GLOBALISATION has increasingly become the byword for ambitious businesses of all sizes with the names of worldwide cities lighting up the departure and arrival boards of airports, including in Scotland. In Europe these opportunities have been based on freedom of movement and access to a talent pool that can travel and work here easily. But things have changed – and suddenly.
One of the most significant results of the 2016 Brexit referendum was the realisation that stricter regulations on immigration would inevitably follow.
However, the withdrawal agreement negotiated by the previous UK Government included a Transition Period until December 31st, 2020, meaning that the changes in relation to freedom of movement would not have a real impact until the end of 2020.
Boris Johnson’s accession to 10 Downing Street altered the Government’s position, with a ‘no-deal’ Brexit being talked about as being perhaps the likeliest result. Employers who had been hoping for some post-Brexit adjustment time, at least allowing them to get to grips with the changes and challenges that might impact them, now face a precipitate exit from the EU in less than two months. “Employers are increasingly – and urgently – focused on the ‘no-deal’ Brexit scenario. For many months they have been planning in the hope that there would be a deal with an implementation period and minimal changes until the introduction of the future immigration policy which was being developed,” says Elaine McIlroy, an employment and immigration partner at law firm Brodies.
This would give people time to get to grips with the new ‘future skillsbased immigration system’ (which will mainly focus on the recruitment of intermediate and highly skilled migrants) due to come into force on January 1st, 2021,” she says. ‘Some employers assumed that the flow of EU nationals into the UK would continue during the Implementation Period and that the effects of tighter immigration rules wouldn’t be felt in the immediate future’.
Elaine McIlroy, an employment and immigration partner at law firm Brodies.
However, with a real prospect of ‘no-deal’ on October 31st there is an increasing focus on what is going to happen to those EU nationals who arrive from November 1 onwards, and the effect that will have on business here. “With a deal and an implementation period the situation would not change to a significant extent immediately; whereas without a deal, the UK Government has announced that freedom of movement as it currently stands, will abruptly end.
“Instead of having an orderly implementation period during which there would be little impact on the ability of EU nationals to come to work in the UK, recent developments are creating increased uncertainty. We are hearing reports from employers who were hoping for an ordered, managed process with nothing substantial changing in the interim, but now are increasingly focused on what is going to happen on Oct 31st,” says McIlroy. ‘They want to understand what the immediate impact will be for their workforce and their recruitment plans’.
In the case of a no-deal Brexit anyone who is an EU citizen living in the UK prior to October 31st, 2019 can apply for pre-settled or settled status. They will either be granted settled status if they have lived in the UK for at least five years- indefinite leave to remain- or if not, they can be granted a right to continue to live in the UK known as pre-settled status. Once they have lived in the UK for a continuous period of five years, and provided they meet the other criteria, they would then qualify for settled status.
Those arriving after October 31st will have more limited rights. It is currently anticipated (although further changes may yet be announced) that they will be subject to a ‘European Temporary Leave’ scheme which will give EU, EEA (European Economic Area) and Swiss citizens permission to stay in the UK for up to three years, after which they would either have to return or qualify for some other type of visa arrangement. “That would have a far greater impact on employers and EU citizens, in the short term, compared to having a transition period.
It is likely that the temporary nature of the permission to work may make it significantly less attractive for EU citizens to come to the UK. But at the moment, and until at least October 31st, they can come to the UK and have the option to settle here in the longer term,” says McIlroy.
The prospect of leaving Europe with no deal may have increased recently, but she says that many employers had already been seeing a significant dip in EU nationals applying for jobs and that Scotland is already facing the accompanying recruitment challenges.
She explains: “Many of these jobs where employers are struggling to recruit are low skilled so they are not eligible for sponsorship and the rates of pay would make sponsorship for a Tier 2 visa prohibitively expensive for some – so the impact on recruitment has already been felt by certain sectors.”
McIlroy adds that while the UK government announced that they are looking at making ‘improvements to the previous government’s plans for a new immigration system’, employers have little idea about what these changes will be. “It is difficult for employers to make plans for the future if the goalposts are moving and if there is significant uncertainty about what the rules will be”
There is also the question of whether the Home Office and the infrastructure can deal with this rapid change of plan with a no-deal Brexit. “If the implementation of the most significant changes to immigration policy were not to take place until 2021 there would be a long run in time to implement those changes,” she says. “If there is a no-deal Brexit and if there are to be further changes, that would be difficult for employers and EU citizens to deal with those changes with little notice.”
Uncertainty, she says, is a key concern for employers who have been used to doing business all across Europe. “It has been easy to move employees around between say the UK and Italy or Spain with minimum inconvenience and cost. That is clearly going to change. “Under the new settlement scheme, if EU citizens who have pre-settled status leave the UK for an extended period of time, they may risk not qualifying for settled status / permanent status.
Things will become more restrictive and employers and employees must plan for that and be aware of the implications. “One of the issues is that while there has been an announcement that there may be some further change to the rules in the case of a no-deal Brexit the implications of that have not been adequately spelled out, which is understandably a concern for our clients that we are attempting to alleviate with practical guidance and advice on how to address circumstances that are, at the moment, changing rapidly.”
Slim pickings for labour market after Brexit.
THE proposals for the new future skillsbased immigration system were announced back in December 2018. The future system is still subject to consultation. It is intended to come into force on a phased basis from January 2021.
Some have welcomed the fact that in the future the types of jobs that will be eligible for sponsorship by employers will include medium as well as highly skilled jobs (whereas the current rules generally cover highly skilled jobs only). But what about lower skilled/lower paid jobs which also face recruitment shortages?
A Scottish Government report from January 2019, ‘Brexit and businesses: sectoral impact analysis’ commented that EU migrants make up a notable share of the workforce in a number of sectors in Scotland – the proportions of EU citizens are not evenly spread - meaning that cutting off the supply of EU nationals will impact some businesses more than others. Certain sectors suffer more from recruitment shortages than others in any case- due to the nature of the work, rates of pay and other factors. For example, it found that Scottish meat processors currently have a fifth less staff than they need– that is a very substantial number of vacancies at any time. Those shortages exist before expected changes to immigration policy that will make it more difficult to access the European labour market.
From anecdotal evidence, companies in this sector have also reported that they experience relatively high rates of turnover meaning that it is important to be able to replace leavers regularly with a new labour supply.
So will the UK Government’s proposals on future immigration policy cater adequately for businesses that need to hire lower skilled workers? The current proposals for the future immigration system include a ‘temporary short term worker’ immigration route for lower skilled jobs.
However, there are a few limits on this route that employers need to consider. This is a transitional arrangement – it is not intended to be a permanent feature of the system. In addition, although workers will be able to come to the UK for a period of up to 12 months, they will have to leave at the end of that period.
A ‘cooling off’ period will then apply meaning that they have to leave the UK for 12 months before they can return.
Those workers will not be able to bring dependants with them which may make the route less attractive. It is likely to be available only to workers from certain ‘low risk’ countries. It will therefore be vastly different from the current system.
Will this temporary worker scheme ‘help’ those in sectors such as meat processing? It may to an extent. But feedback has suggested that it will have limited value. Employers will be faced with training staff to do a job for a maximum period of 12 months.
In addition, some are sceptical that the limited period of 12 months stay in the UK will mean that fewer workers will want to come to the UK for such a short period of time.
For more information and advice please visit www.brodies.com