Long reads

Brexit: who's got the answers?

23 Aug 2018 By Eleanor Whitehouse

With opinions on the EU exit flying in from all sides and just six months to go, it’s tempting to feel despairing. But there are some things businesses know for sure (albeit with a few caveats)

Like the miners’ strike and the Iraq War, Brexit has become the defining political event of its era. And no matter what your philosophical perspective, for employers there are important, and highly personal, considerations in play as the future of EU workers’ rights in the UK (and firms’ future access to talent) hangs in the balance somewhere between Whitehall and Brussels.

High-profile personnel changes at the Department for Exiting the European Union (DexEU) have only complicated a situation that seems to evolve on an almost hourly basis. But with six months to go before the UK’s formal departure date from Europe, certain arrangements have at least been set in stone, while plenty remains to be played for. People Management asked the experts to explain.

EU citizens living in the UK will be allowed to stay…

Despite the understandable concerns of EU citizens currently living and working in the UK around their post-Brexit rights, it seems the government has delivered on its promise that no one currently here will be forced to leave – up to a point, at least.

In June, immigration minister Caroline Nokes announced plans for a “straightforward” system for EU citizens who have been living in the UK for at least five years to apply for settled status (or pre-settled status for under five years), which will replace the current permanent residence status. Although the exact details are still subject to approval by parliament, it will broadly mean that EU citizens can continue to live and work in the UK and access public services. 
Pre-settled status will allow them to remain until they reach five years’ residency and can apply for full status.

Applications will cost £65 for adults and £32.50 for children, and can be submitted at any point during the ‘implementation’ period of March 2019 to 31 December 2020 – the transition phase following the UK’s formal departure from the EU, before the permanent arrangements for a future relationship come into effect. After a six-month grace period, it will be mandatory for EU citizens in the UK to hold either settled or pre-settled status from July 2021.

The government has stressed that as long as applicants are resident in the UK before the end of the implementation period and don’t have serious criminal convictions, their application will be granted. Shortly before Nokes’ announcement, home secretary Sajid Javid told the House of Lords EU justice sub-committee that the government “will not be looking for excuses to not grant status”. 

Mike Spicer, director of research and economics at the British Chambers of Commerce, welcomed the clarity: “Businesses lost European employees in the aftermath of the referendum owing to the uncertainty, so assurances that they can stay are a positive step forward.”

...but only if we get a good deal

The prospect of negotiators coming away with what would be deemed a “bad deal” for the UK, or no deal at all, is an eventuality that has gained traction in recent weeks, and there is much more uncertainty about EU citizens’ rights to stay in the UK in these circumstances. 

“A month ago, nobody was talking about getting no deal,” says Gerwyn Davies, senior labour market analyst at the CIPD. “But employers have started to come to us asking about the prospect of a no-deal situation.”

Giving evidence to the exiting the European Union committee in June, Nicolas Hatton, founder of campaign group the3million, described no deal as the “worst case scenario” for EU citizens. “On 29 March, you get three million illegal immigrants in the country, because we will not have a status,” he said.

There are a number of possible scenarios for EU migration in the event of no deal, the most likely of which is extending the pre-settled status programme indefinitely. Jessica Pattinson, head of immigration at Dentons, says: “I can’t see a situation where EU nationals already resident in the UK won’t be able to apply for settled status, or where the Home Office will have to make EU citizens leave.”

The settlement scheme has provided clarity and certainty, adds Davies. “But the concern for employers is that talk of a no deal will undo the progress that has been made in recent months. The need for government to issue consistent, categorical assurances about the status of current and future EU citizens, whatever the outcome of negotiations, is more important than ever.” Flexible working and reward packages can help retention, while upskilling existing employees and diversifying recruitment methods may mitigate the loss of some EU staff. But the best hope is that a breakthrough, of some kind, means we’re not left in limbo next March.

A digital registration system is already on the way…

The government is proposing a ‘paperless’ settled status application system for the 3.8m EU nationals already in the UK, with successful applicants being issued with online codes. Prospective employers enter these codes into the Home Office website to check an individual’s immigration status – a process that the prime minister has promised will be “as streamlined as possible”. 

It also says applicants will be required to submit less evidence – for example, they won’t need to prove they have sickness insurance. The process has been trialled by 4,000 EU nationals at three universities and 12 NHS trusts, and is planned to be fully operational by March 2019.

Gary MacIndoe, managing director of specialist immigration law firm Latitude Law, describes the proposed changes as “positive” and says he is advising clients with EU staff to wait and “take a chance” on it. Davies also welcomes the plans, saying it is “sensible” of the government to implement a digital system.

...but it might mean a headache for HR

With the new registration system’s roll-out scheduled to begin later this year, employers will need to be up to speed in a very short time frame, and it appears some vital details are still lacking. A report released in July by the exiting the European Union committee warned that the system’s success would be dependent on “employers … understanding and embracing a new way of working”, and called on the government to “clarify how employers … are meant to take and keep copies of digital records of settled status”.

“Some employers are happy to be digitally savvy,” says Karendeep Kaur, immigration analyst at Migrate UK. “But some still work with paper files – it’s going to be completely different for them.”

Kaur also points out the need for employers to ensure the personal data contained within employees’ digital codes is protected online. “Individual companies will be expected to organise this,” she adds.

Other experts are less concerned, and suggest the amount of work required by employers won’t be any greater than at present. “Employers’ legal obligations to keep records of employees’ passports and do periodic visa checks has been around for years,” says MacIndoe.

Pattinson is also optimistic about the system’s simplicity: “From an employer point of view, it’s clear cut – they access the website and are told whether or not this person has the right to work. It’s easier than checking hard copy documents. Employers shouldn’t be made to become immigration experts.”

Although any formal assistance has yet to materialise, the Home Office has launched a toolkit of how-to guides, videos and posters to help employers communicate with and support EU staff through the settled status process, which the CIPD has been heavily involved in creating. 

Businesses will still be able to move workers between countries…

A government white paper published in July revealed that, although freedom of movement between the UK and the EU will end after Brexit, the UK will seek to secure a reciprocal mobility arrangement to make sure businesses and workers can still enjoy some degree of flexibility.

In what newly-appointed secretary of state for exiting the European Union Dominic Raab described as “sensible mobility arrangements”, proposals include visa-free travel tourism and “temporary” business activity, as well as young people wishing to study abroad. The paper also proposes ensuring that UK citizens living in the EU can still access pensions and healthcare.

“From a mobility perspective, it is encouraging to see that the government has listened to employers, especially in terms of youth mobility, onward movement for UK citizens within the EU and visa-free business travel,” says Davies.

…but the arrangements are still lacking important details

Although there are assurances that the government is listening to businesses’ concerns about their ability to move people between countries post-Brexit, at the moment there is little clarity around the precise arrangements, and how exactly they will work in practice.

“Recruiters have been clear that Britain needs a comprehensive mobility deal with the EU to support national prosperity,” says Recruitment & Employment Confederation (REC) chief executive Neil Carberry. “The white paper suggests this may be possible, but it leaves too many questions unanswered.”

One of the main issues still at stake is whether businesses will be able to transfer employees, in both directions, between the UK and European countries where they have a physical presence. Hundreds of thousands of such intra-company transfers – covered under special Tier 2 visas for skilled employees – have taken place between the UK and non-EU countries including the US and India. It is expected that businesses will want to treat employees based in the EU the same way when freedom of movement comes to an end.

But as Kaur says, while there has been “a lot of speculation” on the topic, nothing has so far been published. Employers’ best hope is that a much-anticipated immigration white paper this autumn will answer their burning questions. 

Concerns about the shortage of highly skilled workers are being listened to…

The removal of non-EU doctors and nurses from the Tier 2 visa cap, plus the government white paper’s promise of mutual recognition for professional qualifications between the UK and EU countries, has helped dampen concerns over the supply of skilled staff from abroad.

The exemption of doctors and nurses from the cap – which came after the limit was reached for six consecutive months at the start of 2018 – means British businesses are now able to collectively recruit around 8,000 more skilled migrants per year in IT, engineering and teaching, as well as alleviating worries around the supply of vital NHS clinical staff. 

However, there are calls for the government to make more radical changes. Davies says: “Removing doctors and nurses from the Tier 2 limit is helpful, but the demand for visas looks set to continue to outstrip supply due to the sharp fall in interest from EU-born jobseekers and the tightening labour market.”

…but little is being done about the shortage of lower-skilled workers

Manufacturing, agriculture and hospitality are all heavily reliant on the sort of unskilled labour that will fall outside any visa system that applies salary and skills criteria similar to Tier 2 to EU citizens. And alarmingly, the CIPD’s latest Labour Market Outlook reports that the median number of applicants for low-skilled vacancies has fallen to 20 from 24 in 2017.

A recent REC study also found that 81 per cent of employers who offered temporary work hired EU staff to fill these roles, while 60 per cent of recruiters in warehousing said at least half their temporary staff come from the EU.

“Beyond the December 2020 cut-off, the government will need to acknowledge these industries’ reliance on low-skilled workers and not just be a barrier to them relocating,” says MacIndoe.

“We still need clarity on the arrangements for low-skilled workers,” agrees Pattinson. “An estimated 30-50 per cent of London’s construction workforce and 30 per cent of the UK’s food manufacturing workers come from the EU. How will they be replaced?”

Experts argue there are measures the government could take that would help alleviate concerns, such as reducing the Tier 2 visa skills threshold. MacIndoe also advocates the introduction of the Tier 3 visa – a short-term work permit for unskilled migrants designed to be used during temporary labour shortages. 

But the government cannot be expected to solve every issue. It is clearly incumbent on employers to do what they can to engage the domestic workforce that will become more important after Brexit. Kaur says employers without sponsorship licences should secure them now “before the flood of applications”. 

Whatever the next six months brings, employers have to reassure EU employees. “Managing Brexit is about managing the person issues,” says Pattinson. “For a lot of people, it’s about their family too – their elderly parents or their children studying abroad. It’s up to employers to make sure they’re not kept awake at night.”

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