Brexit transition period ended: What this means for employers in the UK manufacturing industry
18th June 2021
Laxmi Limbani of Fragomen discusses the impact of the end of free movement on the manufacturing industry in the UK in advance of the upcoming EUSS deadline
It has only been five months since the end of the transition period, but the absence of free movement from the EU is already having a significant impact on UK manufacturers across multiple sectors. For instance, freedom of movement within the EU has been very beneficial to the UK car industry. The ability to transfer highly skilled people at short notice, often with very precise skill sets, from one plant in the EU to another in the UK has been vital for the UK automotive sector. The same is true for the pharmaceutical sector, where the UK is a very attractive destination for skilled workers, especially in the fields of science and research.
The skills gap in the manufacturing industry is well known and access to talent will remain a key topic of discussion for manufacturers in 2021 and beyond. Bringing in new talent and retaining skills within businesses will be crucial to be agile and responsive. Companies will also need to adapt and embrace the new ways of working as a result of the pandemic, considering generational issues such as a flexible working environment and climate change, while also working to increase productivity and collaboration.
According to the Make UK Executive Summary, manufacturers are rightly concerned about the UK’s ability to attract international talent post-Brexit, with more than half (52%) of the companies surveyed reporting concern that the impact of the UK leaving the EU would either somewhat or substantially decrease the ability to attract international talent. Just 11% of manufacturing companies believe the UK will be a more attractive destination outside the EU. This potentially puts at risk the ambition of the government’s new immigration system, which is specifically designed to encourage the brightest and best global talent to come to the UK.
Under the new UK immigration system, in place from 1 January 2021, there are two main challenges for manufacturers:
- Looking at the mid to longer term, the ability for UK companies to fill vacancies where they have skills shortages, particularly specialist skills that manufacturers are unable to source easily in the UK, will be heavily impacted. Navigating the new immigration rules and facing new costs from immigration requirements will be uncharted territory for many manufacturers. As a result, attracting and retaining international talent will likely be challenging.
- In the short term, the end of the transition period will bring challenges in the ability to send workers into and out of the UK for shorter periods in order to meet the requirements of service contracts without additional bureaucracy and cost of sponsored visa applications.
For those employees already in the UK
For those EU employees that were already in the UK before the end of the transition period on 31 December 2020, it is imperative that they make an application for status under the Home Office’s EU Settlement Scheme. Applications must be made by 30 June 2021.
For employees that have been residents in the UK for at least five years, they will be issued with settled status. For those that have been resident in the UK for less than five years, they will be issued pre-settled status, with the ability to apply for settled status once they reach their five-year anniversary of residence.
The deadline is fast approaching, and with less than a month to go, employers should encourage these employees to act quickly and submit their applications before the deadline date. Anyone who has not applied by the 30 June 2021 cut-off date will not be able to show their lawful residence in the UK and may struggle to access work, housing and healthcare.
For those employees who are yet to enter the UK
Mobility of EU employees in the longer term can be complex and foreign workers coming to the UK from January 2021 are subject to the new immigration system. The new system has introduced a lower salary threshold, as well as a lower skill requirement for sponsored visas, making global talent more accessible for some smaller companies and some sectors that were previously unable to sponsor migrant workers.
However, this route also requires a sponsor licence issued by the Home Office, which brings with it additional responsibilities. Further information on the sponsor licence process is available in our blog post here. There are also significant costs to consider with sponsored employees. Sponsoring a single employee without dependants for a period of five years can cost approximately £10,000. In addition to visa application fees, there are administrative fees relating to work authorisation and skills surcharges, as well as health surcharges to consider. Larger manufacturers will be able to cover these additional costs, but smaller manufacturers may struggle, especially those that have never hired non-EEA migrants before.
Serious consideration to long- and medium-term recruitment and retention strategies, as well as immigration budgets, are recommended. Companies should also audit current workforces and look at ways that they can maximise the return on investment of current employees and contractors.
In the short term, the new system does not solve manufacturers’ workforce mobility challenges. Employees from the EU may also be able to enter as a business visitor, but activities that can be undertaken while in the UK will be limited. Manufacturing companies must carefully consider the activities that will be undertaken by employees entering the UK from the EU. Unless those are clearly permitted under the business visitor regulations, a sponsored visa application may be required to avoid illegal working and associated penalties.
Need help for your business?
The immigration rules and guidance can be daunting and unwieldy for employers who want to employ global talent, but it doesn’t need to be a painful process.
Fragomen can fully support your business to navigate the new system. Their highly experienced teams can help you pull together your sponsor licence applications and all supporting documents. They can also support on applications under the EU Settlement Scheme and under the new immigration system, allowing you to focus on other areas of your business growth and product development
Through their newly acquired company Nomadic, Fragomen can assist your business with short-term travel and immigration needs, helping you to reach technology-led, innovative solutions for the short-term travel compliance and transactional delivery needs.