The United Kingdom has taken the momentous decision to leave the European Union.
This note seeks to consider the anticipated impact on freedom of movement for European workers in the UK and the impact on UK employers seeking to recruit from the EU.
Even the most prominent proponents of Brexit have been unclear on how a UK outside of the EU will look.
To try to give us an indication of the effect of Brexit on the workforce, we have considered some of the key potential changes raised during the Leave campaign and give an indication of the legal ramifications and some next steps for employers.
Prior to the referendum the Leave campaign stated that they would not immediately trigger an exit from the European Union following a vote for Brexit – a process which takes a minimum of two years from Article 50 of the European Treaty being invoked.
Prime Minister David Cameron has confirmed this morning that he will stand down as Prime Minister with a new Prime Minister likely to be in place by October. It will be for the new Prime Minister to invoke Article 50 and carry out negotiations with the EU.
The Leave campaign have suggested that a European Union Law (Emergency Provisions Bill) should be immediately passed by Parliament but the proposed provisions within this statute would not currently affect business immigration.
However, the Leave campaign has also proposed an Asylum and Immigration Control Bill, which they may seek to push through Parliament prior to the UK's formal exit from the EU. In its proposed form this statute would end the automatic right of all EU citizens to enter the UK by the next election and instead force them to apply by way of the Points Based System as current non-EEA migrants do.
The Leave campaign has also touted the possibility of granting permanent residence to any EEA national who is exercising treaty rights in the UK at the date of the referendum.
In view of the above we recommend the following:
- Encourage your EEA employees to seek documentation confirming their immigration position in the UK.
Employees who have been in the UK for more than 5 years may be eligible to apply for permanent residence. Permanent residence status removes any employment restrictions that an EEA national may be subjected to if the Tier 2 visa route is modified to cover EEA nationals and would also act as a stepping stone along the path to full British Citizenship.
Employees who have been in the UK for less than 5 years should formally register their residence in the UK.
A registration certificate will prove that the individual is in the UK legally exercising European treaty rights and if automatic permanent residence is conferred, this is likely to be the most straightforward manner of qualifying.
- If your business does not have a Tier 2 sponsor licence yet, consider applying for one.
With unemployment currently at 5% our view is that any new system is likely to put tremendous pressure on the Tier 2 visa route, which is already operating at capacity. It is unlikely UK employers will be able to find all of the skilled talent that they require in the UK in the short term and a sponsor licence may become invaluable and the application process may become protracted leading to recruitment delays.
- What if your business does already have a sponsor licence?
We would recommend that you consider your skilled labour needs in the medium term. It may be that you need to apply for any increased certificate of sponsorship allowance to bring in foreign skilled labour. It is only likely to get more difficult in the future as the system gets more congested and new caps are introduced, so acting early may save on difficulties later;
- Consider your potential future Tier 3 unskilled labour.
Tier 3 is the inactive tier of the UK Points Based System for unskilled workers, but there is a chance that to cope with the burgeoning need for visas for EEA workers that it will be activated. Businesses should consider their needs in the medium term to be in a position to react fast once concrete proposals in this regard are published.
As the landscape becomes clear, Mishcon will be running seminars to advise businesses on how best to cope with the changes that arise.
If you have any questions arising from this, please contact Kamal Rahman (020 3321 7143) and Steven Bostock (020 3321 7481).