cover any private medical healthcare or costs such as being flown back to the UK or mountain rescue in ski resorts. Most Control Master Policies (CMP) either have the Freedom of Services contract sitused outside the UK or have permission from the EU to continue to utilize the UK paper and offices as a branch of an entity based in the EU. CMPs can still be written outside of the UK but the EU element should be covered under the EU entity of the insurer.
In cases where business travel accident risk is covered by a non-admitted policy, Brexit has no effect on coverage.
Life and disability
UK life insurers do not routinely cover non-UK individuals on UK insurance programs. Exceptions are permissible where an employee based outside of the UK is working for a UK business on a UK employment contract; otherwise coverage should generally be segregated. Any coverage for overseas individuals should be reviewed to ensure that the cover remains valid.
When a personal accident policy is written out of the UK to an EU policyholder, this would need to be addressed and redomiciled separately within the EEA and UK.