Immigration and jobs will continue to dominate UK politics. They were a major consideration in many voters’ minds when considering how to vote in the Brexit referendum on 23 June 2016. The legal outcomes from the vote to leave will not become clear for several years, but the broad possibilities are taking shape.
Below Vikki Wiberg, Senior Counsel in Taylor Wessing’s Immigration Team with partner Sean Nesbitt, considers some practical dos and don’ts for HR Managers following the referendum to assure people in a time of uncertainty.
How has Brexit impacted EU workers in the UK?
It is business as usual. Nothing is going to change immediately. The UK is and will remain a member of the EU – with EU and British citizens retaining the automatic right to work in any EU country without immigration permission. This will change when the UK has left the EU. That process should take at least two years from the point that the UK gives formal notice to the EU under Article 50 of the Treaty on the European Union on current estimations this will be Autumn 2018 or later.
It is expected that transition arrangements will ensure that EU citizens who are in the UK when the UK departs Europe will have the opportunity to confirm their right to live and work in the UK. The mechanics to achieve this will be hammered out during the transition negotiations.
As immigration was a major issue in the referendum debate, it is likely that there will be pressure from the electorate to limit inbound immigration following exit. Various routes could be used. A Norwegian style model (i.e. accepting continued right of free movement in return for free trade with Europe) may not be sufficient to meet the electorate’s concerns. Another option could be limitation of the right of free movement to a smaller number of countries in Europe, or alternatively a lot of time consuming negotiation of deals with specific countries.
If freedom of movement is not preserved, the Government will need to introduce working restrictions for EU nationals after the UK’s departure from the EU. It is not known what form restrictions would take. It is possible that the UK could extend its existing points-based system (“PBS”) to include EU citizens as well as non-EU citizens under the currently frozen Tier 3.
People often talk about following “the Australian model”. This is somewhat misleading as we have already done so with the PBS. The model does not operate to limit low-paid inbound migration to Australia – it operates to permit the influx of large numbers of lower paid migrants. So there are current models for us to look at, but none provides any obvious easy route to reduced migration.
This all sounds complicated. Can’t I just stop hiring EU citizens?
Currently there are no changes to the rights of European nationals to live and work in the UK. You can continue to recruit EU citizens to work for your business in the usual way. It is not necessary to alter your recruitment model. Indeed deciding against a prospective employee on the grounds of their EU race or nationality could lead to discrimination claims, as well as adverse publicity. It is not possible to hire UK citizens in priority to EU citizens on the grounds above.
Some of my team come from Germany and are feeling unsettled. Can I do anything to reassure them they can stay in the UK?
Yes! EU citizens who have spent 5 or more years working, studying or are financially self-sufficient in the UK may be eligible to apply for permanent residence status (“PR”). Holders of PR will be taken outside of immigration control, which means that their right to remain the UK will not be affected by the UK’s future departure from the EU.
Any EU citizens who will have spent 5 years in the UK during the transition period will also be able to apply for PR before the exit process is completed. EU citizens who hold PR may also be able to apply for British citizenship 12 months after attaining PR. Before applying for citizenship however, do advise your employees to take advice on the possible impact on their current citizenship as well as tax status.
People do not have to make these changes yet, but may choose to do so for peace of mind and to preserve their options and make a future decision easier. EU citizens who have not spent 5 years in the UK can now apply for an EEA registration certificate residence card which will demonstrate that they are legally resident in the UK. This may also assist in an application for PR at a later date.
Applications are submitted to the Home Office for consideration by post and cost £65 per person. The processing time is currently around 6 months and, we assume, will only increase. We recommend you advise any of your staff who are considering applying for a visa to submit their applications as soon as possible.
Can I do anything to protect the business in the future?
Any new immigration rules applicable to EU citizens will depend on the outcome of the exit negotiations and any new trade arrangements put in place. As mentioned above, there could be an extension of the current PBS. Currently this applies to high skilled workers performing graduate level roles, with UK market rate minimum salaries. Studies show that most EU workers already in the UK would not meet those visa conditions. A requirement for more of your UK based workforce to arrange visas will involve more red tape, cost and planning. It may also restrict access to the same size of talent pool that is currently open to employers.
In addition to assisting existing staff to where possible obtain PR, we recommend you think about your future resourcing for roles and possible training needs for your existing resident workforce to ensure a spread of skills. This will particularly be the case for companies whose workforce has a large proportion of EU nationals, or workers who might not meet the skills test set by the Home Office under the PBS.
I have heard that the Home Office is auditing more businesses. Is that true?
The Home Office is issuing increasing numbers of civil penalties against companies that are found to be employing individuals without leave to work lawfully in the UK. This covers reputable business in retail transport, hospitality, and services across these, as well as food production and agriculture. We think that this Home Office approach will continue, as well as the stepping up of auditing of businesses and removal of sponsorship rights for employers that do not comply with the immigration rules. So HR teams will need to have an increased focus on the compliance aspects of managing an international workforce.
Voters are customers and clients. For as long as immigration is a political hotspot, there will be an increased need for UK-based businesses to show they comply with immigration rules to protect their brand with customers, their contractual relationships with business counterparties, and their standing with the regulators who will determine future applications. “Tip-offs” are increasing, and businesses face risks of consumer campaigns against non-compliant practice (like the social media tax campaigns which emerged after the financial crash).
For all employers but especially those in sensitive sectors – such as financial services, care homes, hospitality, retail, engineering and construction – we would advise you to undertake an audit of your current employee visa status and consider future plans.
What other immigration changes do I need to be aware of?
The Immigration Act 2016 builds on the Government’s manifesto promise to reduce net migration to the UK and creates new sanctions against “rogue” employers.
A number of key provisions in the Act will take effect from 12 July 2016, including laws making it easier convict businesses employing someone without the right to work lawfully in the UK. Currently employers must have actual knowledge of illegal working to be prosecuted. From 12 July the Home Office will be able to prosecute employers who “had reasonable cause to believe” that an employee did not have permission to work lawfully. This is a much easier test for the Home Office to meet. Conviction penalties will also increase from the current 2 years’ to 5 years’ imprisonment.
There is also a direct business sanction: the Act grants the Chief Immigration Officer the power to close business premises for up to 48 hours where illegal working is suspected or the employer cannot provide evidence that right to work checks have been conducted, or if the employer has had previous infractions of the immigration rules. So this means that hotels, factories and stores could be shut at busy times.
The Act will also introduce other changes in the future, such as an immigration skills levy of up to £1,000 per visa year against employers who sponsor migrant workers under Tier 2 and the loss ofNICs allowances for immigration infractions (see here).