Immigration is consistently in the public eye as a headline topic, there is a need for organisations to look ahead to what Brexit will mean in real terms for both their workforce and business operations.
With the introduction of new regulations and the chances of decreased access to overseas workers, this short article will highlight the key areas for consideration, and how UK businesses will be affected.
Last month saw The House of Commons vote in favour of beginning initial proceedings to enact Article 50, approving the Prime Minister’s proposition to begin negotiations for the UK to exit the European Union. However, it is still unknown what deal will be made with the EU and what this may mean for the UK and its economy.
One of the key areas for discussion is what effect Brexit could have on the workforce of UK-based companies, and to what extent free movement will impact on recruiting and retaining migrant workers of all skill levels. Many businesses in the UK rely on a strong core of migrant workers to provide valuable skills that are much needed and often in short supply from the native British workforce. Industries including construction, IT, engineering, hospitality, and healthcare (11% of NHS staff are not natively British) are all boosted by migrant recruitment every year.
40% of the top 250 global companies who have a European head office have theirs in the UK.
A lot of talk has been had around limiting the free movement of people into the UK once having left the EU, however the potential knock-on effect for businesses in this internationally diverse and equally acclaimed British economy is significant. A report from the University College London highlights how between 2000 and 2011, (European) migrants had a NET contribution of £20 billion to the UK’s public finances, contributions which vastly outweighed that which was given out by the state.
The contribution of migrant workers to the UK is critical for businesses to remain successful, especially large organisations that have a presence far beyond just the UK market itself – 40% of the top 250 global companies who have a European head office have theirs in the UK, most being based in the capital itself. London is a hub for international talent, one which can, relatively easily, bring in and retain the best employees from around Europe as a result of the current free movement regulations.
However, should the ability to recruit top talent be limited because of post-Brexit changes to immigration regulations, the UK risks losing out on foreign investment, putting many an industry ecosystem under strain. Therefore, depending on the severity of regulations in the coming years, the UK risks not only putting off overseas business investors, but also the migrant workers themselves, many of whom are already considering plying their trades outside of the UK because of the uncertainty and increasing likelihood of longer processing periods and ultimately visa rejections.
With access to migrant workers limited, the future will see higher demand for home nation workers to be sufficiently equipped to fulfil the needs of the UK job market, roles and functions that would have previously been filled by overseas workers. This raises the important question of how do businesses forward plan to reduce the impact that such changes could have on their organisation – the UK government has already begun preparation in some form with a focus on increasing apprenticeships, but presently this is still a regular topic for debate as to its long-term benefits, sustainability, and ability to provide the answer to a significant economy-wide recruitment problem.
Should this be the case, UK businesses would be then in a position whereby attracting and employing the top talent for an organisation suddenly becomes more competitive, and costly. Wages would increase to secure the best individuals, which whilst maybe good news for workers, it is something of considerable consideration for employers who require certain in-demand skills.
April 2017 will also see the introduction of the Immigration Skills Charge, which although currently only to be applied to non-EEA workers has sparked conversation surrounding the possibility that EEA workers could also come under these regulations once the UK leaves the EU. This charge already sees employers charged an additional £1000 per year for every tier 2 skilled worker that they employ (over 50,000 tier 2 visas were issued in the first half of 2016 alone), and if extended to EEA migrant workers, will affect even more businesses across the country.
As an example, if a non-EEA worker was required for a 4-year full-time project, the typical commercial employer would be guaranteed (if not a charity or small business) to incur an additional £4,000 in immigration skills charges. This would also be on top of probably a higher annual wage, recruitment fees and existing immigration charges and procedures.
With these upcoming changes, as well as those still only being some of the many possibilities, the knock-on effect of Brexit on recruitment could result in opportunities being increased within the recruitment industry as employers seek to ensure that their migrant workforce is the best fit for their business. So, whilst recruiters may be able to benefit, UK businesses’ costs keep rising.
The effects of Brexit on the employment of migrant workers is still yet unknown, and will largely remain so until details of the UK’s Brexit deal are confirmed. However, there are strong arguments outlining some of the possible scenarios, and for UK business leaders now is the time to prepare and consider their options.
Ricardina Pedeneira is Solicitor Avogada at Ricardina Bridges Solicitors, experts in all aspects of corporate, commercial and employment law. If you or your business require more information regarding the effect of Brexit, the Immigration Skills Charge or employing migrant workers, please get in contact via info@rbsolicitors.com.
This article is not designed as a form of legal advice and does not necessarily deal with every topic in this area.
Copyright Ricardina Bridges Ltd 2017
