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Brexit-proofing your workforce

With still no Brexit deal agreed, it is impossible to know how the UK’s EU exit will impact such vital areas as availability of skills and workers’ rights. Although the future is unclear, you can still prepare now.

“We may end up in a completely different skills availability landscape, things may stay as they are, or somewhere in between,” says business mentor and consultant Craig Stirk. “But your business can do several things right now to put you in the best possible place when we get certainty.”

What are my business capabilities?

Assess the skills you have and where and when gaps might occur. “Think about what capabilities you need in the next few months and how directly reliant you are on overseas skills,” says Stirk, who owns Sarcul Consulting. “For instance, I’ve had great Polish plumbers fix my personal DIY disasters over the years – what will I do without them? If you have EU workers, anonymously learn how many plan to stay in the UK, and assess the likely impact of their departure, where that skills gap would be.”

Can I still employ migrant workers?

EU nationals currently resident in the UK will continue to have a right to work and settle here. But from January, the ability to recruit new workers from the EU will be radically different and for some companies will be impossible.

All new migrant workers you employ must hold 70 points according to the UK’s new immigration points system. These accrue by certain criteria, including having a formal job offer from you (20pts), having the required skill level for the job, equivalent to A-level (20pts) and speaking English to an “intermediate” standard (10pts). But in most cases the job must also pay a “going rate” of at least £25,600 (10pts) which reflects that it is a skilled position.

What if I need unskilled workers?

There are opportunities for migrants to fill unskilled jobs if they are on a government list of “specific shortage occupations” - these include nursing, civil engineering and, somewhat incongruously, classical ballet dancing, for which the minimum going rate salary is lower, at £20,480.

The idea is that Britain, according to a poster retweeted recently by Home Secretary Priti Patel, employs migrants “according to their skill level, not what country they’re from”.

Check if your vacant roles are for ‘skilled’ workers

From January all jobs will be given a Standard Occupational Classification (SOC) code and accompanying designated skill level. A full list of occupations that meet the criteria is published in the government’s Immigration Rules.

While skilled workers include traders such as carpenters and plasterers, they exclude hospitality jobs such as table-waiting, some farm workers and – despite the fact millions of us clapped for them every evening through the summer – a huge number of lower-paid jobs in the NHS and social care. Even if these jobs were classed as “specific shortage occupations” (most are not, even though one in 11 care workers posts is currently unfilled) many of their going rate salaries would be so low that migrant workers would not qualify. This is likely to present a huge headache and staff shortage for many industries, not least the entire care sector, where one in six of the UK workforce currently comes from overseas.

Are you licensed?

Employing migrant workers is about more than them meeting the “skilled role” criteria. UK businesses have long required licences to sponsor migrant workers from outside the EU but if there is a no-deal Brexit, this will apply to workers from the European Union as well.  This means applying to the Home Office and constant monitoring and record-keeping about each worker and informing the government if their individual circumstances change. Failure to do so brings extensive financial penalties.

How do I become a sponsor?

Applications to become an approved sponsor take around eight weeks, although this is likely to be longer at the moment as a last-minute rush builds. Most businesses can get a licence as long as they, or their officers, have no criminal convictions for immigration offences or other crimes such as money laundering. You need to nominate a key contact in your organisation to be a sponsorship manager, and then pay a fee that, depending on the size of your business, workforce and number of migrant workers you wish to take on, is between £536 and £1,476. Indeed with licence fees, an immigration skills charge and an immigration health surcharge, an company who could previously employ an EU worker for no charge is now looking at around £9,000 for a five-year visa. For further details and to apply, see https://www.gov.uk/uk-visa-sponsorship-employers

This looks prohibitive…

Yes it does, and the high cost and administrative process is going to affect several sectors. The Institute for Public Policy Research reports 38% of EU workers currently employed in the UK financial sector would no longer be eligible. This rises to 55% in the energy sector, 58% in business services and 90% in transport.

Look for alternatives now

When you have identified gaps, look at potential new suppliers, making contact, building up a rapport. “This isn’t about wanting to replace existing workers,” says Stirk, “but if you ultimately have to, you can approach that alternative supplier as a friendly face they know, rather than just one of the many approaching them in the same boat.”

Consider British workers

Some physical roles, such as on farms, may require seasonal workers – and with many migrant workers no longer qualifying to come to the UK, you will need to look at British workers. “Think about what capabilities you need and whether you could employ British workers – unemployment looks as though it will continue to rise so more young, healthy people will be available,” says Stirk. “With seasonal work you can wait a few months before committing – but you can plan now.”

Assess tax implications

Covid may have increased skills availability. “So many companies have engaged with remote working that distance is not an issue,” says Stirk. “They can work for you in their own countries, which means you have a bigger pool of talent. But if you are suddenly employing staff permanently on these terms, be mindful of their local tax laws, and the rights they can expect from you. You may want to put these people on contracts instead but consider the impact of IR35.”

Take available cash help

If Covid has adversely impacted your business, government loans are available – which can help you negotiate the additional effects of Brexit. “Covid has shut borders too,” says Stirk. “If, and of course only if, you meet the government’s criteria, there is no reason not to draw down a loan. It’s interest-free for the first year, so it may help with immediately replacing or finding new skills. If you don’t have immediate need, put it in an account and don’t touch it for 364 days, and then if you still don’t need it, give it back.”

Undertake cashflow modelling

“This is an essential part of any business,” says Stirk, “but especially now. Run through various scenarios, especially in terms of staff, who you’d lose, who you might be able to retain and recruit, so you know what position you’d be in in each situation.”

The Business and Management Faculty have many resources to aid this planning.

Finally… don’t panic

“The dust will settle,” says Stirk. “Whatever happens with Brexit, the first three months of 2021 will be confusing and take adjusting to. But after that, we’ll have a clearer idea of how things are working. So keep cool, calm and rational in the meantime. To paraphrase Kipling, if you can keep your head while all about you are losing theirs, you’ll be a successful business leader!”

This an article from ICAEW's Business and Management Faculty. Craig Stirk is a Business and Management Faculty Board member.