How will Brexit affect your workforce?

By Dr Lusine Navasardyan

Dr Lusine Navasardyan is Director and Head of Corporate and Business Immigration at RVS Solicitors. Dr Lusine studied at Yerevan State University and the Bucharest University of Economic Studies. She is also a published author and a member of the Bucharest Bar. As a Director of RVS Solicitors, she is instrumental to the operation of the law firm, and as Head of Corporate and Business Immigration, she helps our clients to forge new futures in the UK.

A recent survey carried out by Total Jobs has indicated that two-third of the employers in the UK believe that Brexit will affect their businesses due to shortage of workforce. This is not a new concern. Shortly after the Brexit vote and indication that Brexit would also take the UK out of the Single Market many businesses not only worry about the future issues they will face, but already start to feel the effects. The recently released Migration Report indicates a very sharp decline of migration from the EU and this has already started affecting the local labour market.

I have numerous clients, mainly in construction and hospitality businesses who grow frustrated by the day, as they struggle to recruit people to fill vacant positions. Many companies that were able to easily meet their workforce requirements either by recruiting in the UK or organising recruitment rounds, in particular in Central and Eastern European countries, now return home from such rounds nearly empty handed. Many look into implementing changes to the services they provide, to counter for the skill shortage. Agriculture doesn’t fare any better, as seen by the insistent calls by the farmers, who face a serious shortage of workers already in this coming season.

For now, there have not been any changes to the legal regime of access to the UK market by EEA workers. The effects we currently see are simply due to the unwillingness of the European workers to commit to relocation, considering the uncertainty of their future in the UK. Situation will undoubtedly become more complicated as the UK leaves the EU. Day-by-day it is becoming clearer that not only the industries relying on lower skilled workers will bear the brunt of Brexit, but all of them. Britain has long been relying on EEA to source its skilled workers. In certain areas, the shortage of highly skilled workers is becoming worse as well.

So what can be done to counter these effects?

What we know so far

The legal framework for EEA workers will remain unchanged until 30 March 2019, the date when the UK will officially depart from the EU. After that date, the indications are, so far, that those who have arrived before that date will be allowed to remain in the UK and obtain settled status. It is, however possible, that the European nationals will have to face some administrative barriers associated with registration, which also means added costs for them.

The grey area so far has been for those arriving after the date of 30 March 2019 and before the transitional period ends on 31 December 2020. The Prime Minister has indicated that the UK is willing to accept concessions in this area. As it stands today, it looks like the new arrivals will also benefit from roughly the same legal rights as those who are already in the UK. The only difference that has so far been disclosed by the Government is the right to bring over family members. This, however, is outside the scope of this article.

It is, therefore, safe to say that up to December 2020, the businesses still can turn to the EU market to secure the workforce. As the barriers are currently more psychological than legal, the businesses looking to retain the services of the EEA national workers might wish to consider incentives and information programs. It is essential to realise that those who currently avoid relocating to the UK do so based on lack of understanding of what rights they currently have and what they will have in the future. For instance, my personal experience has shown that offering access to impartial legal advice or having a lawyer hold talks with employees or potential employees, give better chances of retaining employees or even signing up new employees.

The issues become more complicated when it comes to highly skilled professionals. These are usually relatively young, very in-demand individuals with high mobility. Retaining or attracting them is much more complicated. However, again, based on my personal experience, the companies who have offered their employees access to legal advice on their rights and status in the UK, have managed the situation more successfully.

A distinct note to the workforce shortage comes from an area that seems to not be Brexit related, however this might be a wrong impression. I refer to a phenomenon that for now has been preoccupying a very small segment. It’s related to the issue of CoS under Tier 2 visa route. CoS, Certificate of Sponsorship, is the document that is issued, on application to Sponsorship Licence holders in order for them to sponsor a non-EEA national for work purposes. There is an annual limit which is slightly over 20,000. This annual limit is divided in 12 monthly limits. Since November 2017, the monthly limit has been consistently surpassed. Which has translated into CoS applications being refused in large number, even though they technically met the requirements for issuing of CoS. This is unprecedented. The last time CoS limit was reached was 2015 and it was only for a brief one month. The fact that we are now in month five of surpassing this limit indicates that perhapse the skill shortage due to Brexit worries is not confined to lower skilled jobs. Tier 2 is almost exclusively for NFQ level 6 qualified professionals, as such, this might be a sign that the UK employers are now failing to secure the required skills locally in higher numbers and as such, have to turn to the non-EEA workers. A new allocation cycle will start from this month and it might bring some relief. Which, however risks to be short lived if it is indeed the case that the skill shortage is driven by the Brexit worries. Again, referring to the Migration quarterly report, it seems it might be, as the net migration from the EU has fallen by 75,000 and fewer people arrive to take up work or in search of work. It has also been noted that the sharpest fall comes from the older member states, who traditionally have been the suppliers of high skilled workforce. For which, it seems that now the UK business are looking for elsewhere.

What can be done to minimise the risks for business?

Interestingly enough, the biggest concern in planning for Brexit from perspective of workforce is the fact that the businesses seem to not have what can be called an impact study. Very few businesses have a clear understanding of how dependent they are on European workers and therefore, what the effects of the Brexit will be on their business. This is due to the fact that as the law stands now, the EEA nationals have what can be considered as unlimited right to work. They have the same access to the labour market in the UK and the employees are not required to have a separate database. In contrast to this, the employers are required to have a database of migrant workers from non-EEA countries with mechanisms in place to periodically verify if they still have right to work in the UK. Accordingly, what the businesses will need to do as a first step is identify the EEA nationals within their workforce. This will allow them to have an understanding of what the current proportion of EEA workers within their workforce and if there are any steps they might need to take with immediate effect.

Another measure, for those who are reliant on skilled workers, can be familiarising themselves with sponsorship license requirements and duties and perhaps even applying for one. Holding a Sponsorship Licence is a requirement for those who wish to employ non-EEA and non-UK workers. The Licence practically transfers the burden of responsibility for the migrant and their conduct onto the Employer. There are numbers of domain and tier specific requirements for obtaining the sponsorship licence and following the successful application, there are numerous obligations on the Sponsor not adhering to which can have serious consequences. It is therefore a good idea to familiarise oneself with the Sponsor duties well before becoming one.

For those who are relying on lower-skilled or unskilled workers to conduct their business, it still might prove to be productive to gain knowledge of Sponsorship duties, as that might offer them a competitive edge for when inevitably a system will be devised to assure the level of lower-skilled workers is satisfactorily maintained in the UK labour market. It should be noted that certain lower-skilled positions can be filled via the Tier 2 route even today. These are very limited and are either a recognised shortage occupations or certain creative sector jobs. It is, therefore, advisable to always get a legal opinion on the matter.

In conclusion, while there is still a lot of uncertainty around the effects of Brexit on the workforce, there are some steps that can help businesses to be more flexible and competitive in a changing labour market.