Brexit is expected to have a significant impact on the FMCG sector in the UK and on firms across Europe that have links to the UK. The Government has now published some much-awaited details on the operation of the new immigration system and its first in-depth guidance document on the subject. Business Immigration experts from leading law firm, Walker Morris, Shabana Muneer and Suzanne Treen, discuss the key considerations for businesses in the sector ahead of the new points-based immigration system coming into play from 1 January 2021.
A recent survey by the CBI[i]found that 96% of EU workers currently employed in the UK hospitality sector would not gain entry under the points-based system that currently applies to non-EU nationals. This is a sobering statistic, given that the points-based system is set to be amended and extended to EU nationals from January 2021. Ultimately, the net effect of these changes and the inability to bring people into the UK from the EU without restriction is likely to leave skills shortages across many industries.
Business Immigration has never been so relevant to so many UK employers, particularly in the FMCG sector where around a quarter (25%) of all warehouse staff in the UK are EU nationals and, of the total number of people employed across the food sector, one in ten (12%)[ii]are EU nationals. It’s imperative for businesses to prepare for the changes now in order to minimise the impact on their workforces. The Government maintains that the new system will be more streamlined and accompanied by simplified rules and guidance for businesses looking to recruit from the EU, but that may not be much comfort for sectors such as FMCG who have been accustomed to recruiting from the EU without any red-tape whatsoever.
What’s new?
The Immigration and Social Security Co-ordination (EU Withdrawal) Bill, which will form the legal basis of the new system, has yet to become law but the aim of the guidance is to prepare employers and applicants alike for the upcoming changes. The guidance confirms that free movement for EU nationals will end at 11pm on 31 December 2020 and changes will come into force. Key points to note include:
- EU migrants arriving in the UK from 1 January 2021 will be subject to the new immigration system
- The existing Tier 2 (General) route will be replaced by a new Skilled Worker route. Tier 2 (Intra-Company Transfer) will remain in place with some adjustments
- Existing sponsors will automatically be granted a new Skilled Worker licence or Intra-Company Transfer licence and will not need to make a further application
- Existing Tier 2 (General) migrants who need to make a new application following the closure of that route will do so under the Skilled Worker route
The end of freedom of movement will have significant implications for companies and their supply chains, including in the agricultural sector, where many businesses are heavily reliant on seasonal workers or non-UK workers more generally – it has been estimated that as many as 38%[iii]of the UK’s farm workers are non-UK EU citizens.
Many low paid jobs that require a high level of skill are not covered by the new system, and employers will not have access to the same number of workers as they have under freedom of movement, so they are being encouraged by the Government to invest in homegrown talent and technology. A survey published by the Food & Drink Federation[iv]reveals the severity of the situation that the UK food and drink supply chain faces without reassurances regarding the future of EU workers – almost a third (31%) of businesses surveyed had seen EU nationals leave since the EU referendum whilst almost half (47%) said EU nationals were considering leaving the UK because of the uncertainty over their future.
A key difference between the Tier 2 (General) and the Skilled Worker routes however, and one that will be welcomed by the sector, is the lowering of the skills level from degree level (RQF 6) to A-level equivalent (RQF 3), bringing a number of previously excluded roles within the scope of sponsorship. In the FMCG industry, this includes warehouse and logistics managers and many roles in the food and drink sector including chefs, butchers and bakers.
This time last year, the Government commissioned the Migration Advisory Committee[v]to undertake a full review of the Shortage Occupation List which found many companies were concerned about the potential loss of access to lower skilled workers with the ending of freedom of movement. Companies in the food and manufacturing industries indicated that they were already struggling to recruit into roles below RQF3 (A-level) and that they were experiencing a greater turnover of staff as a result of Brexit.
The salary threshold for Skilled Workers will be lowered from £30,000 to £25,600 per annum, with new entrants able to enter on a lower salary than their more experienced counterparts, provided it does not dip below £20,480 per annum. While there are still certain mandatory criteria for Skilled Workers which will earn an applicant a fixed number of points, the new system introduces tradeable points for certain attributes such as salary, relevant PhD qualifications and shortage occupation roles.
The annual cap under the current Tier 2 (General) route will be suspended and employers will no longer have to carry out the Resident Labour Market Test, which, coupled with lower salary and skill thresholds, should make it easier to recruit migrant workers to skilled roles than it currently is. However, the extension of the points based system to EU workers is still a huge shift from the current regime, under which there are no skills and salary restrictions on recruitment from the EU. Crucially, the new regime will also require migrants to satisfy minimum English language requirements in order to be eligible for sponsorship, which may prove to be a practical obstacle to the recruitment of some EU migrants in the future.
Watch this space
As you might expect, the implementation of the points-based system will be phased, and the Government’s guidance document is likely to be the first of many providing details of the Home Office’s wider plans up to 2025. As part of the implementation of the UK’s fully realised Points-Based Immigration System, the requirements for the main work and study visa categories are expected to be written into the Immigration Rules and published later in 2020, along with more detailed guidance for applicants.
The Home Office retains the ability to widen the number of attributes for which tradeable points may be obtained, and they may seek to do so in response to the country’s economic needs and pressures and the needs and challenges faced by specific sectors.
An unsponsored graduate route will be launched in summer 2021, giving international students the opportunity to stay in the UK to work or look for work after they graduate and an unsponsored route for highly skilled workers is expected to be introduced under the points-based system in 2022. This will allow for a small number of only the most highly skilled workers to enter the UK without a job offer in place.
What now?
If your business already has a sponsor licence under Tier 2 (General) or Tier 2 (Intra-Company Transfer), no new application is required, although you should familiarise yourself with the changes to the rules which may in some cases mean sponsorship is now possible for roles which were previously excluded. You should also check whether you have a sufficient certificate of sponsorship allocation to deal with the potential increased demand from January 2021. Now is also a good time to make sure the existing licence is up to date, is held by the correct sponsoring entity, contains correct key personnel details etc, and that all Home Office notification requirements have been met.
If your business doesn’t currently have a sponsor licence but may need to recruit from the EU or beyond from January 2021, the Government is actively encouraging licence applications to be made now. As we get closer to the end of the year, more organisations are likely to be submitting applications which is likely to result in increased processing times, and potential delays to recruitment plans.
Should you require assistance with a sponsor licence application or further guidance on any of the issues addressed above, please get in touch with the Walker Morris Business Immigration Team using the contact details below.
Suzanne Treen: [email protected]
Shabana Muneer: [email protected]
[i]https://www.cbi.org.uk/media/1230/open-and-controlled.pdf
[ii]https://www.fdf.org.uk/publicgeneral/fdsc-workforce-skills-report.pdf
[iii]https://www.herbertsmithfreehills.com/file/14086/download?token=7YB-E4uI
[iv]https://www.fdf.org.uk/news.aspx?article=7866
[v]https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/806331/28_05_2019_Full_Review_SOL_Final_Report_1159.pdf