For our latest article on the impact of Brexit on your organisation, we’ve teamed up with leading law firm Sheridans to bring you practical advice on what to consider in your workforce planning. Thanks to partner Daniela Korn for writing this article; we hope you find it useful.
The deadline for Brexit has been extended to allow for it to take place at any point up to 31 October, mitigating the immediate threat of a no-deal Brexit. After all the debating of the how, what and when, it seems we are no closer to achieving clarity on these key questions. We, as a country, are in a state of uncertainty and limbo. Not ideal for business or the economy.
Workforce planning in these circumstances can feel daunting. It is therefore important to understand what we do know so far and consider how that needs to feed into your talent pipeline plans. In this article we will provide you with guidance on the key workforce considerations and what you can do to plan to minimise the impact for your organisation.
The UK Government has been clear that all EU nationals currently in the UK, even those without 5 years’ residence at the point of Brexit, will have the ability to continue living and working in the UK. However, all EU nationals (including those who currently hold Permanent Residence) will be required to register under the EU Settlement Scheme, which is a mandatory scheme.
Once an individual applies under the Scheme, they will be granted either Pre-Settled Status or Settled Status. If the individual does not have 5 years’ continuous residence when they apply, they will usually receive Pre-Settled Status. They can then apply to change this to Settled Status once they have 5 years’ continuous residence.
Settled Status is, broadly speaking, the equivalent of Indefinite Leave to Remain and therefore once granted, those individuals will not require additional immigration permissions to work in the UK. The deadline to apply under the Scheme will be 30 June 2021 (if we leave the EU with a deal) or 31 December 2020 (if there is no deal).
For organisations looking to retain their current EU staff, we recommend you ensure they are aware of the Scheme and understand the time frame within which they must apply. Failure to do so may result in that individual not having the necessary right to work in the UK.
The Settlement Scheme is a two-step process. The first step requires downloading the EU Settlement Scheme App. For now, only Android phones will work, although it may be compatible with iPhones from later this year – watch this space! The App uses NFC technology to read passport details from the built-in chip and requires the applicant to submit a ‘selfie.’ This part of the process can only be done via the App. The second step is to complete the application online by inserting personal details including National Insurance numbers and uploading documents where requested.
Initially a fee of £65 was to be payable per applicant, however, the Government has now waived that fee so all applications are free.
It’s natural to expect that employees may be nervous and unsure of how to complete the application. To help them through the process, organisations could hold working groups to support affected employees as they complete their applications – even through basic measures such as providing access to an Android phone for the application.
In the event of a deal, there will be an ‘implementation period’ which is expected to end on 31 December 2020 after which it will be too late for new EU nationals entering the UK to have the automatic right to settle here permanently under the Scheme.
In the event of a no deal scenario, there will be no implementation period. Free movement will end on 31 October 2019 (unless a new cut-off date is negotiated between Parliament and the EU), and a new immigration category will be introduced called EU Temporary Leave to Remain. The concept here is that new EU nationals coming to the UK after the cut-off date will be given 3 months initially to work and live here, after which they will be required to apply for a grant of EU Temporary Leave to Remain which will be valid for 3 years. This concept is sure to prove politically contentious and may be subject to change.
For now, organisations should watch developments here closely. It’s not yet certain whether they will benefit from building support mechanisms for incoming employees to gain EU Temporary Leave To Remain, but if we do leave without a deal and this new immigration category is implemented, helping EU nationals through could be a valuable activity.
Although there is uncertainty surrounding the date when additional immigration permissions may be required by EU nationals, not least because it is possible that Brexit may not occur, the UK is already affected. It is becoming less attractive to job seekers from the EU, notwithstanding that free movement can still be enjoyed. Page views of UK jobs by candidates in the 27 EU countries has been in steady decline since the referendum result in June 2016. The number of views continue to fall from 52% in the first quarter of 2018 to 47% in the first quarter of 2019.
Additionally, EU professionals migrating to the UK fell by 30% between 2016 and 2019. The result is that there appears to be a smaller talent pool from which to recruit, which in turn requires employers to consider how best to attract domestic UK talent. The solutions employed include offering higher remuneration packages to new recruits and giving salary increases to existing employees in order to retain them. Other non-financial approaches include encouraging people who have left the labour market to return, especially women post-maternity-leave, older workers and the self-employed. Flexible approaches to work that accommodate these groups’ lifestyle demands are required but will provide the organisation in turn with diversity and reputational benefits.
It’s important for employers to be aware so that they can budget effectively for the likely increase in cost to recruiting and retaining staff.
If Brexit (and it really is if at the moment!) happens, free movement will end. Consequently, the Government has indicated that there will be a level playing field approach to immigration into the UK. EU nationals entering the UK after Brexit (or the expiry of the implementation period in the event there is a deal), will be subject to the same rules as non-EU nationals. For EU nationals coming to work in the UK, that means sponsorship under Tier 2. Employers who are not currently sponsor licence holders will be required to obtain one in order to continue recruiting from the EU in the long term.
The current sponsorship rules for Tier 2 create significant bars to entry. There is a tight monthly cap on the number of Tier 2 sponsored workers who can enter the UK (20,700 in total per annum). Additionally, role and salary levels need to be assessed to determine whether a role is skilled enough to warrant sponsorship. There are also stringent rules surrounding advertising of the role prior to sponsorship to demonstrate that of the applicants for the role, there were no settled UK workers available or able to undertake the role, known as the resident labour market test.
The Tier 2 system in its current form will not be able to meet employer demand for talent once EU nationals are added to the equation. The latest figures are that there are 2.38 million EU nationals working in the UK. An annual quota of 20,700 restricted certificates of sponsorship under Tier 2 isn’t quite going to cut it.
The good news is that there are proposals to relax the current sponsorship rules, including removing the resident labour market test, quota caps and salary/skill level thresholds. However, the significant costs of Home Office fees are unlikely to change. Accordingly, whilst there will be a mechanism available to employers to employ EU nationals, it will be an expensive one.
Employers who are alive to the issues facing their talent pool, both in terms of availability and immigration requirements once Brexit has happened, will be better placed to take a proactive approach to workforce planning. Brexit will have an impact on recruitment strategy and costs and so it’s important this is factored in early. Whilst this article provides the headline issues, if you have any queries regarding the immigration impact of Brexit, please contact the Business Immigration Group at Sheridans.