response of penningtons manches llp to the … · loss of eea staff members following the...
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RESPONSE OF PENNINGTONS MANCHES LLP TO THE MIGRATION ADVISORY COMMITTEE CALL FOR EVIDENCE ON EEA WORKERS IN THE UK
LABOUR MARKET
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EXECUTIVE SUMMARY
Penningtons Manches is a leading full service UK law firm, with a top ranked immigration
team, which acts for start-ups through to multi-national corporations in a variety of sectors,
education providers and HNW individuals
Following the referendum, the firm launched its Brexit Hub to ensure that our clients were
fully informed and kept up to date on matters which may impact their staff and business. This
included holding Brexit roadshows across all our seven offices, covering immigration,
employment, constitutional, data protection and commercial law matters.
The immigration team was asked by clients to provide assistance to staff members, in the
form of advice sessions, helplines and assistance with residence card/Permanent Residency
applications. Department head Pat Saini was invited to sit on the Centre for London’s Brexit
Advisory Board.
Following the launch of the call for evidence we put together a survey, aimed at those
businesses and entrepreneurs that employ/engage EEA nationals and who believe they will
be impacted by Brexit. A copy of the questions accompanies this submission. Given the
significance of the issue, we were pleased that we received around 200 responses.
Respondents came from virtually every sector (as listed by the UKVI), including
Tech/IT/Digital sector, professional services (such as accountancy, finance or law),
education, arts/entertainment/recreation, retail; construction/real estate, heath/care, life
sciences, manufacturing, hospitality and transport.
Whilst the overwhelming majority of respondents expressed a need and desire for free
movement to continue, following the referendum result it is accepted that free movement in
its current form will come to an end. Any new immigration system that is introduced needs to
take into consideration that the relationship between the UK and the EU has existed for more
than 40 years and that EEA workers have provided businesses with a readily available pool
of workers. These businesses will therefore need adequate time to prepare. In addition any
new system must ensure that it is not overly complicated and does not deter those who the
UK needs to attract. We do however appreciate that reciprocal arrangements will need to be
agreed as part of the exit negotiations.
It was clear from both our survey responses and our wider discussions with our clients that
the current UK immigration system does not work for all and requires an overhaul. However,
this is too wide a question to be addressed at this time and does not form part of the call for
evidence. Nevertheless in our response we have set out below why simply bringing EEA
nationals under the current Points Based System (PBS) will not provide an immediate
solution to businesses.
Businesses need time to prepare and therefore dealing with the immediate issue to hand, the
loss of unfettered access to the EEA labour market, must be at the forefront of the
Government’s policy making/strategy. A two year transitional arrangement following Brexit will
not allow businesses and regions enough time to do this.
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THE CURRENT UK IMMIGRATION SYSTEM FOR NON-EEA NATIONALS
For the purposes of this response we have only set out what the concerns are with the
current immigration categories if they were to apply to EEA workers.
The PBS needs to be viewed in the context of the economic climate at the time of its
introduction. Launching the new system in February 2008, the then Home Secretary Jacqui
Smith MP stated:
‘The introduction of our Australian-style points based system will ensure that only those with
skills the country needs can come. Migrants benefit this country economically, contributing an
estimated £6bn to our national output, as well as socially and culturally, and it is right that we
have a system which is fair but firm, accessible but controlled.’
Whilst we appreciate that since its introduction it has gone through some reform, it is
questionable whether the UK post Brexit would necessitate an immigration system that
requires the same degree of restrictions and control as that imposed by the PBS.
Tier 2 Whilst Tier 2 works in general, the category is not without its issues:
many businesses are not in a position to obtain a sponsor licence
citing reasons such as the prohibitive costs; the speed of the
process; the difficulty in offering remuneration that meets the Tier 2
requirements; and the lack of internal resources to support the
licence once obtained. Such businesses will often rely on EEA
nationals to fill the skills gap. In addition, Tier 2 does not deal with
the need for low/medium skilled labour. Many sectors within the UK
are reliant on the flow of low/medium skilled labour from the EEA to
fill vacancies. The category also has a cap on Tier 2 visas and
simply removing or increasing this for EEA workers will not address
the above issues. The solution therefore should not be to simply fit
EEA workers into the current Tier 2 system.
Tier 1 We were unable to source any quantifiable data with regards to highly valued EEA migrants
who either bring their innovative ideas, invest in or set-up businesses in the UK. Such EEA
nationals are currently able to reside in the UK by demonstrating their self-sufficiency or self-
employment.
Fitting such individuals into the current Tier 1 system will not be workable for the following
reasons:
The Tier 1 Investor category requires a minimum of £2 million and investment is
restricted. It is likely that forcing EEA nationals to come under the current route will deter
those who may ordinarily have invested in the UK.
The Tier 1 Entrepreneur category is effectively broken and the Government is yet to
implement the MAC’s recommendations made in 2015. Non-EEA nationals are already
deterred from applying under this category; forcing EEA nationals into an already
broken route will prevent those who have the best ideas from bringing them to the UK.
‘We need an
unrestricted route
for EEA Tech talent
to work in the UK,
separate from the
Tier 2 system
which is so
cumbersome’ Founder of tech
company
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‘I came to the UK to study, after I completed my studies I stayed in the UK and set up
my business here. I now employ over 100 people, other UK companies rely on my
business. We have a distribution warehouse outside of London which employs many
British workers; we are considering shifting the warehouse to Poland’ EU entrepreneur
The Tier 1 Exceptional Talent category limits individuals to five designated bodies and is yet
to be fully utilised. This is because the requirements are stringent and some of the
designated bodies still do not have the resources to deal with applications.
In its Global Talent report entitled ‘Why the UK’s world-leading creative industries need
international workers and how to attract them’ The Creative Industries Federation (CIF)
stated that the Tier 1 Exceptional Talent category:
‘does not address the sector’s requirements around the freelance workforce or skilled – short
of ‘exceptional’ – talent at the level that many creative businesses would be looking to
employ. With the combined total of exceptional talent visas across all five strands capped at
1,000 places per annum and an annual allocation of only 250 for arts, it operates on far too
small a scale.’
Given that 47% of creative roles are on a freelance basis, CIF proposes introducing a
‘freelance creative visa’.
Tier 3 - Low/medium skilled migration As stated above, the current Tier 2 system does not allow
for low/medium skilled migration (with a few limited
exceptions). Therefore businesses that require such skills
often rely on the domestic/EEA pool.
From those surveyed just under 50% reported that the
majority of their EEA national workforce was made up of
low/medium skilled workers. Therefore these businesses
would need other immigration routes introduced/changed
to allow them to operate effectively, a statement which is
supported by over 75% of our respondents.
When the PBS was first designed provision was made for
lower skilled migrants to be categorised under Tier 3. The
category was never made operational as the Government
of the time felt that the readily available pool of workers
from the EEA would fill these roles.
One solution would be to make Tier 3 operational for EEA
low/medium skilled migrants. However, further consultation
will be required before taking this step in order to fully
understand whether this will address the needs of UK
businesses.
‘Allow those with lower skills to come with ease to the
UK to work and help combat the shortfall of the UK workforce who are unwilling to do
these jobs’ Survey respondent
50% Almost
responded that the majority
of their EEA national
workforce comprises low/medium skilled workers
demand new
immigration routes
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Tier 5 Youth mobility This route allows certain nationals aged between 18-30 to live and work in the UK for up to two years. The route allows visa holders to temporarily gain employment. Businesses are also able to benefit from the supply of labour such migrants provide.
Penningtons Manches envisages a similar system which would allow EEA nationals aged 18-30 to live and work in the UK.
Tier 4 students This route is only available to those coming to study at institutions that hold a sponsor licence. There are restrictions in place as to the type and level of course they can study and the duration of studies in the UK. Furthermore students coming under this route also need to meet the stringent maintenance requirements.
According to Universities UK’s Higher Education in Facts and Figures 2017 report, EEA nationals make up a substantial number of home students. In the Higher Education sector, EEA students make up approximately 41% of all international students (127,435 students). In the Independent School sector the latest census conducted by the Independent Schools Council showed that “there are currently 23,192 non-British pupils whose parents live in the UK. Among these pupils over 42% come from EEA” (ISC Census and Annual Report 2017).
Therefore, forcing them into the PBS will discourage those students from choosing the UK and risks further diminishing the UK’s status as a world-leading education provider.
For EEA students we again envisage a system which will allow them to continue to come to the UK to study.
‘Any restriction on the free movement of our European students (approximately 65% of the student body) will decimate us’ Education provider
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SUMMARY OF SURVEY RESULTS
There was a broad regional spread of respondents to our survey with the majority having
operations in London and the South East. Respondents were of varying sizes and turnover,
from the very small (less than £632,000) to the very large (over £25 million) and with varying
degrees of reliance on EEA nationals.
We are not in a position to answer all the questions posed in the Call for Evidence. We
therefore address the questions that were most relevant to our clients below:
EEA migration trends
Just under 95% of those who responded to our
survey stated that an end of free movement would
have either an impact or a negative impact on their
organisation with the overwhelming majority (76%)
stating that it will have a negative impact.
Of those surveyed, just under 40% have reported a
loss of EEA staff members following the referendum
result and just under 50% have reported a decrease
in applications from EEA nationals.
The general commentary from respondents highlighted the uncertainty as to the EEA
nationals’ future in the UK as a reason for this decrease.
On confidence of businesses being able to fulfill their hiring needs post Brexit, just under 80%
either said ‘No’ or ‘Don’t know’. With regards to the ‘Don’t know’, it is presumed that this is a
result of not knowing what a future system would be.
Given that uncertainty is the main reason behind this trend, the impact on current workforce
and future recruitment is likely to continue until the rights of resident EEA nationals are
formally guaranteed and a workable system is put in place for those looking to enter the UK
post Brexit.
‘There is increased level of
uncertainty among members of staff
and this affects our organisation’s
ability to hire and retain staff in the
UK.’ Survey respondent
‘Current EEA staff have left to return
to their home countries as they have
felt unwelcome or uncertain of the
future’ Survey respondent
believe an end to
free movement
will have a negative impact
76%
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Recruitment practices, training & skills Of those who responded to our survey just over 50% listed skills
including language ability as one of the advantages of employing
EEA workers, with just under 20% highlighting the availability of a
wider talent pool as the advantage and nearly 15% highlighting
diversity as one of the main advantages.
One respondent commenting on the advantages of EEA nationals
stated:
As we have stated above, the current Tier 2 system does not deal with the need for
low/medium skilled labour. These types of jobs are often low paid and temporary in nature.
To introduce a complex, time consuming system for such workers would be nonsensical.
Companies are already reporting that they are seeing fewer applications from EEA nationals
and the quality of those applying has also decreased. Introducing a cumbersome
bureaucratic system would make the UK even less attractive to EEA nationals who may
instead choose to go to our competitors.
“We believe that EEA nationals should remain outside the PBS in order to continue to
provide an agile work force with minimum administrative burden and advocate control
through systems such as worker registration”. Medium sized business
Of the clear conclusions from its Policy report entitled ‘Facing the future: tackling post-Brexit
labour and skills shortages’ CIPD highlighted that:
“the two most important concern the need for a safety net for recruiting unskilled or low-
skilled workers from overseas to ease labour shortages, and an immigration system that
works for them. Without these two provisions, some of Britain’s key industries and services,
including food and drink manufacturing, hospitality and social care, are likely to sustain
considerable damage.”
50% list skills
as an
advantage of
employing EEA workers
‘Gives us access to a broader talent pool as there
are insufficient UK workers with the right levels of
skill we need to sustain and grow our business. We
also need language capabilities to support our
customers’
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FUTURE SYSTEM
One of the biggest challenges facing businesses is uncertainty over the future and so their
inability to plan ahead. They are facing skills shortages, a weak pound, loss of EEA migrant
employees and a decrease in applications from EEA nationals. Therefore the UK quickly
needs to introduce a system which doesn’t further deter EEA nationals from coming to the
country and which prevents the further drain of EEA nationals already in the UK.
By 2019 it is unlikely that the Government will be in a position to present an immigration
system that will address the needs of the various sectors, regions and/or skill level in the UK.
Any new system however needs to be thought through and tested. Therefore, at least in the
short term, we would suggest that a single simplified system which applies to all EEA
nationals be put in place which can in due course be reviewed and further amended to suit
the needs of the UK economy.
The system we are proposing is a registration system which would provide businesses with
the certainty they need and the Government with the necessary data to implement a more
measured system in the future. We propose that the registration system should be for a
minimum of three years following the transitional period.
The registration system would run similar to that of the Accession Worker Registration
Scheme introduced in the UK when Bulgaria and Romania joined the EU. That scheme was
not without its problems, it was ineffective as there was no incentive for workers to register
given that this can be done after the employment started and it was also time consuming.
Instead, the registration system that is put in place needs to be:
Streamlined
Electronic and secure – similar to the electronic visa waiver (EVW)
Allows businesses to quickly fill vacancies; and
Be devoid of bureaucracy.
The scheme will also need to cover all aspects of entry and stay in the UK. EEA nationals
and their dependents entering the UK, for reasons other than visit, will need to register prior
to their entry using the electronic system and providing supporting documents as follows:
Workers – application for registration will need to be supported by a job offer in the UK
which includes details of salary (above the minimum earnings threshold); duration and
skill level. This will enable the Government to capture valuable data as to where skills
‘Create certainty and clarity as soon
as possible, make it as easy as
possible to attract and hire high
skilled international staff’ Survey respondent
‘Should be streamlined and
simplified to make it easier to recruit.
Companies will not be able to just
rely on the UK labour market the skill
set and experience is not always
available.’ Survey respondent from creative industries
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gaps exist. Those switching employers will need to notify UKVI of the change of
employer giving confirmation from the new employer of the job title, salary and skill
level.
Skilled individuals/self-employed – application for registration will need to be
supported by evidence of qualifications and they need to fall into one of pre-specified
sectors which can be set by the Government according to demand.
Investors – confirmation of self-sufficiency ie savings above that required to claim
means tested benefits.
Entrepreneurs/innovators – application for registration will need to be supported by
one or more letters from an organisation in the UK confirming willingness to invest in a
business idea e.g. FCA registered venture capitalists, Government departments, DIT
endorsed entrepreneurial seed funding competitions, or third party sponsor
organisations pre-approved by UKVI.
Students – application for registration will need to be supported by evidence of
acceptance on course of studies at a genuine educational institution and sufficient
funds. There should not be an English language requirement.
Youth mobility – application for registration for EEA nationals aged between 18-30
allowing them to live and work in the UK for a limited period akin to the Tier 5 Youth
Mobility scheme.
The registration scheme will prohibit recourse to public funds and specify duration of stay
according to the relevant category selected. This will also specify if the relevant category
leads to settlement.
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CONCLUSION
As stated above, we have not suggested a registration scheme indefinitely. However having
taken soundings from both our clients and survey respondents, it is clear that the issues of
most concern to businesses are their ability to fill skills gaps and access a wide pool of talent
now and in the future to remain competitive. Given that UK businesses rely heavily on access
to EEA workers to fill vacancies and skills shortages, it is crucial that those businesses are
allowed time to adjust. In addition, the Government needs to ensure that the UK remains
competitive and attractive to EEA students and to high valued migrants so they don’t take
their innovative ideas and investments elsewhere.
Businesses and sectors need to continue to upskill UK workers, the education system and
apprenticeship schemes also have a role to play in continuing to develop homegrown talent.
However, in the short to medium term this will not be enough.
A registration system will allow the Government the opportunity to assess the needs of
businesses and sectors, paving the way for a future overhaul of the UK immigration system
supported by the necessary data. Until then, the Government should abandon its target of
reducing net migration as this would be to the detriment of the economy.
FOR FURTHER INFORMATION
PAT SAINI
T: +44 (0)20 7457 3117
HAZAR EL-CHAMAA
T: +44 (0)20 7457 3194
PENNY EVANS
T: +44 (0)20 7457 3195
© Penningtons Manches LLP, 2017
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APPENDIX: SURVEY QUESTIONS
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Brexit impact survey: EEA-workers in the UK labour market About your organisation
1 What was the approximate UK turnover of your organisation in the last financial year?
a. Less than £632,000
b. £632,000 - £10.2m
c. £10.2m - £25m
d. More than £25m
2 Which of the following sectors best describes your organisation's main business focus?
a. Accommodation and Food Service Activities (includes hospitality)
b. Activities of extraterritorial organisations and bodies
c. Activities of households as employers; production activities of household for
own use
d. Administrative and Support Service Activities
e. Agriculture, Forestry and Fishing
f. Arts, Entertainment and Recreation
g. Construction
h. Education
i. Electricity, gas, steam and air conditioning supply
j. Financial and Insurance Activities
k. Human Health and Social Work Activities
l. Information and Communications (includes digital tech)
m. Manufacturing
n. Mining and Quarrying
o. Public Admin and defence; compulsory social security
p. Professional, Scientific and Technical Activities
q. Real Estate Activities
r. Transportation and Storage
s. Water supply; sewerage, waste management and remediation activities
t. Wholesale and retail trade; repair of motor vehicles and motorcycles
3 In which of the following UK regions does your business operate?
a. East of England
b. East Midlands
c. London
d. North East & Cumbria
e. Northern Ireland
f. North West
g. Scotland
h. South East
i. South West
j. Wales
k. West Midlands
l. Yorkshire & the Humber
About your workforce
4 How many workers does your organisation have in the UK?
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a. Less than 10
b. 11-50
c. 51-250
d. More than 250
5 What is the employment status of the majority of your UK workforce?
a. Employed
b. Self-employed
c. Don’t know
6 What percentage of your UK workforce are EEA nationals (excluding Irish nationals)?
a. Less than 10%
b. 10-25%
c. 26-50%
d. 51-75%
e. More than 75%
f. Don’t know
7 What is the employment status of the majority of the EEA nationals in your UK
workforce?
a. Employed
b. Self-employed
c. Don’t know
8 Does your organisation perceive any advantages or disadvantages to employing EEA
nationals in the UK?
a. Advantages
b. Disadvantages
9 Which of the following groups constitutes the majority of your UK-national workforce in
the UK?
a. Highly skilled - (RQF level 6 - graduate level) e.g. senior officials in an
organisation, professionals such as lawyers, accountants, architects,
engineers, IT professionals
b. Medium skilled – (RQF level 3 and 4) e.g. managers in warehouses or
hospitality industry, garage manager, electricians, engineering and IT
technicians, police or fire service officers, plumbers, secretaries, chefs,
florists, air/rail travel assistants, manager level in health care centre,
medical/dental technicians, IT operation technicians, artist, designers, buyers,
career adviser
c. Low skilled – (RQF level 2 or below) e.g. Education welfare officer, credit
controllers, book-keepers, bank and post office clerks, insurance clerks,
administration/facilities supervisors, medical/school secretaries, receptionist,
carpenters, plasterers, painters, floorer/titles, cooks, ambulance assistants,
travel agents, beauticians/hairdresser, caretakers, customer adviser, security
guards
10 Which of the following groups constitutes the majority of your EEA migrant workforce in
the UK?
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a. Highly skilled - (RQF level 6 - graduate level) e.g. senior officials in an
organisation, professionals such as lawyers, accountants, architects,
engineers, IT professionals
b. Medium skilled – (RQF level 3 and 4) e.g. managers in warehouses or
hospitality industry, garage manager, electricians, engineering and IT
technicians, police or fire service officers, plumbers, secretaries, chefs,
florists, air/rail travel assistants, manager level in health care centre,
medical/dental technicians, IT operation technicians, artist, designers, buyers,
career adviser
c. Low skilled – (RQF level 2 or below) e.g. Education welfare officer, credit
controllers, book-keepers, bank and post office clerks, insurance clerks,
administration/facilities supervisors, medical/school secretaries, receptionist,
carpenters, plasterers, painters, floorer/titles, cooks, ambulance assistants,
travel agents, beauticians/hairdresser, caretakers, customer adviser, security
guards
Impact of Brexit
11 Which of the following statements best reflects the impact that an end to free
movement would have on your organisation in the UK?
a. It would have a negative impact on the business and we would need other
immigration routes introduced or changed to allow us to operate effectively.
b. It would have an impact but we would hope to fill the shortfall via the current
UK immigration routes.
c. It would have no real impact as we would expect to fill the gaps from the
domestic labour force.
12 Since the referendum, which of the following statements apply to your organisation's
ability to hire and retain staff in the UK?
a. There has been a loss of EEA staff
b. There has been a decrease in applications received from EEA nationals
c. There is a greater need to sponsor non-EEA workers
d. Projects are being outsourced overseas
e. None of the above
13 Are you confident that your organisation will be able to continue to meet its hiring
needs in the UK following Brexit?
a. Yes
b. No
c. Don’t know
14 Are there any future recommendations for the UK immigration system that you would
like to put forward which would enable your organisation to continue to function post-
Brexit?
About you
15 Contact details (optional)