Long reads

You still need to get ready for Brexit (remember Brexit?)

26 Mar 2020 By Jo Faragher

Despite facing other critical challenges, HR must keep one eye firmly on helping build a well-staffed post-Brexit Britain

It’s been called a ‘wake-up call’ for HR – a chance to look at the workforce differently and set up new operating models. It’s an opportunity like no other to offer agile and flexible work approaches and design jobs around the individual needs of employees. 

For many people professionals such statements will – given the unprecedented nature of the last few weeks – evoke just one thing. Yet, while this sounds a lot like how organisations should be responding to the challenges of the coronavirus pandemic (see our information hub for that), it’s also sound advice in relation to another seismic macro event – one that, until recently, was the challenge dominating most people professionals’ every waking (or at least working) moment.

Before coronavirus logistics eclipsed all other workplace considerations, there was actually a glimmer of hope on the horizon for HR practitioners bruised and battered from an uncertain and challenging few years. In February the wait was finally over and the details of the UK’s proposed post-Brexit immigration regime were announced. This meant the starting gun had been well and truly fired on preparing, not just for the impact when the system comes into force in January 2021, but also for several years down the line when the workforce planning implications will really start to bite for some sectors.

It’s important such preparations aren’t forgotten in the immediate term, experts warn. “Even if they only plan to hire one worker from the EU or outside after January next year, they’ll need to do something about this,” says Jonathan Beech, managing director of immigration law firm Migrate UK, regarding the importance of HR professionals still finding the time to work on post-Brexit skills planning now.

Indeed, the nature of the new points-based scheme has caused consternation among many – particularly those who rely on what the government terms ‘low-skill, low-paid’ workers. But organisations can now at least put plans in place for non-UK workers they want to retain, and start looking ahead to how their talent pipeline might look in the future, says Beech. “They’re trying to get to grips with who will qualify; forecasting what it means for them; looking at job codes; thinking about salaries,” he 
says in relation to those HR teams proactively getting started on this. 

Gerwyn Davies, senior labour market adviser at the CIPD, argues that it should be a wake-up call for HR professionals to look at workforce planning more holistically. “They’ll need to look at internal development through schemes such as apprenticeships, which will help to retain staff. But also think about flexible working and job design – are there ways to make roles more attractive? They could offset many recruitment problems by being as responsive to the individual needs of employees as possible.”

He warns employers not to expect a reprieve or significant change to what’s now been set out. “Some employers might have legitimate concerns about the impact of the new system, especially low-paying sectors. But after an extensive consultation period, there is no wiggle room left to influence the design of the new system,” he says. “With just nine months remaining before the introduction of the new restrictions, employers need to get up to speed with the system quickly and adapt their workforce planning strategies accordingly.”

Under the proposed scheme, overseas workers who want to come to the UK after free movement ends on 31 December 2020 will have to meet certain criteria – or an equivalent of 70 points – to be able to work in the UK (see chart below). Home secretary Priti Patel insisted she wanted to reduce employers’ reliance on “cheap labour” from EU countries, and businesses would have to “adapt and adjust” to the new status quo by investing more in staff training and retention, and in automation technology. 

Points are awarded for factors such as whether the candidate speaks good English, the level of qualifications held and whether they hit a salary threshold of £25,600 (or lower for certain shortage occupations). At the same time, the government plans to remove the resident labour market test, which requires employers to advertise certain roles locally before applying for a visa for a migrant worker. Likewise, there will be no cap on the number of skilled workers. 

It’s already clear there will be winners and losers under the new system. The technology industry, for example, will benefit from the lower salary threshold (the current limit for Tier 2 visas is £30,000) and a relaxation on the demand that applicants have a degree (the new qualification threshold will be A-level or equivalent). 

But thousands of employers that hire workers from EU countries into lower-paid roles in sectors such as hospitality, social care and food production now face their labour supply being severely compromised. And while many have invested in skills development for UK workers through apprenticeships and other programmes, these could take years to bear fruit. Added to that, the latest figures from the Office for National Statistics show EU immigration to the UK is at its lowest for 16 years, so the pool of labour is already reduced. 

The government has reassured that there are eight million people in the UK currently ‘economically inactive’, and that employers should look to this group to fill lower-paid roles. But like many, Chadi Moussa, an ex-HR director in the food production industry and now partner at consultancy Let’s Talk Talent, says it will be “near impossible” to find UK workers to make up for the shortfall in labour. “The government’s spurious claims that companies can simply retrain some of the eight or so million ‘economically inactive’ workers between the ages of 16 to 64 is wishful thinking,” he says. 

“Data shows Britain’s labour force are just not attracted to roles that are filled by a migrant workforce.” The home secretary’s assertion that employers can simply scoop up this group also ignores many of the reasons that they are not in work, he adds – most are currently students, a high proportion are unable to work because of sickness, and others are either looking after families or retired. 

No small challenge for many industries, then. To help you get to grips with it, People Management outlines how employers in some of the UK’s most affected sectors will be impacted and when, and what they should do now to prepare for January 2021, but also those ramifications manifesting further down the line...

What to do to prepare for the immediate term

There will be no practical changes to immigration between the UK and the EU until 1 January 2021, but that doesn’t mean employers can’t use the next nine months to get to grips with who in their workforce will be affected, whether they’ll be eligible for a visa and how much this might cost. The first job, says Jamie Bryant, managing director of immigration consultancy UK Visas, is to confirm which employees from the EU have already acquired settled status through the EU Settlement Scheme. “You need to encourage any EU staff you currently have to confirm their status, settled or not,” he says. Waiting times are reasonably quick at the moment, he adds, but the service could get busier at the end of the year. 

“Don’t ignore the individuals you employ now, including any UK nationals who work in Europe,” advises Louise Haycock, partner at law firm Fragomen. One useful strategy is to look at how the points system would have affected hiring in 2019. “Who would you not have been able to recruit? What would have been the cost if you’d had to apply for visas? Would there have been a delay to hiring?” she says.

This was one of the first things Emma Jayne, area director for people and culture at hospitality employer Dorchester Collection, looked at when the new regime was announced. “Of the 242 people we hired last year, under the new regulations we wouldn’t have been able to hire 36 per cent of them, or 88 people. This included commis chefs, bartenders, room attendants and spa therapists, because they were under the salary level.” 

Jayne objects to the ‘low skills’ moniker: “Someone doing those roles is likely to have had exactly the same training in customer service as a ‘skilled’ colleague.” In terms of immediate-term planning on this, the company ran a briefing session a year ago on acquiring settled status and plans to run another to ensure those who have not yet applied do so in good time. 

According to UKHospitality, the sector is the second largest employer of EU workers by number, and the fifth highest as a percentage of the workforce, so will be one of the worst hit by the new regime. Dorchester Collection will focus on building a robust and sustainable pipeline of UK talent through apprenticeships, adds Jayne – its talent acquisition manager has been looking into bringing in candidates from Canada on youth mobility visas, which are valid for two years. 

For organisations looking to recruit anyone without settled status from the EU or beyond after 31 December, getting a sponsor licence should also be a priority. It has not been fully confirmed yet, but the sponsor system is likely to be the same as the current Tier 2 sponsor system for non-EU workers. “If you have a licence now you will be able to sponsor EU workers from January 2021, as long as they comply with the job and salary requirements,” explains Bryant. 

Ongoing compliance with Home Office requirements of sponsors is crucial, he adds. “Compliance audits are tough – any ownership changes or if someone’s role changes in a significant way – the government should be informed. Give someone in the organisation responsibility for managing the licence. If you lose it now, the implications could be serious as you’ll have no access to EU workers next year.”  

Haycock says it’s important to keep under review any policies or documentation requirements you have in place around employees’ right to work. “This will all likely change at some point, and will cascade to any policies or standard documents you produce. Make sure anyone who does carry out these checks is trained and knows where to look for the right information.” (See the online ‘right to work’ guide on gov.uk.)

What to do now to be ready for the next few years

It will come as a relief to many HR managers that, once the new year has rung in on 31 December, there will be some wiggle room in terms of access to EU labour. “This is not a falling off a cliff [scenario],” says Beech. “The new rules only apply to new entrants and EU nationals who arrive in the UK before this date will have until 30 June 2021 to cement their status in the UK, and will still be able to bring in family members over the transition period, who will have eligibility to work.” 

And while there is no route for lower-skilled migration for either EU or non-EU citizens, the Migration Advisory Committee estimates that there are around 170,000 recently arrived non-EU citizens in lower-skilled occupations. These people, as well as the dependants of skilled migrants, will continue to be eligible. 

If they haven’t done so already, employers will need to consider how pay and conditions impact on attraction and retention. “Organisations will have to adjust through, for example, more inclusive recruitment, automation where possible and raising pay,” says Davies. Don’t forget about developing managers, either. “People leave because of managers – they have a big impact on our satisfaction at work, so think about how you can improve the capability of managers and improve the quality of those relationships.” 

With the system beginning to bed in, 2021 onwards is when costs could begin to bite. If you’ve had to increase salaries for certain employees to reach the salary threshold of £25,600, will you need to do this for others in their team? Similarly, the cost of sponsorship and visas could be prohibitive. It costs around £5,000 to bring someone into the UK alone, and this could quadruple if they are a family of four, according to Ian Robinson, immigration partner at Fragomen. “Project that on to your business to see how it might impact,” he advises. 

“Does that mean you recruit in a different way or make allowances? Another option is to move the work to another location.” Bear in mind that certain charges, including the immigration skills charge, are renewable annually and, if you agree to cover other payments, such as application fees and the immigration health surcharge, the costs could soon mount up.  

As 2021 progresses, certain sectors will feel more of a pinch from labour shortages. In ornamental plant production, for example, more than 50 per cent of workers come from the European Economic Area, according to Martin Emmett, chair of the ornamentals management committee at the Horticultural Trades Association (HTA) and strategy director at Tristram Plants. “Getting settled status [for our EU workers] has been a priority for us, and we try to do as much direct, permanent recruitment as possible. But over the next 10 months we can’t avoid the need for some seasonal labour, and there’s a concern that there will not be enough people available,” he says. 

His company has redoubled its efforts in local recruitment, planning visits to schools and sixth form work experience programmes – “everything to make ourselves accessible to anyone to come and work for us”. Meanwhile, the HTA is lobbying the government to get certain roles on to the shortage occupation list and work is underway to define these roles. 

In more seasonal industries such as agriculture and hospitality, half the challenge is getting people through the door – then the work on retention can begin. At Dorchester Collection, for example, Jayne is developing career maps so workers can see what they need to do to progress. There are also plans for the leadership team to mentor people from the universities where they studied, building a stronger graduate pipeline. “I feel excited about what we can do,” says Jayne. “This is forcing us to do what we should have been doing anyway.”

There will be a ripple effect on organisations’ supply chains, however. In construction, for example, major civil and commercial infrastructure projects rely on sub-contractors; if these suppliers can’t access the labour, this will have a negative impact on building schedules. “We can’t deliver without our supply chain,” explains Harvey Francis, executive vice president and chief HR officer at Skanska. “Bricklayers and carpenters would fall below the skills and salary threshold. The other issue will be general labourers.” 

Part of the reason construction companies have relied heavily on labour from eastern Europe is the volatility of orders, he adds: “If we go into a bust cycle, the first thing that stops is construction, so we need flexibility in labour within the supply chain.” Many construction workers are also self-employed and currently without a potential visa route, leaving the resource pool compromised. 

Beech advises employers to monitor any revisions to the new points-based system. “Continue to forecast what you need, but also consider what might change in the immigration rules,” he says. “The government has indicated it wants to make it more like the Australian system. I believe this could be a refined version of the current highly skilled migrant programme, and that could be introduced in the next three years. We may also see more routes for individual visas.” 

It’s likely the roles listed on the shortage occupation list will evolve, too, so keep these under review and incorporate into workforce planning accordingly, Beech adds.

What to do now, with an eye to long-term skills planning

If employers do ‘adapt and adjust’ to the new labour market norms as the government anticipates, we should begin to see stronger pipelines of UK workers in sectors that have invested heavily in early careers programmes such as apprenticeships. “Many are already putting measures in place to see how they can make themselves more enticing to British workers, such as putting on buses, looking at wellbeing initiatives, childcare – anything that can make them a more appealing employer,” says Haycock. “These will take time to plan and budget for, and investigation as to how different sorts of policies will work.” 

A number of employers have already revamped their approach to hiring. Alex Arundale, group HR director at software company Advanced, believes her company will weather the changes to the post-Brexit labour market well because it hires on potential rather than skills and experience. “We hire without CVs – everyone goes through an aptitude test regardless of role and you’re hired on cultural fit,” she explains. “Then we focus on skills development. This prevents that desperate need to go outside and try and source those skills. And because we hire differently it means we don’t falter if there are changes in our economy or in one country.” 

Others are operating virtually and globally rather than based in a certain location – something that will of course also put them in good stead in relation to the coronavirus outbreak. “One of the unique things about our business is it’s completely remote,” says Chris Milligan, founder and CEO of Adepto (recently acquired by learning platform Degreed). “We plan to engage with people where they are – so we might have some eastern European developers, but we have no issues in working with them where they’re based.” 

For some sectors, automation and AI will be able to plug the gaps for certain roles, but not all. “We’ve done a surprising degree of automation already in horticulture,” says Emmett. Tristram Plants is actively looking at technology such as robot arms, supporting a local college to research this area. “We grow garden plants, so can’t use automation to the same degree as for bedding plants, and with more specialist, seasonal plants, the capacity to automate is reduced because there are more variables. There’s more going on in the sector than people realise but, to get a step change in automation, we’ll need a five to 10-year timescale,” he says.  

Of course, many of the so-called ‘low skill’ roles ineligible under the new immigration regime will not necessarily lend themselves to automation – nobody wants to be looked after by a robot carer, or not yet. Moussa adds: “The other issues are that much of this machinery simply doesn’t exist. There are no robot baristas or technical experts that can quality-assure exotic food reliably enough.” 

That’s not to say, however, that employers can’t augment their workforce through technology. Professor Martin Green, chief executive of industry body Care England, argues technology will help support patients’ independence and in turn ease pressure on human workers. “Some homes are using tools such as pressure pads that shine a tunnel of light to the bathroom if a resident gets up in the night,” he says. “If they don’t return within a certain time the staff can talk to them rather than going in, which improves staff efficiency but also the experience for the user.” 

So embracing innovation and ditching decades-old approaches to hiring and reliance on certain labour sources could place HR at the heart of organisations’ response to the fast-changing social, political and demographic changes going on. There’s no denying that with coronavirus business continuity and workforce planning now added to the mix, people professionals continue to have multiple huge, often competing, challenges to contend with. 

But HR teams put off longer-term post-Brexit skills planning at their peril. Indeed, in such unprecedented times, ensuring a strong pipeline of future engaged and talented staff has perhaps never been so important.

Post-Brexit workforce planning in action: Social care

According to Skills for Care, which collects data on the adult social care workforce, there are currently around 1.6 million roles in adult social care, with around 250,000 of these held by EU and non-EU workers. But while the proportion of non-UK workers in the sector may seem small, there are currently an estimated 110,000 vacancies for positions that will not be covered by the new points-based system and have historically attracted lower-paid migrant workers. 

One of the biggest issues is the knock-on effect that a drop in labour supply in social care will have on the NHS, according to Emma Platt, who runs the health and social care division of White Recruitment. “What the government doesn’t see is that if you were to fix the social care side of things, that would take pressure off the NHS” she says. “This will be too much for some care homes. We need to phase the new regime in to ensure we have enough workers before we relinquish the EU workforce.” 

Professor Martin Green, chief executive of industry body Care England, adds: “Care work tends to be emotionally and physically draining, commissioned by a local authority paying the living wage. “If I’m faced with a choice between that and working in Aldi for the same money, I’ll do the latter.” 

In terms of response, the most straightforward action would be to increase wages. But without extra funding from local authorities, this is difficult. Some are developing dedicated career pathways in a bid to boost retention, but not all can afford it.

Several larger care companies are also investing in international recruitment drives in areas such as the Philippines and South Africa to bring staff in on temporary visas. One company, HC-One, has developed an overseas nurse recruitment programme that supports hires through the immigration process.

Post-Brexit workforce planning in action: Hospitality

Trade body UKHospitality has warned that more than 200,000 job vacancies across the sector will be left unfilled under the new immigration system. The salary threshold of £25,600 (or more than £20,480 for specific shortage occupations) would make it impossible to secure EU migrants for entry-level positions, and the industry already faces an acute labour shortage thanks to record employment levels. 

“The ‘low skill’ label has not helped make these roles attractive, so organisations are not getting the local applicants,” says Rebecca Siciliano, managing director of Tiger Recruitment. That said, the sector has anticipated a shortage for years and has ramped up talent initiatives aimed at sourcing other pools of talent. Pub chain Greene King, for example, has a dedicated scheme for hiring ex-offenders, and a recent survey by hospitality jobs board Caterer.com found 2.5 million people over 50 are interested in moving into hospitality. 

Siciliano adds: “[Employers are] thinking about soft benefits or ways they can make the industry more attractive, as the message from the government is we should fill the gaps with UK workers. Or they’re looking at schemes that will bring in younger workers so they can show them the career paths in the longer term.”

Post-Brexit workforce planning in action: Tech

The technology industry, which already attracts large numbers of highly skilled, high-salary workers from non-EU countries, will arguably benefit from the new regime. The lower salary limit and the reduction in skills level to A-level equivalent mean there will be fewer restrictions on hiring.

That said, the system will still prove costly for tech employers. At hotel software company SiteMinder, 65 per cent of London office employees are from the EU. The UK headquarters is made up of predominantly sales and customer support staff, which are not skills typically on the skills shortage list. “The system will impact on our budget,” says Dionne Niven, chief people officer. “We will need to fund visas for more than 50 per cent of our staff, so this will be significant in both cost and time.” 

Meanwhile, industry body techUK has welcomed the government’s commitment to the global talent visa, which could help attract vital digital talent to the UK. “This replaces the Tier 1 exceptional talent visa route, is no longer capped at 2,000 visas annually and offers more flexibility around the length of the visa than in other routes,” explains Seema Farazi, partner at EY. “It is not tied to an employer and does not require finding a job before application.” 

Farazi believes accessibility to individual, rather than employer-sponsored, routes could expand in years to come. “The UK government has expressed an intention to create a broader unsponsored route for highly skilled workers within the points-based system. There is real appetite for the new regime to deliver innovation around the current restrictive frameworks for an increasingly diverse workforce and new ways of working,” she says.

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