The paper also confirms that the UK is seeking "reciprocal arrangements" on citizens' rights, healthcare and social security for UK citizens living in the EU, but that no such arrangements have as yet been finalised.
Immigration law expert Louise Shaw of Pinsent Masons, the law firm behind Out-Law.com, said that the paper would make "uncomfortable reading" for employers, who would be left facing restrictions on recruiting EU employees much earlier than currently expected. The draft Withdrawal Agreement between EU and UK negotiators allows EEA citizens to work in the UK until the end of the planned implementation period on 31 December 2020, and extends eligibility for pre-settled status to EU citizens living in the UK by that date.
"The government has stated that in the event of no deal that only EU employees resident in the UK by 29 March 2019 will be able to work and live here in accordance with the arrangements that are set out in the draft Withdrawal Agreement," she said. "This brings forward the cut-off date from over two years away – 31 December 2020 – with an agreement, to just over three months away without a deal."
"Employers and their affected employees may be hoping that the paper has been prepared to ensure that a no deal Brexit is less likely," she said.
Some EEA citizens living in the UK have begun applying for settled status under a pilot of the UK's settlement scheme, which will be fully operational by 29 March 2019. Settled status will be available to EEA citizens who have already been living in the UK for five years, while those who have not yet met the five-year residence requirement may apply for 'pre-settled status' and convert this to full settled status once they have been living in the UK for five years.
The policy paper states that only those EEA citizens resident in the UK by 29 March 2019 would be able to apply for settled or pre-settled status. They would have to do so by 31 December 2020, rather than by the 30 June 2021 deadline that would apply if a formal implementation period is agreed. There would be no right of appeal by way of a preliminary reference procedure to the Court of Justice of the EU (CJEU), which would have no jurisdiction in the UK; while relevant family members intending to join the person with settled status in the UK would have to do so by 29 March 2022.
The paper does not propose any interim arrangements for EEA nationals until the introduction of the "new immigration system" from 1 January 2021. The UK government is expected to publish plans for this new immigration system shortly, including a response to recent recommendations by the independent Migration Advisory Committee (MAC).
"This means we do not know whether there will be a relaxation of the Tier 2 sponsorship rules to enable recruitment at lower skill levels, as proposed by the MAC, until then," Shaw said.
"The paper also importantly shows that there are no guarantees in place to protect UK citizens working and living in the EU. There is just a stated hope that other EU states will provide reciprocal arrangements. This will be of particular concern to those UK citizens working in the EU for UK employers," she said.