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Brexit planning: how to hire overseas talent

28 October 2020: Dhruti Thakrar of Edwin Coe LLP explains how the new sponsor licensing system will work and the potential challenges for businesses.

Employers don’t know what kind of mindset shift will be needed when it comes to recruitment post-Brexit transition period. Hiring people from Europe will not be as easy as it once was, incurring addition to the financial and administrative costs.

“There will be additional cost implications and an impact on budgets, as employers wishing to employ EU nationals will need to apply for a Sponsor Licence (for which there is an application fee payable), pay visa application fees, skills charges and IHS charges (a contribution to the NHS),” explains Dhruti Thakrar, head of immigration at law firm Edwin Coe LLP. Thakrar spoke to ICAEW Insights ahead of an ICAEW webinar, Brexit: What We Know – Labour and Personnel Issues, on 2 November.

Start planning to fill skills gaps

In the immediate aftermath of Brexit, there may be skills shortages across various industries. Employers urgently need to assess whether they have the skilled labour they need within their workforce. “Where they might have previously sourced skill shortages from the EU fairly easily, this will no longer be possible,” says Thakrar. “The most obvious sectors using skilled staff from the EU are the hospitality and construction industries, as well as the healthcare industry.”

Lower-skilled roles may also become more difficult to fill. There is a distinct disinterest from UK nationals in filling certain roles in sectors such as hospitality and farming. “UK nationals may demand higher wages than their EU counterparts did, pricing out businesses from hiring as many labourers as they previously had been able to. I think many sectors of business have been using talent from EU countries and there is going to be a substantial forced change following the UK’s departure from the EU,” says Thakrar.

Companies must start looking at their current labour force and assess where they might lack skills. They need to start planning how they are going to fill any skills gaps in their requirements.

“Employers need to increase their awareness about whether they will be able to continue to retain current staff and assess how they will recruit and transfer staff from the EU where necessary,” says Thakrar.

Points-based criteria

Businesses will be able to sponsor EU nationals by applying for a sponsor licence under the government’s points-based system. Employers need to understand the constraints within the sponsor licensing system; they can only sponsor migrants who meet prescribed skill levels under points-based criteria. Also, they need to pay certain prescribed salaries. “Employers also need to understand the level of additional costs and resources required to hire foreign nationals under the points-based system and appreciate it will not be as easy as before.”

To retain existing staff, Employers should remind EU members of staff to apply under the EU Settlement Scheme to secure their futures post- Brexit, Thakrar advises. “Diligent companies may also want to consider a hiring glut now, so they can rely on the free travel area before it is lost next year. Careful planning where possible will ensure that companies face no issues from 1 January 2021 and may continue their businesses relatively undisturbed.”

While the sponsor licence application process is simple, holding one imposes responsibilities on a business. “Many companies do not realise the importance of maintaining appropriate records in line with their obligations as licenced sponsors and also when and how they need to update the sponsor management system once they become a licensed sponsor. Companies that wish to obtain a sponsor licence must seek advice and prepare early to avoid being left in the lurch,” says Thakrar.

Failing to meet a sponsor’s obligations can result in hefty fines and other consequences that could impact the company, Thakrar explains. Companies must ensure they are well versed on their duties and responsibilities to avoid negative consequences. “Again, costs and resourcing are key challenges in maintaining a sponsor licence.” 

The government has run an advertising campaign to help raise awareness of what they need to do before the end of the transition period. There is a tool which employers can use that shows what each business type should be doing to prepare for Brexit. This encompasses everything from intellectual property, data regulations and many other aspects of businesses impacted by leaving the EU, including immigration.

The government has also changed the requirements of the points-based system, lowering the minimum salary threshold from £30,000 to either £25,600 or the minimum salary prescribed under the standard occupational codes of practice – whichever is higher. A role with a salary below the minimum means you cannot sponsor an individual. The minimum skills requirement is also being lowered from RQF level six to RQF level three, widening the number of roles that can be sponsored. The intention in lowering these requirements, Thakrar is to make it easier to hire migrant workers once freedom of movement to the EU ends. 

“It remains to be seen as to whether this change is sufficient to help businesses hire skilled labour from the EU or indeed from other parts of the world,” says Thakrar. “In our opinion though, the government has not done nearly enough to prepare businesses for Brexit. The government should have gone further than the current new rules, removing the immigration skills charge and freezing visa application fees.”

Greater flexibility?

However, there are some positives – the lowered income and skills requirements give businesses greater flexibility in hiring foreign nationals. “Many have been barred in the past by sky-high salary requirements or roles not being considered skilled enough, but hopefully the changes the government should help. Of course, this is nowhere near as free as the current freedom of movement provisions enjoyed during EU membership.”

That’s for skilled roles. However. For businesses looking for lower-skilled labour, recruitment will be much tougher. Labourers, office administrators, hospitality workers and many other non-degree level roles will be barred from sponsorship.

“Roles that can still be sponsored may have increased salary requirements/costs because of immigration fees, pricing some businesses out of hiring from outside the UK,” says Thakrar. “Many companies that rely on EU labour are going to have to look for alternative ways to fill vacant roles or even adopt different business strategies to account for the loss of labour such as, for example, through apprenticeship schemes or setting up their own training and development schemes.”