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How UK's exit from the EU will impact upon HR practices for tech companies

(Image credit: Image Credit: KurKestutis / Shutterstock)

The UK Commission for Employment and Skills estimates that 1.2 million new technical and digitally skilled people will be required by 2022 to fill roles in the UK industry. With the Government announcing that there will be no preferential access to EEA workers post Brexit, and with insufficient supply from the domestic labour market, how will the Tech industry plug the talent gap?

With the clock ticking down to 29 March, there is relatively little that is known for certain.  Deal or No Deal is the burning question on everyone’s lips.  Even if we have a deal, there is no certainty that it will be the current deal, although it looks likely, if Theresa May remains Prime Minister, that it will be a deal based on the existing Withdrawal Agreement.

Into this maelstrom businesses have to make important plans regarding how they will meet their obligations and continue to drive their businesses forward, continuing to recruit and be an employer of choice. 

So just what do HR teams need to consider both in the event of a deal and also in the event of a No Deal exit from the EU?

DEAL

The most straightforward outcome is for there to be a deal.  A deal allows things to continue, very much as they are now, at least in the immediate aftermath of an exit.  One thing we do know is that with or without a deal there is not going to be any wholesale reform of employment legislation.

Staffing

There are many EU workers in the UK currently filling important roles.  In the event of a deal the Government’s EU Settlement Scheme will provide for a transition period  in which all those who are living in the UK on 31 December 2020 to apply for Settled or Pre-Settled Status.

Under the current deal scenario, applications can be made from 30 March 2019 up to 30 June 2021.  Settled Status is open to all those who have been resident in the UK for 5 years (at least 6 months in each 12 months).  Those with Settled Status will be able to work, use the NHS and have access to public funds.  They will also be able to bring close family members to the UK after 31 December 2020 if their relationship with then began before 31 December 2020 and the individual is still in that relationship when they apply to come to the UK.  Those with Settled Status can also leave the UK for up to 5 years.

Those with less than 5 years’ residence can apply for Pre-Settled Status, which allows them to stay in the UK for a further 5 years and, therefore, apply for Settled Status.  They can work, use the NHS and access public funds.  Importantly those with Pre-Settled Status can only leave the UK for a continuous period of 2 years. 

Whilst the EU Settlement Scheme deals with the issue of those arriving in the transition period, it does not solve the problem of what happens after 31 December 2020.  Those arriving after that date will have to apply under the Points Based System, under which there will be no preferential treatment for EU/EEA citizens. 

In addition those who have “Permanent Residence” must apply for EU Settled Status.  Those with Indefinite Leave to remain may choose to apply to obtain the benefit that they can leave the UK for 5 years without losing their settled status.  

Importantly, employers will need to have a Sponsor Licence in place in order to be able to employ non UK nationals.  Whilst 31 December may, today, be some way off it is inevitable that as the date approaches there will be a rush to register.  Prudent employers should consider putting their HR systems in order to ensure that they can apply for a Sponsor Licence and having done that apply for a Sponsor Licence.

Whilst the focus of this article is about employees working in the UK there is also a need for businesses to consider whether they can continue to send employees to work abroad.  With a deal there will be a transition phase allowing matters to continue as they are currently.  However, employers will need to begin planning now for what happens at the end of the transition period to those UK employees who are now or will during the transition period be working abroad and continue to work abroad at the end of the transition phase.

Data

A deal will allow personal data to continue to flow smoothly within the EEA.  That is important because it means that for those businesses who house their European centre of operations in the UK, although the UK will be outside the EU, it will not prevent personal data transferred to the UK by business operations which are inside the EU.

NO DEAL

In the event of a No Deal Exit the UK will leave the EU at 11 pm on 29 March 2019, with no transitional period.  The suggestion is that this may cause significant dislocation of services and transport systems, as the UK will no longer be covered by EU Agreements.

Data

Currently the UK is bound by GDPR however a no Deal exit will mean EU businesses will no longer be able, lawfully, to transfer personal data about employees to UK data centres. 

Employers are faced with a choice, either to move the place where personal data is held and processed or put in place Model Clauses, and appropriate systems and safeguards to ensure that the business remains compliant with its data obligations.  Matters become more complicated when third party providers are involved and it is important to ensure now that all necessary agreements are in place to allow the free flow of data to continue lawfully.  That might, for some, mean understanding how and where data flows to and from. 

Staffing

The Government proposal is the EU migrants who can prove they were living in the UK as at 29 March 2019 will be able to remain in the UK and apply for “settled status” but only up till 31 December 2020 (as opposed to June 2021 under the deal scenario set out above)

During this time, they will still have the right to live and work in the UK and will still be able to bring their family members over to live with them until 31 December 2020.

EU migrants who come to the UK from 30 March 2019 onwards will be subject to the new Points Based System. 

Travel within the EU may also become more problematic, but the good news is that travel to Ireland will be unaffected.

The Schengen Countries have their own rules, but on 1 February 2019 agreed that British nationals could have visa free entry into the Schengen area for 90 days in any 180 days period.   In addition, passports must be no older than 9 years and 6 months old on the date of travel and it seems likely that those wishing to travel within the EU immediately after 29 March 2019 will need to have at least 6 months left on their passport before it expires.

Bulgaria, Croatia, Cyprus and Romania will have their own entry requirements.

Another consequence of a no deal Brexit will be that those planning to drive or hire a car in Europe will need to have an International Driving licence.

Unlike a deal scenario there is no transition with a No Deal Brexit.

Until recently, it was unclear what would happen to those arriving after Brexit day on 29 March 2019. However, on 28 January 2019, the Home Secretary announced that transitional arrangements would apply so that EU citizens who arrived after 29 March 2019 and who wished to stay in the UK longer than 3 months will need to apply for temporary leave which will be valid for 3 years. They will be subject to identity, criminality and security checks. Those wishing to stay for longer than 3 years will have to apply under the new Immigration system from 2021.

For  UK nationals who are working in other EU states,  it is likely that this will be determined on a country by country basis.  It seems that many are beginning to prepare for a No Deal Brexit and are preparing emergency legislation.  Employers, or Groups who have UK nationals living and working in other EU countries should ensure that they have prepared for a No Deal Brexit and have organised their affairs to ensure that their employees can continue living and working abroad.   There may well be steps which employees need to take individually and employers should ensure that their employees are aware of what steps they need to take, either through Brexit surgeries or circulating updates or links to appropriate websites.    

A new Immigration System – 2021 onwards

Regardless of whether there is a Deal or no Deal there will be a revamped  Points Based System

The UK already operates a Points Based System (PBS) to regulate the entry of non-EU citizens who wish to come and work in the UK. This involves UK employers registering as sponsors for those they wish to employ.
From 2021 this will also apply to EU citizens, they will not receive any preferential status.

This means that all employers wishing to recruit from outside the UK will have to register as sponsors. Sponsorship under the PBS brings a number of hurdles for employers including:

  • A cap on the number of visas to 20,700 per year
  • A resident labour market test (a recruitment test to ensure the UK domestic labour market is not undercut); and
  • Minimum skills and salary criteria

The Government has proposed some concessions under the new immigration system to assist employers.
In particular, the removal of the cap and Resident Labour Market Test and lowering of the skills requirement to A-Level and equivalent qualification level.

It has also proposed a new short-term work visa – aimed at helping employers who are reliant on low-skilled workers from Europe to transition to the new system. This new route will be temporary and reviewed in 2025. It will provide a visa for up to 12 months, after this, the migrant must return to their home country for a 12 month “cooling off” period before they can apply again. While in the UK, they will not have to be sponsored or have a definite job offer but could not switch categories, bring dependents with them and/or acquire the right to settlement.

Filling the skills gap

With employees likely to be at a premium employers should consider how best to retain their employees and the sources from which they will recruit the next generation of talent.  Is it realistic to source, recruit and train suitably skilled talent locally?  If they are going to do that how are they going to recruit and train in sufficient numbers?

Tech Employers need to consider both the long and short term to ensure that their business is not starved of the talent base it will need in future years.

What should tech employers do now?

  • Register as a sponsor: If you are not already a sponsor you should register now to beat the rush. There are currently over 900,000 employers in the UK who will need to register under the new system.
  • If you are already a sponsor: Invest in compliance training - sponsorship brings with it strict onerous compliance and reporting obligations. Sponsorship can be revoked for non-compliance and employers can be banned from re-applying. Ensure you know your obligations.
  • Assist your existing staff with applications under the EU settlement scheme or their local country scheme

For advice or assistance with all of the above, please contact Barry Stanton or Claire Taylor-Evans Business Immigration group on 0118 952 7284 or email us at big@boyesturner.com.

Barry Stanton, Partner, Boyes Turner
Claire Taylor-Evans, Senior Associate
Image Credit: KurKestutis / Shutterstock