EU Settlement Scheme: Generous but flawed?

A recent High Court judicial review ruling, in the case of R (Independent Monitoring Authority for the Citizens’ Rights Agreements) v Secretary of State for the Home Department [2022] EWHC 3274 (Admin), has deemed the EU Settlement Scheme (EUSS) to be unlawful on the basis that it is incompatible with the EU-UK Withdrawal Agreement. The Home Office is intending to appeal. However, the judgement is highly significant as it could affect the rights of almost 3 million pre-settled status holders in the UK.

What is the EUSS?

Brexit brought many changes to the UK. But nothing impacted people more on an immediate practical level than the restriction on the freedom of movement. EU citizens were no longer allowed to work and live in the UK without restriction and vice versa.

One of the main purposes of the Withdrawal Agreement was to protect the rights of several million EU citizens who were already living in the UK, and those of British citizens already living in the EU.

The British government implemented the citizens’ rights element of the Withdrawal Agreement by introducing the EUSS. The EUSS requires EU citizens who were living in the UK before the end of the Brexit transition period on 31 December 2020 to apply for a new status. The status they get depends on how long they have lived in the UK:

1. EU Citizens who have lived in the UK for 5 continuous years are granted settled status, which is a special type of indefinite leave to remain.
2. Those who started living in the UK before 31 December 2020 but have not completed 5 years in the UK are granted pre-settled status, which is a temporary status for 5 years. Once they have completed 5 years in the UK they can apply to upgrade to settled status.

It is widely accepted that in some ways the EUSS is more generous than required by the Withdrawal Agreement because the EUSS is based on physical presence in the UK. In contrast, the Withdrawal Agreement protects the rights of EU citizens who were exercising a right of residence in the UK under EU law, which means that in most cases they had to be working, studying or self-sufficient. Physical presence alone is not sufficient to be protected by the Withdrawal Agreement, but the EUSS allowed an EU citizen to get pre-settled status regardless of whether they had been working or studying or been self-sufficient. Around 2.7 million people have been issued pre-settled status to date according to Home Office statistics.

What questions did the court consider?

The main parties in the judicial review proceedings were the Independent Monitoring Authority (IMA), an independent publicly-funded body which was set up to protect the rights of EU citizens in the UK after Brexit, and the Home Office, which operates the EUSS. The court answered two separate questions.

The first question:

The first question was about the rights of pre-settled status holders who fail to upgrade to settled status before the expiry of their pre-settled status.

The Home Office’s position was that if a person with pre-settled status fails to apply for settled status (or in certain cases for an extension of their pre-settled status) before their pre-settled status expires they are no longer be protected by the Withdrawal Agreement. They become an overstayer in the same way as anyone else who stays in the UK after their visa has expired. This would have a drastic impact on those individuals, for example meaning they would be committing a criminal offence and become subject to what used to be called the “hostile environment” that takes away many rights to a normal life, such as the right to work, rent a home or open a bank account.

The IMA’s position was that EU citizens who exercised a right of residence in the UK before the end of the Brexit transition period and who have been granted pre-settled status under the EUSS do not lose their existing rights under the Withdrawal Agreement and cannot be treated as overstayers if they fail to upgrade to settled status.

The court agreed with the IMA.

This is certainly a positive development for people with pre-settled status. A person with rights under the Withdrawal Agreement will retain these rights at the end of the 5 year period even if they do not upgrade to settled status. Considering the scale of pre-settled status holders, it is inevitable that some of the 2.7 million will miss the deadline to upgrade to settled status for various reasons.

The second question:

The second question was about the acquisition of permanent residence. Permanent residence is an EU law status which is roughly equivalent to settled status under the EUSS. An important difference is that under EU law permanent residence is acquired automatically when a person has exercised a right of residence for 5 years. There is no need to apply for it.

The current version of the EUSS divides EU citizens into two groups: those with pre-settled status (temporary status) and those with settled status (permanent status). It requires a pre-settled status holder to make a second application after 5 years of temporary residence to be granted settled status.

The IMA’s position was that EU citizens covered by the Withdrawal Agreement cannot be divided into two groups in this way and that only one application is required.  Having been granted a residence status (in this case pre-settled status) there is no need to make a separate application for the equivalent of permanent residence.

The court again agreed with the IMA.

How can the EUSS be fixed?

If the High Court’s judgment is not reversed on appeal, what can the Home Office do to fix the EUSS?

Chris Benn, in his article in the Free Movement blog, suggested that the Home Office can solve this issue by “chang(ing) the database entries to permanent residence from temporary residence”. This would certainly solve the problem but it seems unlikely that the Home Office would make such a benevolent move.

In theory, the Home Office could introduce a policy under which only those EU citizens who were exercising a right of residence under EU law before the end of the transition period and continue to do so – and who are therefore protected by the Withdrawal Agreement – are treated as having a continuing right of residence beyond the expiry of their pre-settled status. But this would have huge practical problems because the current version of the EUSS makes no attempt to separate EU citizens who are protected by the Withdrawal Agreement from those who are not.

A less welcome possibility is that the Home Office removes the expiry dates from pre-settled status but tries to make life difficult for people whose pre-settled status was granted more than 5 years ago. For instance, after 5 years they might be required to make a fresh application for an updated status if they want access to share codes which are needed to prove their status to employers and others – for right to work checks, right to rent checks and so on. An updated status may be needed if the person wishes to apply for naturalisation as a British citizen.

In this scenario, by failing to apply for an updated status they would not become overstayers but they would run into practical problems. This would be similar to the problems faced in the past – while the UK was still in the EU – by non-EU family members of EU citizens. In many cases they had an automatic right of residence but they did not always have a document to prove it.

What does the judgment mean for pre-settled status holders?

The first people who will potentially be impacted by this judgement could face problems in August 2023 as the first pilot phase of the EUSS scheme opened in August 2018.

It is too soon to assess the full impact of the judgement. There is no immediate effect as we await further developments in this area pending the Home Office’s appeal to the Court of Appeal. However, we can expect major changes to the EUSS if the judgment stands in the higher courts. 2023 promises to be a fascinating year to track the continuing impact of Brexit. 

Update on 20 February 2023:

The Home Office has now decided not to appeal the High Court decision deeming the EU Settlement Scheme to be unlawful.

This is good news for the 2.7 million pre-settled status holders in the UK. Albeit, the Home Office and IMA are still encouraging pre-settled status holders to apply for settled status as soon as they are eligible, “so they can obtain secure evidence of their right of permanent residence in the UK.” We strongly advise the same as we await a detailed update on the implementation of the judgement by the Home Office.

FURTHER INFORMATION

If you have any questions regarding this blog, please contact Kim Vowden or a member of the immigration team.

 

ABOUT THE AUTHOR(s)

Kim Vowden covers all areas of business immigration. He has extensive experience of advising companies in the finance, media and technology sectors. He has a particular interest in European free movement law and in the implications of Brexit for EU citizens living in the UK, and for their employers.