Immigration post Brexit: The Government White Paper explained
Analysing the details of the Government's immigration white paper, “The UK’s future skills-based immigration system”.
Shortly before Christmas, the Government published its long-awaited white paper, titled “The UK’s future skills-based immigration system”, setting out the proposed new post-Brexit immigration regime.
The white paper draws on the recommendations of the Migration Advisory Committee (MAC) and proposes to adopt most of the committee’s suggestions (see our September 2018 alert).
The new regime, which the white paper describes as “the most significant change to the immigration system in more than 40 years” will be built around a single skills-based immigration route for intermediate to highly skilled workers from outside the UK (with no preferential treatment for EU citizens). There will be no dedicated entry route for low-skilled work, although the paper proposes a limited, temporary, entry route for all skill levels for nationals from specific countries which is intended to partially ease labour shortages in the immediate post-Brexit period.
Currently, the UK has a “dual system” of immigration, generally admitting only highly skilled workers from outside the EU and workers of all skill levels from within the EU (under current ‘free movement’ rules). Free movement for EU workers will continue until 31 December 2020, assuming that there is a UK Parliamentary approved withdrawal agreement prior to exit day (29 March 2019).
The key proposals set out in the white paper to replace the current system are as follows:
- There will be a single route for skilled workers (both from outside and within the EU) to enter the UK. Workers entering under this route will need to be sponsored by an employer. This will mean that a far greater number of employers than before will require a sponsor licence and will have to get to grips with the associated compliance obligations.
- The necessary skills threshold for skilled migrants to enter the UK is currently very high (covering graduate and post-graduate level jobs only). However, under the new regime, this threshold will be lowered to include roles requiring intermediate skills (at A level or equivalent).
- The Government will consult on whether Tier 2 salary thresholds (currently £30,000 or £20,800 for new entrants) should be reduced given the extension of the skilled workers route to jobs requiring intermediate skill. This will be important for many employers outside of London and the South East as this minimum salary threshold may significantly restrict the sorts of jobs which are eligible for sponsorship.
- The immigration skills charge (currently an upfront cost of £1,000 per year for large sponsors) will be retained under the new regime. This can add a total cost of £5K to the standard visa costs involved in sponsoring someone. This charge may make sponsorship unviable for certain jobs.
- The Tier 2 immigration cap (which currently allows a maximum of 20,700 skilled migrants to enter the UK each year) will be scrapped. There will be no limit on the number of skilled migrants that can enter the UK on an annual basis. This will make the sponsorship process faster and simpler.
- The white paper proposes a “temporary, short term workers route” which will allow workers at all skills levels, including low skilled roles, to come to the UK for a maximum of 12 months (with a ‘cooling off’ period of a further 12 months to prevent workers stringing together a number of short term stays and effectively working in the UK permanently). The white paper stresses that this will be a transitional arrangement only and will be kept under review (although, interestingly, the white paper does not close down the possibility of this route continuing or becoming permanent if successful). This route will only be open to applicants from specified, low-risk countries (likely to include EU countries) and employer sponsorship will not be required.
- The Resident Labour Market Test (RMLT), which currently requires an employer to advertise a job for four weeks and to consider applications from resident workers before offering it to a migrant, will also be scrapped (on the basis that it simply extends recruitment process time and does not offer effective protection for UK workers). This will also make the sponsorship process quicker and simpler for employers.
- As currently, visitors will be permitted to spend up to 6 months in the UK provided that they are not working or carrying out prohibited activities. Visitors coming to the UK for short-term business reasons will continue to be able to carry out a limited range of business related activities, including some permitted paid engagements. The Government will consult on whether these arrangements can be improved to reflect business need. Intra-company transfers will still be permitted under the Tier 2 (ICT) route. There is no proposal to reduce skills or salary thresholds for intra-company transfers.
- The new immigration regime will apply across the UK and there will be no regional variation. However, the Government will consider whether the composition of the Shortage Occupation List (SOL), which sets out those occupations in relation to which there is a skills shortage in the UK, needs to look different for Northern Ireland and Wales than the rest of the UK. There is already a separate SOL for Scotland. There will be no special sectoral labour schemes (except potentially for seasonal agricultural workers).
What does this mean for me?
We know that many of you are concerned that the cost and complexity of the immigration regime will increase once the UK leaves the EU. We are also aware that clients in some sectors (such as construction, manufacturing hospitality and leisure) fear that they will be unable to source sufficient low-skilled labour from the UK labour market post-Brexit.
The white paper offers little comfort on the first issue. Organisations that currently employ skilled workers from outside the EU will know that the cost doing so is very high, when visa fees, the increased immigration health surcharge and the immigration skills charge are taken into account.
The Immigration Law Practitioners Association recently estimated the total cost of sponsoring a migrant worker for 5 years under Tier 2 at £8,631, with the figure jumping to £18,927 for a migrant worker to come to the UK under Tier 2 for the same period with their spouse and 2 children. These estimates do not include any costs associated with conducting a resident labour market test, meeting UKVI’s English language requirements or having a TB test conducted. These estimates include the cost of the application itself, which is currently £1,220 per applicant for a 5 year visa. Although an employer can require the employee to cover the cost of this application fee, total sponsorship costs are in any event substantial.
Of course, many intermediate and even skilled roles currently filled by EU workers currently attract a salary of less than £30,000. Unless salary thresholds are reduced following consultation, employers may need to significantly increase base salaries for some roles if they wish to continue to recruit EU workers. This is likely to disproportionately impact employers outside of London.
If your organisation relies on low-skilled labour from within the EU you may be disappointed that no designated entry route for low skilled workers is planned. While the white paper states that the temporary, short term route is intended to ease pressure on the most impacted sectors, it may just push the problem further down the road. For where training may be required (for example drivers) a 12 month period of work may be of limited use. This transitional arrangement has very few benefits attached (for example, workers cannot bring family members) and is likely to attract far fewer EU workers than current arrangements. It may not afford UK employers the steady flow of low-skilled workers and the workforce continuity that they require.
As the white paper relies so heavily on the work of the MAC, it contains few surprises. The key outstanding issue is whether salary thresholds for skilled migrants should be reduced post-Brexit. It is also important to note that the white paper proposals may still be subject to change as the final legislation is developed and negotiations with the EU continue to evolve.
The proposed new roles will not apply immediately on the UK’s exit from the EU. It is envisaged that current rules will continue to apply during the ‘implementation period’ (running from exit day on 29 March 2019 until 31 December 2020), assuming that there is not a ‘no deal’ Brexit. The proposed new regime will apply from 1 January 2021 and will be “phased in to give individuals, government systems and businesses time to adapt”.
The Government has promised to carry out “extensive engagement” with stakeholders over the next 12 months to finalise the new immigration rules. There may still be an opportunity for employers to have some input into key aspects of these proposals such as minimum salary thresholds for skilled workers and which occupations are considered to be in ‘shortage’ and should qualify for less onerous immigration requirements.
If you have any concerns or questions about the impact of Brexit on your organisation or require support with workforce planning please do not hesitate to contact Elaine or speak to your usual Weightmans advisor. As well as HR and management advice we can offer workshops on the settled status scheme to inform and support EU nationals within your organisation. We would be happy to talk through your specific requirements.