Brexit uncertainty risks leaving businesses ‘hung out to dry’

13 Feb 2019 By Lauren Rebecca Brown

Employers struggling to prepare, BCC warns government, with prospect of no deal drastically altering rules for EU migrants

With less than two months left until Brexit day and the prospect of ‘no deal’ looking more plausible than ever, UK businesses are still lacking answers to fundamental questions, a leading business body has warned.

The British Chambers of Commerce (BCC) has said a no-deal Brexit would cause the most significant changes to terms of trade in a generation, but added businesses lacked the information they needed to plan accordingly.

The body has published a list of 20 unanswered questions, including key queries about the ability for staff to travel for work in Europe and the availability of skilled European labour in Britain if an exit deal is not agreed by 29 March.

Adam Marshall, director general of the BCC, said: “In less than 50 days, UK firms could face the biggest change to their terms of trade in over a generation, without the information and clarity they need to navigate their forward course.

“There is a very real risk that a lack of clear, actionable information from government will leave firms, their people and their communities hung out to dry.”

However, despite Theresa May’s efforts to secure amendments from the EU for her deal, which was voted down by MPs last month, a no-deal scenario is looking more likely than ever and uncertainty about the employment landscape tops the list of concerns for many employers.

If the UK and EU successfully agree a divorce agreement, EU citizens and family members who arrived in the UK by 31 December 2020 would be eligible for pre-settled status. This would allow them to stay five years, at which point they would be able to apply for settled status. Those who already meet the required threshold would have until June 2021 to apply for settled status.

But if no deal were struck by 29 March, that date would become a cut-off point after which settled status applications would be closed and no permanent leave to remain would be granted. EU nationals arriving after that date, under recently announced Home Office rules, would have three months in which to apply for European Temporary Leave to Remain (ETLR), which would allow them to stay for three years.

The assumption is that by the end of that period, the government will have its skills-based immigration system in place, which would allow permanent EU migration to resume in some form – though with the requirement to strike a deal with the EU removed, this need not directly mirror the proposals already made.

The take-home for businesses is that a smooth transition to a skills-based migration system is not necessarily going to happen, said Gary McIndoe, director of Latitude Law. “This presents an urgent need for employers with EU staff to get themselves sorted out much more quickly. They can’t continue recruiting from an EU labour pool.”

This immediate uncertainty was echoed by Karendeep Kaur, senior immigration consultant at Migrate UK, who told People Management ETLR would only be a “temporary reprieve”. With no indication yet of what minimum financial thresholds will exist under the skills-based migration system, any workers given temporary leave to remain may still face having to leave after three years.

“Medium and highly skilled workers are likely to meet the threshold, but lower-skilled workers would be most affected,” she added.

Kaur advised businesses who know they want to recruit EU nationals to “get them into the country before 29 March” and ensure they are registered. 

Until the details of any skills-based system are settled, employers can no longer realistically use incoming EU nationals as part of a long-term staffing strategy. BCC figures released in January revealed businesses across all sectors, particularly manufacturing, were already facing significant and increasing difficulties in recruitment.

The BCC’s call to the government came after Bank of England governor Mark Carney implored MPs to solve the current Brexit impasse. In a speech at the Barbican in London yesterday, he said Brexit had caused a high level of uncertainty and caused companies to hold back on making big decisions.

"A no-deal would be an economic shock for this country, and this would send a signal globally about refounding globalisation. That would be unfortunate," he said.

A government spokesperson said the best way to provide certainty for businesses was to back Theresa May’s existing deal with the EU – which she plans to put to another House of Commons vote “as soon as possible” – and said the government was focused on “securing the necessary changes to ensure the deal passes through parliament”.

"We have published more than 100 pages of guidance for businesses on processes and procedures on the border and contacted 145,000 businesses directly about how they can prepare," the spokesperson added.

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