Immigration was widely cited as the main reason for voters choosing to leave the EU; now those politicians who argued for tighter controls have to deliver them. For manufacturing and industry, this brings a renewed focus on business immigration. What will be the impacts of a shifting law and policy framework on employers’ ability to source skills from overseas, and how to plan for it?  

EEA nationals and their families

The UK, unlike most of the “old” European states, enthusiastically embraced unrestricted labour market access for the citizens of those countries which joined the EU in 2004. From the start, the UK became the destination of choice particularly for Eastern European migrants seeking low-skilled work. Now, the mood is reversed; the decisive vote in favour of Brexit has raised expectations of correspondingly decisive action to close this access down. Given that half of the 327,000 annual net migration figure is made up of European nationals, the potential impact on employment is significant.

Post-referendum, speculation grew that those already exercising treaty rights in the UK might lose them. Article 70 of the Vienna Convention on the Law of Treaties guarantees “acquired rights” of individuals if a Treaty ends. This is untested, but the legal consensus holds that existing rights under European law will survive the dismantling of that law – and, by extension, that those in the process of acquiring rights may continue to accrue them (including those exercising third party rights of residence and labour market access in the UK through marriage to an EEA national). The Government has to balance the legality – and the social and economic consequences - of removing employees’ present and future entitlements, against the electorate’s vote to end “uncontrolled” European immigration. 

This will almost certainly play out in the protection of currently existing rights and a clampdown on future free movement rights and labour market access for European nationals and their family members who have not yet worked here, while building in exemptions for the more highly skilled and in-demand. So, when should the cut-off date be?  Although the timing is unclear, the shape of the emerging deal is unmistakeable. The Government will protect the rights of those EEA nationals already living and working in the UK. There may also be simplified provisions within the Points Based System (PBS) to keep open an accessible supply of EEA nationals with in-demand skills.

The Immigration Act 2016 – illegal employment

Knowingly employing an illegal worker has been a criminal offence for almost two decades; but now the test has been broadened to include “reasonable cause to believe” that a person’s immigration status disqualifies them from being employed. It is now also a specific offence for a person to work “illegally”, i.e. without appropriate immigration permission. What does this mean in practice for employers? The onus is on employers to prevent illegal working by carrying out comprehensive checks on the immigration status of their employees and, in the case of migrants with immigration status, to re-check before expiry. Failure to do so risks civil penalties and loss of ability to sponsor non-EEA nationals. The burden of proof on the investigating agency is no longer there; the implication for employers wishing to avoid fines, criminal sanctions, reputational damage, and to protect their ability to sponsor foreign nationals is clear.

Changes to the Points Based System

The prospect that the current economic migration system of sponsorship would be replaced by an “Australian style points based system” was probably the biggest source of alarm to business. The present PBS (heralded as “Australian style” when introduced in 2008-9) was specifically designed to be adjustable in the light of labour market conditions and business needs, an objective which it has achieved. However the PBS has not had any significant impact in reducing net migration from hundreds to tens of thousands a year in line with policy. The introduction of the Sponsor Management System was very costly at the time; it is inconceivable that the Government can find the resource and political justification to rebuild the system anew. Instead, it will press on with more pedestrian changes.

The known structural changes ahead were triggered by the Migration Advisory Committee Report of late 2015 and announced in March 2016 (pre-referendum). They include:

  • Minimum salary thresholds for “experienced” (i.e. not recent graduates) sponsored migrants will increase to £25,000 per annum from the autumn of 2016 and £30,000 per annum from April 2017.
  • “Simplification” of the Intra-Company Transfer (ICT) route by scrapping the Skills Transfer route for migrants who are upskilling local workers or being upskilled themselves in October 2016, and a removal of the short-term category for Tier 2 ICT in April 2017; in all but a few exceptions and Graduate Trainee cases, this will be subject to a minimum salary of £41,000 per annum.
  • The compulsory Immigration Health Surcharge will be payable for all ICT migrants from October 2016; at present they are exempt.
  • An Immigration Skills Charge Levy will be imposed on all Tier 2 Sponsors at a headline level of £1,000 per migrant per year from April 2017.

There are some exceptions, but the overall picture is no fundamental change of policy or direction.

Immigration – how tough will it get for business?

The Government’s changes to immigration law are not designed to target well-run businesses. Employers who adhere to well-documented compliance processes keep their statutory excuse against penalties. The rights of European nationals and their families already living and working in the UK will be protected. There is unlikely to be any sudden attack on the PBS. The challenge for employers is complying with a “simplified” system whose complexity is an embarrassment to Government, but where rigour is a necessity. The political impetus to deliver “control” of borders leaves no alternative direction for policy and law. The system can still deliver essential skills for businesses which understand the rules, plan ahead and, where in doubt, take advice.

About the author

Matthew Davies Partner

Matthew is an expert in business immigration law, advising employers, business people and investors on how best to navigate the complexities of the UK’s immigration rules and minimising delays, costs and risks in hiring talent from overseas.