1. Huge changes to immigration law are on the horizon
The scale of the changes to immigration law caused by Brexit should not be underestimated. For the past 45 years, free movement has meant easy access to the UK workforce for EU nationals; and for employers, employing an EU national has been as straightforward in immigration terms as employing a British citizen. Self-employment for EU nationals wanting to start up their own businesses in the UK has been without restriction. All of this will change after Brexit. No business in the UK will be immune from the effects of the changes. Even those who employ only British citizens will be affected by a likely increase in wages due to competition for labour.
2. What are the main changes proposed?
The changes proposed so far come from the Migration Advisory Committee (MAC). The MAC is a highly influential committee made up of government-appointed economists, commissioned by the UK Government to make recommendations on immigration law reform. The MAC published its keenly anticipated report on immigration reform in September. The Government has said it will publish a White Paper in response to the MAC report, but as yet no date for release has been provided. The Home Secretary Sajid Javid has confirmed that the White Paper will not be published until after the Commons vote on the Prime Minister’s Brexit deal, which is due to take place on 11 December.
Broadly speaking, implementation of the MAC’s proposals would mean:
- No preferential treatment for EU nationals
There had previously been rumours of EU nationals receiving preferential treatment, and the former Home Secretary, Amber Rudd, was known to support this. However, the Government has thus far endorsed the proposal of the MAC that there should be no preferential treatment for EU nationals. This may not be the final word, however, as some kind of special arrangement for EU nationals could form part of final negotiations with the EU.
- A significant increase in the numbers of businesses required to obtain a sponsor licence.
The MAC proposed that when free movement ends EU skilled workers should be sponsored by their employers in the same way that businesses currently sponsor non-EU skilled workers under UK domestic law. At the time of writing, 29,000 businesses and organisations in the UK hold a Sponsor licence (the means by which non-EU staff are currently sponsored to work in the UK). A licence is applied for online and is granted at the discretion of the Home Office. The application process is administratively burdensome and requires a set of prescriptive documents to demonstrate that the business is genuinely trading and that it has a genuine vacancy that cannot be filled by a settled worker.
- The end of so-called “low skilled” migration to the UK.
The MAC recommended (to the dismay of many businesses) that there should be no immigration route for low-skilled workers. This is despite the fact that many businesses across a range of sectors (e.g. hospitality, food processing and construction) rely heavily upon EU so called “unskilled” labour, the MAC’s position was that there is no need for an unskilled immigration route. Its justification was that the existing “stock” of workers, namely the EU workers here already and those here on family routes, could meet business needs.There has been significant lobbying by sectors reliant on low skilled workers, to try to persuade the UK Government not to follow this recommendation since the MAC report was published in September.
3. The time and money consequences of the proposed changes
A Sponsor licence costs £1,476 (£536 reduced fee for small organisations) and lasts four years. It comes with its own unique manual, the Sponsor Guidance, a document that has been changed seven times and is currently sitting at 202 pages. In exchange for the privilege of holding a licence, businesses “pledge” to comply with the Sponsor duties as set out in the Sponsor Guidance. Failure to comply with Sponsor duties or failure to follow the manual properly can result in loss of the Sponsor licence.
Losing a Sponsor licence is very bad news for both the business and any sponsored employees. The business loses its ability to employ its sponsored workforce and any sponsored workers lose their (and, if applicable, their family’s) right to live and work in the UK.
Sponsors of all sizes find keeping on top of sponsor compliance hugely time consuming. Some large organisations, such as universities, which are hugely dependent on international academics, have staff dedicated to this specific function.
For smaller organisations, keeping on top of the Sponsor Guidance can be a real headache. The current system allows no room for error: a simple human error can mean, at best, a visa refusal for an employee, and, at worst, the Sponsor licence itself being revoked.
For EU nationals who currently have no visa fees or are facing an uncertain application, paying the sums as set out below is likely to make coming to the UK unattractive. However, we should note that these visa fees are currently being paid by skilled workers from the rest of the world.
Visa fee breakdown (US national coming to the UK from overseas on a five-year visa with spouse and two children)
Employer Costs (these costs must be borne by the employer)
- Immigration Skills Charge
- Assigning a RCoS
(Restricted Certificate of Sponsorship)
£5000 (ISC) (£1,000 per year)
Employee Costs (some employers may meet these costs)
- Visa fee for main applicant
- Visa fee for three dependants
- Immigration Health Surcharge (IHS) for main applicant
- IHS for three dependants
Total = £8,880
Total Visa Costs (Employer and Employee) £5199 + £8890= £14,079
Total Visa Costs if IHS charge doubles £14,079 + £4000= £18,079
4. Is there a silver lining?
The MAC Report admitted that there would be “winners and losers” in immigration reform. This being in the context of the level of difficulty various sectors will face in securing non British staff after the implementation of the reforms. Sectors employing skilled workers, eg IT and education may find that the reforms will make it easier to employ EU staff than it is now. In contrast, businesses who currently rely on low skilled EU workers, may find that immigration reform presents limited or no opportunities for employing international staff.
What are the silver linings/opportunities?
In short, the changes mean it is going to be much easier for employers to recruit from the international talent pool.
How will this be achieved (if the MAC’s recommendations are implemented)?
- The cap on overseas workers will be abolished.
- The skill level for Tier 2 visas (work visas) will be lowered. Currently, it is set at jobs that require a degree, but in future will be lowered to jobs assessed at a lower skill level.
- The universally disliked Resident Labour Market Test (RLMT) will be abolished.
5. When will the changes take effect?
The timetable is uncertain and will depend, to a large extent, on whether a deal is reached in the Brexit negotiations. In the event of a deal, the timetable for changes for EU nationals will follow the EU Settlement Scheme. Under this scheme, EU nationals can come to the UK without restriction until 31 December 2020.
In terms of changes to UK domestic law, this can happen at any time. Changes are effected by amending the Immigration Rules. This is achieved by laying changes before Parliament that are subject to the negative resolution procedure, which does not require new acts of parliament. The UK Government likes to make changes to immigration law - 5,700 in the past 10 years. We will provide updates as any changes unfold.