Hiring from the EU: businesses must prepare for change
13 October 2020: The Home Office has outlined new immigration rules that will change the way UK companies hire staff from the EU from 1 January 2021, including the introduction of a points-based system.
Following the end of the Brexit transition period, an overhaul of the UK’s immigration system will end the free movement for European citizens and bring the rules for EU workers in line with those governing non-EU citizens, introducing job, salary and language requirements.
From 1 January 2021, companies will need to register as a licensed sponsor to hire or continue hiring eligible EU workers on a Tier 2 (General) visa or intra-company transfer visa. A recent clarification from the government has prompted speculation about a surge of sponsor licence registrations ahead of the end of the Brexit transitional period.
The rules stipulate that job offers must meet specified minimum skill and salary thresholds: that is RQF3 (equivalent to A level) and the higher of £25,600 or the ‘going rate’ for that job, bearing in mind that some employees may be paid less than £25,600, for example, if their job is in a shortage occupation. The UK shortage occupation list can be found here – there is a separate list for Scotland. Applicants must also meet English language requirements.
The new system will not apply to EU employees already working for businesses in the UK. EU citizens and their family members living in the UK by 31 December 2020 can apply to the EU Settlement Scheme until 30 June 2021.
Meanwhile, from 1 January 2021 workers coming to the UK using the Intra-Company Transfer route will need to be sponsored by a Home Office licensed sponsor and must have 12 months’ experience working for a business overseas linked by ownership to the UK business they will work for. Eligible roles must be at graduate level equivalent or above and be paid at least £41,500 or the ‘going rate’ for the job, whichever is higher.
John Boulton, Director, ICAEW Technical Policy, said: "With new requirements coming into force, it is crucial that businesses are alert and ready to take action. Although we are awaiting the conclusions of trade talks with the EU and the certainty this may bring, there will be some changes which happen regardless of a Free Trade Agreement and so it's important businesses are prepared."
The new points-based system has faced criticism from several quarters, including immigrant rights’ groups and UK business leaders, who argue that the system will make it more difficult to hire the staff they need, especially with no so-called low-skilled immigration route in place.
Tijen Ahmet, head of business immigration at law firm, Shakespeare Martineau, warned that larger corporates, whose workforces are made up of a high percentage of migrant workers, have a tough task ahead of them, not helped by timeframes of up to six months to obtain a licence. “If businesses want to employ Europeans in future, getting the ball rolling now would be hugely advantageous. Whilst the current system is in place, EU citizens can enter the UK with their EU passport or ID card and begin to work. As of January, that simply won’t be possible.”
A survey of 502 businesses conducted by immigration law firm Fragomen found that 39% of employers will automate more aggressively, do less work in the UK, move work overseas or scale down production as a consequence of the changes for skilled workers.
Find a range of resources to help prepare for the end of the transition period and beyond on ICAEW’s Brexit Hub.