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Brexit: Implications for Norwegian employers

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Boris Johnson has confirmed that the UK will leave the EU on 31 October 2019, regardless of whether the Withdrawal Agreement between the EU and the UK is approved. The UK's withdrawal from the EU will affect Norwegian and British employers with employees working in Norway or travelling between Norway and the UK.

The situation today

Under the European Economic Area (EEA) Agreement, British citizens have the right to enter, live and work in other countries of the EEA, including Norway. The Agreement guarantees the same rights for Norwegian citizens in the UK.

If the Withdrawal Agreement is approved

Norway has together with the other EEA/EFTA states reached a Separation Agreement with the UK, which applies in the event that the EU and the UK approve the Withdrawal Agreement. The Separation Agreement largely mirrors the Withdrawal Agreement between the EU and the UK in areas relevant under the EEA Agreement. The Agreement establishes a transition period that will apply until 31 December 2020, which is extendable once and for a period of up to two years. During the transition period, the UK will be treated as a Member State of the EEA. This means that the rules regarding freedom of movement will remain in effect, so that British citizens may travel to Norway without a visa and are encompassed by the registration scheme for EEA nationals.

Further, the Separation Agreement states that British citizens and their family members who were legally residing in EEA/EFTA states at the end of the transition period, will be able to continue to enjoy broadly the same rights with regard to the rules regarding freedom of movement including the right to live and work in Norway.

The Separation Agreement does not govern the rights of British citizens who want to live and work in EEA/EFTA states after the expiry of the transition period. These citizens will therefore be subject to the same rules as citizens of countries outside the EU/EEA (third country nationals).

If the UK leaves the EU without a withdrawal agreement

If the Withdrawal Agreement between the EU and the UK is not approved, the UK's withdrawal will be immediate from 31 October 2019 without any transition period. The UK will no longer be encompassed by the rules regarding freedom of movement, and British citizens are in principle subject to the same rules as third country nationals with regard to the rights to entry, residence and work in Norway.

Norway has together with the other EEA/EFTA states reached a "No deal"- Agreement with the UK, that will enter into force in the event that the UK leaves the EU without a Withdrawal Agreement. This no deal agreement ensures that British citizens and their family members who reside and work in the EEA/EFTA states according to the rules regarding freedom of movement on the exit day, will retain broadly the same rights after the UK's withdrawal.

The Agreement does not govern the rights of British citizens who want to live and work in EEA/EFTA states after the exit day, and they will therefore be subject to the same rules as third country nationals.

Residency requirement for Norwegian limited liability companies

According to the Norwegian Private Limited Liability Companies Act and the Public Limited Liability Companies Act the managing director and at least half of the board members must be either resident in Norway or EEA nationals resident in an EEA state. The Norwegian government has adopted transitional rules that apply in the event of a no-deal Brexit, which will be in effect until 31 December 2020. The rules ensure that British citizens resident in the UK or an EEA state, and EEA nationals resident in the UK are exempted from the residency requirement. The transitional rules only apply to managing directors and board members who were appointed to such positions prior to the exit day.

Necessary actions

Employers should get an overview of employees that may be affected by the stricter regulation following Brexit, and evaluate their staffing situation depending on a deal or no deal Brexit. The companies should also evaluate which measures are considered necessary with regards to their board composition and the managing director.

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