The true cost of hiring from the EU

Michelle Tudor outlines how much businesses will now have to pay when taking on workers from the bloc, and the importance of starting the process early

Since 1 January 2021 and the end of the transition period following the UK’s exit from the European Union, businesses have been navigating uncharted waters in how they engage with countries, companies and customers on the other side of the divide.  

One area where the change in dynamic is felt acutely is in recruitment – now a deeply complex process where, previously, free movement made it essentially seamless.

Three months in, most employers are aware that hiring from the bloc is more arduous and anticipate some increased cost and compliance requirements, but there is still a surprising level of shock among business leaders when they embark on the process and appreciate what it entails. 

What’s the cost?

As is so often the case, the key concerns for businesses are time and money. 

To follow the route of the worker and temporary worker system, businesses must first have a sponsor licence in place, in which they must demonstrate that they have the HR infrastructure to comply with sponsorship obligations. It can take up to eight weeks for an employer to receive their sponsor licence.

With a sponsor licence, businesses can then apply for and issue a certificate of sponsorship. The process requires employers to provide detailed documentation verifying the role meets the necessary skills requirement and pays a salary of at least £25,600 or the going rate for the job offer. 

Only upon receipt of the certificate of sponsorship can a candidate begin their application, which takes at least a further three weeks. This, combined with the average amount of time it takes to fill a position – 23 days in the UK – means businesses are now looking at a wait of almost four months before a new employee can start working for the company. This could be even longer, depending on the notice period the worker must serve at their current job.

Recruiting from the EU post-Brexit also comes with a heavy price tag. The sponsor licence application costs £536 for smaller businesses and charitable organisations and £1,476 for medium to larger-sized businesses. To be defined as a small business a company must meet at least two of the following criteria: have an annual turnover of £10.2m or less; have total assets worth £5.1m or less; or have 50 employees or fewer. All other businesses are classed as medium to larger. 

For every candidate to whom a business issues a certificate of sponsorship, the employer must pay a further £199 to the government. Additional fees for the employer include an immigration skills charge of up to £5,000 per employee, while the individual will have to pay a visa application fee of up to £1,220 plus the NHS surcharge of up to £3,120. 

Overall, employers of larger businesses can be looking at a cost of up to £10,000 to employ one person for five years. This is before they even start to consider the costs normally associated with recruitment and paying the employee’s salary and benefits.

What should employers do about it?    

The best advice for businesses is to start planning now, even without immediate plans to employ from the EU. Getting a licence and having the internal processes and personnel in place to manage an international hire could save valuable time later.

This also goes for communication with candidates. The information applicants must provide for their immigration application is incredibly detailed and includes sharing family background, travel history and a required level of English. Ensuring applicants know what’s required early, even before a position has been formally offered, reduces delays as they can start sourcing the information during the recruitment process, rather than leaving it until the last minute. This would also help to flag early any potential issues that may mean their immigration request is denied.

Starting the process early gives the employer time to consider all its options before going down the sponsorship route. A number of other avenues are available, if a candidate is eligible, that could reduce the time and cost of recruitment significantly. These include a family visa if the candidate has a spouse or partner of a British citizen or someone who already has the right to live in the UK, and the youth mobility scheme, which gives those aged 18-30 from certain countries permission to live and work in the UK for up to two years.

Life is tough for businesses at the moment. And while the light at the end of the Covid tunnel is becoming clearer, Brexit and the long-term effect it will have for firms is still to be fully revealed. One thing that is certain is that hiring from the EU is a more difficult prospect now than it used to be, and companies looking to do so should start the process early. 

Michelle Tudor is senior associate solicitor at Moore Barlow