Too few companies in the UK have thought about what they’ll need to do differently when employing foreign citizens after Brexit, says Punam Birly.
We all know that once the UK leaves the EU things are going to change. Free movement will be curtailed, regulations will change and new tariff and non-tariff barriers may be introduced. Most companies are in the process of gearing up for these changes but, from my experience, only a small minority have properly considered what they’ll need to do differently should they continue to employ anyone from overseas when the new immigration system is expected to come into effect in January 2021.
And the risks are significant. Never before has the UK had a situation where millions of people are in the UK legally, but overnight could be here illegally if they don’t jump through the right administrative hoops.
Some of those people will be ‘made’ illegal whatever happens – deal or no deal – because of the sheer numbers involved and the process they would have to go through. At present there are around 3.7 million EU citizens in the UK. If the prime minister’s deal is agreed, every one of these people will have to make a correct application to stay in the UK and the cut off point for the application will be June 2021.
If a deal is not agreed, only EU citizens resident in the UK by 29 March 2019 will be able to apply for settled or pre-settled status by 31 December 2020 and EU residents entering the UK after 29 March will only be able to stay for 3 months without having to apply for further limited leave to remain.
Given that a percentage of EU citizens are like to either forget, choose not to, or simply fail to complete their applications accurately (or present sufficient evidence), some companies are bound to end up employing illegal workers ‘by accident’. So although there may not be a cost for EU citizens to apply to stay in the UK there will be a cost to both employees and employers if they don’t. And let’s not forget that the Home Office will eventually take a zero tolerance approach to this issue.
Firstly in terms of compliance, from January 2021 there is likely to be much less tolerance for businesses found to be employing EU citizens living illegally here. UK Immigration laws looks set to deem an EU worker who doesn’t register for immigration status by the deadline as here unlawfully.
The potential consequences for employers include a £20,000 fine per illegal worker, a prison sentence of up to five years for those who deliberately employ illegal workers, and the threat for repeat offenders that their business premises could be closed down. That’s a big headache for smaller companies and for larger companies a reputational risk that could end up being even more costly.
Secondly, EU citizens here unlawfully won’t be able to access NHS services, drive, have a bank account, rent a home, claim state benefits, or navigate the education system. Putting aside employers’ clear moral obligations around staff welfare, these are issues that will hurt productivity too.
From an HR point of view this represents a fundamental shift in how many firms operate. An organisation’s ability to register 100% of its EU workers (and all their family members) for pre-settled settled status would be a great achievement, but it’s also unrealistic for most. Companies that are used to freedom of movement, and who’ve traditionally relied on EU labour to bolster their workforce or provide specialist skills, will need to:
Some businesses may of course opt to source labour from elsewhere given these additional hurdles. But with the UK at near full employment – especially in EU-reliant sectors such as hospitality, construction, food production and retail – this will be a significant challenge. There is the serious potential for discrimination to consider. You can’t stop interviewing EU nationals just because it’s inconvenient. Equally if a candidate applies for a job with your firm and when onboarding you realise they are from the EU, you will be breaking the law if you turn them down on the basis of their nationality.
This means employers will need to do 10 things:
© 2021 KPMG LLP a UK limited liability partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organisation please visit https://home.kpmg/governance.