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Brexit and Immigration: Challenges for the Chemical Sector

  • United Kingdom
  • Diversified industrials - Chemicals

18-12-2017

A famous nineteenth century American author once quipped that many people complain about the weather but no-one ever seems to do anything about it.  Professionals managing global mobility in the chemical industry could be forgiven for feeling the same way about the UK’s Brexit negotiations. It has appeared clear for some time that Brexit will cause fundamental change to several aspects to the operation of companies in the UK,  but it is unclear what they will be or when they will take effect. 

Citizens’ rights is a high profile issues arising from Brexit.  Many employees holding citizenship of European Union countries are understandably concerned that, for the first time, their right to live and work in the UK may be substantially limited.  This is clearly an important issue for the chemical industry.   A Chemical Industries Association survey in 2016 suggested that, within the 32 respondent companies, approximately 5% of workers hold citizenship of European Union countries.   The highest proportion of such employees is in specialist scientific roles, with 60% of respondents indicating that recruiting replacements would be challenging or extremely difficult.  Media commentary on the subject can be more of a hindrance than a help to employees as fact, speculation and opinion merge into noise for many of those most impacted by the changes.  Some clarity as to what has been announced to date and the remaining points of disagreement regarding citizens’ rights may therefore be helpful. 

What has been going on?

The Government announced its proposals regarding the immigration rights of European Union citizens living in the UK in June this year.  A period of two years is suggested post-Brexit during which EU citizens (other than Irish citizens who will not need to apply for the new status) who have been resident in the UK for 5 years must apply for “settled status”.  Those who will not have been resident for 5 years at the end of this 2 year period will have to apply for “temporary residence” until they have reached the 5 year threshold and can then apply for settled status.

Family members of EU citizens arriving after a specified date will need to make an application to remain within the UK Immigration Rules relevant the time.  The need for some applicants to hold “comprehensive sickness insurance”,  which is currently necessary for permanent residence applications,  will not be a requirement of settled status.  The whole process is to be streamlined to make it as easy as possible for over 3 million EU citizens currently in the UK to make the applications.  In July 2017 the Government commissioned the Migration Advisory Commission (MAC) to advise it on the economic and social impacts of the UK’s exit from the EU and how the UK’s immigration system should be aligned with a modern industrial strategy. The MAC’s call for evidence closed on 27 October 2017. 

The European Commission published its own proposals in June.  The Commission proposes that EU citizenship rights should continue for British citizens in the EU, with no reference to a point at which these expire.  The enforcement of such rights and the importance of EU law and the Court of Justice of the European Union in determining this is a key difference between the Commission and the British Government.  The Commission proposes that British citizens acquiring a right of residence in an EU state should be limited to exercising rights within that country, not across all member states;  the British Government seeks to obtain the latter.     

A Government document was leaked to The Guardian newspaper on 6 September which set out  how the immigration system may change as a consequence of Brexit.  Three phases of management of the transition of immigration status are suggested.  The initial focus is to be on making sure those who arrived before a date to be specified can apply for settled status.  Law which gives effect to EU free movement provisions will be repealed in the second phase and replaced with an Immigration Bill, which will subject EU citizens to immigration control.   Gradual change is envisaged only during the two year implementation period and border control is likely to involve a “light touch”  until at least 2021.  Introduction of new rules which will apply to future migrants from the EU is likely to follow.  Several options in the future system are under consideration regarding permission to work which might include requiring EU citizens to have job offers in advance, restrictions on specific occupations, ending the option of settlement and bringing dependants and a cap on the number of low-skilled workers admitted.

On 7 November 2017 the Government published a little more detail on its thinking in the document “technical note: citizens’ rights – administrative procedures in the UK”. This confirms that for those EU citizens who are lawfully resident in the UK before the specified date (likely to be the date the UK leaves the EU) there will be a period of “around two years” after exit to make an application for settled status. The Government says it is designing a streamlined, user-friendly, digital application process which will draw on existing data (e.g. employment records held by HMRC) to verify residence as a worker. The fee for applying for settled status will not exceed the cost of a British passport (currently £72.50).

The document also states that for those who have a valid permanent residence document there will be a simplified process to exchange this for as settled status document, subject to ID verification and submission of a photograph, a security check and confirmation of ongoing residence. There will also be a reduced fee for these individuals. Finally, the Government has stated that, subject to agreement with the EU, it is planning to set up a voluntary application process before the date of exit to allow those who qualify to obtain settled status at their earliest convenience. 

Neither the Government’s proposals, the leaked document nor the Commission’s proposal constitute law.  It is likely that all will be amended as the negotiations continue. 

What can the chemical industry do now?

The outcome of the negotiations remains in doubt, but it appears inevitable that there will be a restriction on free movement to the UK by European Union citizens in either 2019, 2021 or a later date.  There are several practical steps which HR teams can take in order to plan for any contingency arising from the negotiations:  

Establishing which employees are EU citizens.   Our experience to date is that this has not proved to be as straightforward as it seems to be. The citizenship of employees is often not captured on HR systems as reportable information; since they have held an unrestricted right to work in the UK for many years, there simply has been no need for that before. HR teams should ensure they know whom their EU citizen employees are.  Being aware of those British citizen workers who currently undertake work in other EU countries would also be helpful.

Assess how the company may operate within new immigration restrictions.   Any restriction on the right to employ the best available staff may be regrettable for employers in the UK, but some areas of operation are likely to be impacted by this more than others. It would appear especially relevant if the most highly scientific staff are disproportionately likely to hold citizenship of an EU country.  By reviewing the occupations and departments in which EU staff are employed, it should be possible to identify business-critical roles or hard-to-recruit areas.  We would suggest there should be some consideration at this stage of a contingency plan should these staff decide to leave the UK as a consequence of Brexit. 

Consider the support employees need to enable them to stay.  The Eversheds Sutherland immigration team has conducted meetings with a large number of companies and institutions since last years’ referendum and note that  EU citizens are genuinely worried as to their future prospects of remaining in the UK.  Their perception is often that this will become more difficult and they, or family members. may ultimately not be permitted to stay.   Being proactive in explaining or supporting applications for permanent UK residence could help to dispel misconceptions of this process. It is notable that around 30% of applications for confirmation of the right to permanent residence are refused.   We would suggest companies consider whether to offer guidance or access to external advice on residency and citizenship. 

Plan messaging to employees about the implications of Brexit.  This issue has an extremely high media profile, with new commentary on immigration and Brexit every day.  Have you recently communicated messages of reassurance to employees? Ensuring they can access further information and voice their concerns is an important way employers can show support. Considering whether to make resources available, such as a Frequently Asked Questions list and ongoing advice, is another way to do this.

Future challenges for employers

Whilst negotiations between the British Government and  the European Commission continue, it may seem premature to identify future risks in the absence of an agreement.  We can, however, anticipate the likelihood of future restriction on free movement and apply principles relating to immigration compliance risk to this. Several potential challenges can be anticipated. 

How will employing companies in the UK handle “hard cases” arising from the new rules in a fair and non-discriminatory manner?  There is some risk that employees arriving after a specified date may ultimately lose their right to work in the UK at some point after Brexit.   The concept of an employee holding permission to work in the UK, but subsequently losing it, is relatively uncommon at present.  It will be necessary for the company to determine carefully what is to happen regarding the future employment of the relevant individual. 

What will be the provisions regarding “right to work” checks for EU citizen employees after the UK leaves the EU in 2019?   There is a precedent in the UK of a similar registration programmes to settled status, the Worker Registration Scheme which existed between 2004 and 2011. Many applicants did not register or suffered delays or mistakes by UK Visas and Immigration in processing the applications.  Should this happen again, HR teams will have difficult decisions as to whether individuals have the right to work in the UK or not.  The risk and quantum of a penalty are now significantly greater to employers for non-compliance with right to work provisions than they were in 2011.  Early clarification within the relevant guidance as to precisely what an employer is expected to do when staff do not hold a settled status document will be needed. 

Finally, how can British companies continue to compete in the war for talent with those in the EU and further afield when seeking to attract or retain EU staff?   If the perception of the immigration policies of a country is at least as important as the reality, as we have found, it may prove more difficult than previously to persuade highly-regarded scientific staff, with many available employment options, to relocate to or stay in the UK if the country itself is perceived as insular.

Monitoring the progress of the negotiations on citizens’ rights is of course important, but there may be a need to address immigration risk issues before this is agreed.   We would suggest considering the four actions above is likely to be a practical way to companies to be ready for the eventual outcome.  Like the weather, we may not be able to change the outcome of Brexit, but can at least be prepared for its effects!      

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