March 4, 2021

What do Brexit and the UK-EU trade deal mean for recruitment and staff moves in the FMCG industry?

Brexit

The UK and EU have secured a post-Brexit trade deal and The European Union (Future Relationship) Act 2020, which brings the trade agreement, known formally as the Trade and Cooperation Agreement (TCA), into UK law, received Royal Assent on 30th December 2020. With so many different changes and fact patterns, the situation is inevitably complicated. Shabana Muneer, Senior Associate at leading law firm Walker Morris, summarises the main issues and poses some questions that businesses in the FMCG sector must address.

The overarching effect of the TCA is that the UK and EU can continue to trade without extra taxes and quotas being introduced. However, that’s not to say that it will be business as usual; rather there will be some fundamental differences in the way things operate between the two parties from now on, not least in relation to the recruitment and movement of staff.

Regardless of whether a trade agreement had been reached, the enacting into law of the Immigration Act in November 2020, which ended free movement of people from 1st January 2021 meant that a complete shake-up of the way businesses can recruit new staff from the European Economic Area and Switzerland (“EEA”) and move existing staff between the UK and the EEA, was inevitable. Businesses in both the UK and EEA will now need to rapidly adjust to these changes if they are to remain compliant with their domestic immigration requirements, while meeting recruitment needs, preserving their chances of securing the best talent and moving their staff between jurisdictions to meet operational demands. Existing rights of Irish nationals to live and work in the UK remain unaffected by Brexit.

Recruitment of EEA nationals

The implications of the trade deal on recruiting from the EEA are having a significant effect on employers across the UK, 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%) are EU nationals[i]. Many UK businesses in the industry have become heavily reliant on recruiting from the EEA. The principle of freedom of movement, which gave EEA nationals the unrestricted right to live and work in the UK (and vice-versa) meant FMCG businesses have become accustomed to being able to carry this recruitment out without any additional bureaucracy or costs that are ordinarily associated with the recruitment of UK nationals.

That has now changed, meaning all EEA nationals who were not already present in the UK as at 11pm on 31st December 2020 will need to be sponsored by a UK employer that holds a Home Office issued sponsor licence, or demonstrate an alternative legal basis on which they have the right to work, before being permitted to take up employment. Those EEA nationals who were already in the UK on 31st December 2020 have until 30th June 2021 to make an application under the EU Settlement Scheme to preserve their rights to remain living and working in the UK and remain exempt from immigration requirements, and employers may well have a vested interest in ensuring their EEA workers are aware of this requirement.

That means that the pool from which UK businesses can now recruit without having to follow immigration processes has significantly reduced. Whereas previously only non-EEA nationals required sponsorship, that has now been extended to any non-UK nationals (except for Irish citizens) who do not have an alternative legal basis to live and work in the UK. Crucially, only certain roles that meet prescribed skills and minimum salary thresholds (generally at least £25,600 per annum, though this can be reduced in some circumstances) are capable of being sponsored. While the applicable skills and salary levels have been reduced from 1st January 2021 (meaning, for example, that  managerial roles such as warehouse and logistics managers can now potentially qualify for sponsorship), this probably isn’t much comfort when there were previously no restraints on EEA recruitment whatsoever. Further, EEA nationals will now need to demonstrate sufficient English language skills before being sponsored, which may act as a barrier to sponsorship in some instances.

Any UK FMCG business which has previously recruited from the EEA or beyond or may need to do so in the future to meet its recruitment needs therefore needs to consider making an application for a sponsor licence as soon as possible in order to ensure future international recruitment runs smoothly. Delays in this regard could cause serious operational issues or cause candidates to accept employment from another UK employer who is in a position to complete the hiring process swiftly because they already have the sponsor licence in place. Businesses will also need to factor in the substantial costs of recruiting from the EEA, which are now on a par with non-EEA recruitment.

Cross-border movement of staff between the UK and EEA

As well as thinking about recruitment, businesses are going to have to factor in additional immigration requirements when staff move between the UK and EEA, and the ease with which they have done so previously may well be a thing of the past. The TCA stipulates that both the UK and EU shall provide for visa-free travel for short-term visits in respect of their nationals in accordance with their domestic law (existing free movement arrangements between the UK and the Republic of Ireland will continue).

The UK’s visitor rules allow for visits for certain specified business activities for up to six months. These include attending meetings, conferences, seminars and interviews, negotiating and signing deals and contracts, carrying out site visits and inspections and being briefed on the requirements of a UK based customer, provided any work for the customer is done outside the UK. Any activities which fall outside the permitted list or require a stay in excess of six months are likely to require sponsorship. UK nationals are permitted to spend a maximum of 90 out of 180 days in the Schengen area of Europe without a visa requirement, including for permitted business purposes such as attending business meetings. From late 2022, UK nationals will require a visa waiver in the form of an online European Travel Information and Authorisation System application prior to travel to the Schengen area. 

This introduces new restrictions on the amount of travel and types of activities that are permitted without immigration controls, which previously didn’t exist.

Finally, from 1st July 2021, EEA nationals whose place of residence is in the EEA but who come to the UK regularly for work will require a frontier worker permit to continue such arrangements, provided they were in place by 31st December 2021.

Covid-related travel restrictions

Of course, employers requiring staff to travel for business purposes must also keep on top of the constantly evolving requirements and travel restrictions imposed across the globe due to the pandemic.  Travel restrictions imposed in England (the rules vary across the UK) as a result of the third national lockdown, which started on 5th January 2021, mean that international travel is only permitted where the individual has a legally permitted reason to leave their home. Whilst work is a legally permitted reason, it should be undertaken from home unless it is “unreasonable” to do so. Employers should think very carefully therefore before requiring staff to travel for work to ensure they are not encouraging a breach of the lockdown rules. Where work cannot be done remotely (or business trips delayed until after the lockdown), employers should also bear in mind the different requirements countries have introduced regarding incoming travel; including restrictions on acceptable reasons for travel, quarantine periods and requirements for negative Covid-19 tests, and ensure their staff are fully aware of the up-to-date requirements of their destinations. 

Key takeaways for UK businesses

The main message to remember is that previous visa-free, restriction-free travel between the UK and EEA is now be subject to immigration rules and regulations and will require careful planning and thought. All UK businesses in the FMCG sector should urgently be asking themselves:

  • Are they likely to need to recruit from outside the UK (and Ireland) in the near future, if so do they need a sponsor licence?
  • If they already have a sponsor licence, are they aware of how the sponsorship criteria has changed by the introduction of the new points-based immigration system from 1 January 2021?
  • Are they likely to require workers to come to their UK establishment as business visitors from the EEA or beyond, if so, do they know how to support the individuals to successfully gain entry to the UK?
  • Do they employ EEA nationals in the UK whose place of residence is in the EEA and may need a frontier worker permit?
  • Do they intend to send UK staff to EEA group companies in the near future, and if so will the purpose of their visits fall within the short-term visitor rules for the particular country or will other immigration permissions be required?

The Walker Morris Business Immigration team can assist with any queries on these issues, please contact Shabana Muneer at [email protected].


[i] https://www.fdf.org.uk/publicgeneral/fdsc-workforce-skills-report.pdf