Legal Briefing

Workplace law: Doyle Clayton

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Legal Services | 02 October 2018

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UK Immigration – Rumsfeld déjà vu
Known knowns, known unknowns, unknown unknowns and…

There are few UK organisations where EU citizens living in this country are not clients or customers or, more importantly, employees. Throughout the private and public sectors – from chief executives through to middle management and minimum wage workers, EU citizens have been a cornerstone. Without them – the economic recovery, our attraction to foreign businesses and, of course, investors and entrepreneurs would all have been weakened.

"Yes, the language may be tortured, but good old contingency planning and a solid reminder of the motto ‘be prepared’ certainly applies."
“Yes, the language may be tortured, but good old contingency planning and a solid reminder of the motto ‘be prepared’ certainly applies.”

Sure, the in-place business immigration system could have been easier to use for both organisations and individuals, and its ever-changing limits and caps were a source of continual frustration. But we had what we had, and with a bit of external help both employers and employees could generally get what they wanted.

Boy, did June 2016’s Brexit vote turn things upside down and in the process give in-house counsel and HR a lasting headache to deal with.

So Donald Rumsfeld?

It was a 2002 press briefing that saw Donald Rumsfeld enter the political hall of fame as ‘the ultimate unknown of American politics’. The attempt to explain the lack of evidence linking Iraq’s government with the supply of weapons of mass destruction to terrorist groups was seized on mercilessly by the media.

‘… as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns – the ones we don’t know we don’t know.’

For the Bush administration it led to ridicule and Rumsfeld in particular became a notable if somewhat comedic character. Yes, the language may be tortured, but with what’s being going on since the UK voted to leave the EU on 23 June 2016, and with only a matter of months until the exit deadline of 29 March 2019, good old contingency planning and a solid reminder of the Baden-Powell motto ‘be prepared’ certainly applies to UK business immigration.

The known knowns

Known #1 (The UK is [and will continue to be] an attractive destination for foreign businesses)

The UK has been one of the most popular global destinations for businesses. This year it is ranked (by Forbes magazine and despite Brexit) as the best country for business due to its strong growth, low regulation, technological readiness, access to a highly educated and diverse workforce as well as its position as one of the world’s three main financial centres. It also remains Europe’s top destination for inward investment.

Known #2 (Dependence on EU workers)

The UK economy relies on foreign workers. With its lowest unemployment rate in the last 40 years (1.4 million), 32 million people currently work in the country with 10% of these (3.3 million) foreign nationals and of these, 70% (2.3 million) are from the EU with a further 1.3 million from non-EU countries.

These people fill a variety of roles and at all levels throughout the economy and without them private sector competitiveness would be damaged and public sector delivery even more stretched.

Known #3 (Reliance on non-UK senior managers)

At a senior level UK business is led by foreign nationals. The last decade has seen UK plc recruit the best and the brightest top teams and managers and become some of the most successful global businesses. The number of FTSE 100 companies run by non-UK national chief executives doubled to nearly 40% in the last decade, and 30% of FTSE 100 chairs and chief financial officers are not British.

Known #4 (Stable-ish but difficult to navigate immigration system)

UK Visas and Immigration (UKVI) – a division of the Home Office operates the UK visa system, managing applications from foreign nationals wanting to visit or work in the UK, and also approves applications from businesses and educational institutions looking to become sponsors of foreign nationals.

This is currently done through a complex, restrictive five tier point-based system (PBS) with penalties and fines for organisations and individuals that fail to comply. This is supplemented with a number of non-PBS immigration categories, including the UK Business Visa enabling business people to enter the country for a limited time for specific business activities such as attending meetings and negotiating contracts, but they cannot work. There is also the Representatives of an Overseas Business visa – for non-majority shareholder business people coming to the UK to set up the first UK branch or wholly-owned subsidiary of an overseas company.

Known #5 (What’s been agreed so far)
  • The whole of the UK, including Northern Ireland, will be leaving the customs union and single market. There will be no hard border in Ireland and the Good Friday agreement will be upheld.
  • EU citizens in the UK and UK citizens in the rest of the EU will have the right to stay where they are.
  • UK courts will preside over enforcing rights over EU citizens in Britain but can refer unclear cases to the European Court of Justice for eight years after withdrawal.
  • The Brexit transition period agreement. The period will last from 30 March 2019 to 31 December 2020 (this may change as it has not yet been agreed by parliament):
    • EU citizens arriving in the UK during this period will have the same rights and guarantees as those arriving before Brexit, save that they will have to register to stay in the UK for more than three months. Similar provisions also apply to UK citizens living in EU states.
    • There will also be a voluntary settled status scheme for EU nationals who arrive before the end of the transition period. Where they have a permanent residence document this may be ‘upgraded’ to a settled status document to enable them to regularise their stay under UK law.
So this is what we know so far…

In keeping with the flood of changes around this issue and Home Office immigration rules generally, the government announced further details on 28 August 2018 of what the EU Settlement Scheme will look like. This comes in the form of draft rules that will be incorporated into the existing immigration rules, as well as a recently published statement of intent signed off by Home Secretary Sajid Javid. Also, to bring UKVI into the 21st century, much of the application process will be moved online and simplified through a new digital portal supported by face-to-face interviews.

And the known unknown

From January 2021 onward there will be a new immigration system in place.

But with backbenchers doing their best to force their agenda and unseat the PM – what it will look like is anyone’s guess.

So far, we have seen seesawing policy and plans and with the press stoking public sentiment one way or the other depending on their allegiance. The Confederation of British Industry and other representative organisations as well as think tanks have also chipped in with proposals – some are sensible and others less workable and would see the UK isolated and without European or other foreign labour.

The fact is, we are still no closer to knowing what it will be and whether we are due for a hard exit without a trade deal, a soft exit with agreements in place, a Norway style ‘relationship’ with membership of EFTA and the EEA and group trade deals. Or, will we find ourselves with a general election on our hands, another public referendum and staying in the union? There is certainly backing for this option, but there may not be the time.

All of this does not help UK organisations, many of which are dependent on European workers, from senior management through to shop floor staff and casual labour.

The unknown unknowns

What is not clear at all is what the UK’s business immigration system will look like. Will there be skill/salary-determined migration targets, regional incentives, or compulsory registration similar to the old Worker Registration Scheme introduced for A8 nationals during May 2004 through May 2011?

Based on a leaked Home Office paper that appeared in The Guardian in 2017, it looks and smells like the PBS currently in place for non-EU nationals that controls the type and volume of migration from the EU as well as:

 

  • A more ‘selective’ approach, with all UK immigration incorporated under one single legal framework – Immigration Act 1971.
  • The potential need for EU nationals to secure permission to work in the UK before taking up a role.
  • The possibility that employers may need to recruit locally first.
  • Access potentially restricted to jobs which are not in shortage, particularly non-highly-skilled migrants.
  • Issues over offering intra-company transfer opportunities.
  • Un-guaranteed settlement – potentially depending on whether skills are in shortage/high level.
  • Restricted rights re family members.
  • Likely substantial costs for employees and employers (and economy).

But what looks likely is:

Talent attraction from EU countries.

  • Increased cost and timelines involved for future employees with EU nationality (except those from Ireland):
    • Employers having to potentially apply for a sponsor licence and getting to grips with PBS employer sponsorship – this will add to timings as it can take up to six months from sponsor licence to visa stage for new hires.
    • Right to work checks for EU nationals will be more complicated as there will be a pre-Brexit transitional period and post-Brexit dates to take into account for the checks – so added resources will be required to train compliance personnel.
    • Employers may need to undertake the resident market labour test (advertising) for prospective employees who are EU nationals – resulting in added recruitment fees.
    • Sizeable additional fees for each employee sponsored, including a new immigration skills charge and national health surcharge fees.
    • Less flexibility and more delays in the recruitment process while applicants are sifted.

A new type of visa will be required; whether the system will be the same as for current non-EU (sponsorship PBS), or a new scheme similar to the old Worker Registration Scheme is unclear but will increase costs significantly, with additional government support fees to pay.

  • Attendance at meetings in EU. Increased costs for non-EEA employees attending meetings in EU countries after 31 December 2020 (as they may require visas for Europe).
  • Upskilling a UK workforce following an increase in EU staff shortages – costs time and money! The impact of this was seen during the recent RCoS cap crisis which was only alleviated when doctors and nurses were removed from the RCoS group. Due to a shortage of EU staff in the medical arena, hospitals were forced to hire non-EEA nurses and doctors requiring sponsorship doubling the minimum salary threshold required to £60k.
  • Moving staff to another EU state, a satellite office? Again, this will cost time and money and will be a significant loss to the UK if successful businesses were to up sticks and relocate to another EU state. The Belgians and the French want our financial services businesses, and both Germany and the Netherlands are dangling large tax reliefs.

As far as a structure is concerned, after the transitional period, at the moment we have no idea. We just do not know.

For many organisations, needing to maintain access to people and skills from the current half-billion strong European pool, this question has soaked up thousands of hours and made it virtually impossible for all but the largest and best resourced to plan ahead with any certainty.

UK organisations would do well to talk openly and frankly with their people and explain the changes they are making to create a stable post-Brexit environment.

What should organisations with non-UK employees be doing?

With Rumsfeld and the subsequent White House smoothing PR operation as an inspiration, UK organisations would do well to talk openly and frankly with their people and explain the changes they are making to create a stable post-Brexit environment, and we have seen a number of our clients go down this route through:

Communicating and supporting
  • Reassuring EU staff that there is no immediate risk to their current immigration status; free movement rights will continue until Brexit and transition.
  • Strengthening diversity policies and putting in place a zero-tolerance policy for any racial abuse.
  • Arranging for employees to keep track of Brexit developments and sharing information via intranets as well as HR-led sessions on how to protect immigration status for those employees (including family members) affected.
  • Circulating a clear plan for the organisation that includes its approach to Brexit, particularly where heavily reliant on an EU national workforce, or trade with the EU.
Making sure they have a thorough understanding of the risks involved
  • Audits of the number of existing employees who are EU nationals or non-EU family members, their position in the business and whether they are permanent or temporary. For non-EU family members, understanding whether any have limited leave in the UK and when future right to work checks will need to be made, usually at the expiry point of their leave.
  • Identifying employees at greater risk of losing their status post-Brexit and the information required as well as what needs to be done to protect their status. This is especially important for senior executives travelling widely and close to the permitted absences levels.
  • Establishing the ability to meet staffing requirements from outside the EU.
  • Reviewing existing and new HR systems and processes, in particular for employers who may need to become a licensed sponsor for the first time and due to more complex right to work checks likely to be introduced.
  • Looking at the financial implications, including additional staffing and recruitment costs and fees as well as wage inflation created by reduced supply of skilled workers and management.
  • Anticipating the timescales – potentially longer for recruiting staff post-Brexit, especially where sponsorship is required. Work start dates may be delayed by up to six months, when previously an EU national could work immediately on their EU passport or ID card.
  • Identifying contracts where employees may be relocated to another country following Brexit.

Exactly what is covered in these stages will be dependent on the individual organisation, its culture and working practices – but the aim is to have a simple and regularly updated plan that identifies priorities and sets out what will be done to prepare for and take advantage of the people opportunities created when we leave the EU.

Que será, será

Whatever we end up with and whenever this is, taking a leaf out of the Rumsfeld contingency planning book looks sage. This is especially key given the government’s recent history of indecision – it wasn’t so long ago that the Home Office published a set of 22 amendments only to be followed by a further 250 three days later. What businesses have had to cope with is just shy of 6,000 changes since the turn of the decade and a doubling in length to a near 375,000 words of the UK’s immigration rules. This puts Charles Dickens’ Bleak House (hopefully not an omen) – with 355,936 words to shame.

The rub of it is that organisations really do need to be equipped for a possible torrent of new regulations that have the potential to change at short notice. The reassurances of Theresa May and her latest Home Office head Sajid Javid that immigration rules will be simplified and easier to understand are certainly welcome. Based on past history though, we will not be holding our breath.

Anita de Atouguia (partner and head of immigration), can be contacted at adeatouguia@doyleclayton.co.uk or on +44 (0)20 7329 9090.

Victoria Burnip (partner and immigration specialist), can be contacted at vburnip@doyleclayton.co.uk or on +44 (0)118 959 6839.

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