Friday 4 September 2020 3:47 pm EY Talk

UK 2021 Immigration System: details revealed

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Partner, Global Immigration Financial Services, EY

The Brexit immigration issue was already a complex one, implementing the biggest changes in the UK in almost five decades with new immigration rules to navigate, and impacting business travellers.

In addition, now that 90% of the world’s population is living in countries with travel restrictions in place, the ability to travel is no longer a question of just immigration permission.  Are transport routes safe? Will individuals be allowed to enter a country even with the correct visa and will they be able to exit it? What kind of health certification will be required?  What level of data must be given up to secure entry and will  there be a requirement to quarantine?

Global trends and innovation

Global macro trends too are playing out around regionalised relationships. The localisation of supply chains, and high levels of domestic unemployment have led to  measures being taken by some governments (for example the US) to restrict work and study immigration.  

We are also seeing opportunities for innovation. The nomad visa (announced in Estonia and Barbados among other countries), provides immigration permission to cross-border remote workers and demonstrates a more strategic and integrated view of the global workforce, not least to increase operational resiliency around talent supply shock caused by an inability to move talent across borders.

Read more: COVID-19, the perfect storm for women: Work, trade and immigration

This all has the potential to particularly impact sectors where reliance on specialised migrant talent is typically high. Notably, these are sectors that will be critical to recovery in: life sciences, manufacturing, retail, digitised payments and technology. If you look too at human impact and behavioural change, we are at a point of significant inflection around how and where we work – freedom of movement has taken on an acutely personal meaning for all of us.

Read more: Brexit readiness guide for businesses with 50 days to go

These trends are conflating, and it is impossible to isolate these from the Brexit immigration issues. But let’s unpack all of that and look at what the UK Government’s detailed statement (of 13 July 2020) on the UK’s future points-based immigration system actually means.

The UK’s pre-COVID-19 immigration timeline

We are four months away from the biggest reforms in UK immigration in almost 50 years. This started in June 2016 with the Brexit referendum.  More recently, the Government’s Migration Advisory Committee reported on 27 January 2020 with its recommendations as to the future system and the Home Secretary, Priti Patel, announced her overall aims and plans in February 2020. The Immigration Bill, paving the way for the end of free movement, has been making its way through Parliament. Trade negotiations are ongoing and could pave the way for additional routes. The EU Settlement Scheme will remain open to applicants until 30 June 2021. Otherwise, the focus is on 1 January 2021 when the new system kicks in both for EU nationals arriving to the UK and UK nationals travelling to the EU for business, or moving for work.

What does that 2021 UK system look like?

The answer is that it really depends on your perspective.   If you are used to using the existing system to sponsor Tier 2 workers, a lot of the January 2021 changes via the new Skilled Worker visa are great news, including:

  • Removal of resident labour market testing
  • Removal of the cap on the number of people who can come into the UK as sponsored workers
  • Lowering of the skills threshold to Regulated Qualifications Framework (RQF) Level 3 to cover more roles
  • Lowering of the salary threshold and some flexibility around how to pickup points
  • Flexibilities around the ‘cooling off’ period
  • Ability for intra-company transferees to switch into the Skilled Worker route

If you are not used to using the existing system, or if you have relied on EU talent rather than non-EU talent, or you are a Small or Medium Enterprise (SME), or you have never needed a sponsor licence before; then one’s perspective can be quite different.

Read more: COVID-19 has changed investors’ priorities but UK attractiveness remains resilient

To reiterate, EU nationals resident in the UK before the end of the transition period will continue to have a right to work and settle in the UK. However, the 2021 system is one unified system for both new EU and non-EU national arrivals alike.  Under that unified system, if your business has a need for non-UK talent you have three challenges you are likely not used to facing: 

  1. You will need to have a sponsor licence in place. There are administrative procedures involved in the whole visa process which impact speed to deployment. Although not without faults, the UK’s system fares well comparatively speaking. There are improvements to be made and these are on the Government’s agenda – see below.
  2. You will be hit by significant costs. The cost of hiring an EU national now in the UK in purely immigration terms, is zero. From 1 January 2021, the cost rises to over £9,000 for a 5 year visa under the Skilled Worker route, taking into account application fees, the immigration skills charge and immigration health surcharge. So, the financial impact of that is high. Looking at the sectors critical to socio-economic COVID-19 recovery, in FinTech 28% of the 42% migrant workforce is from the EU.      
  3. There are now barriers to entry for EU nationals that no-one is used to navigating, and even with the reduced skills level in the current system research has found that 38% of EU workers currently employed in UK Financial Services (FS) firms would not be considered eligible under the UK’s new immigration system.  This rises to 55% in the energy sector, 58% in business services and 90% in transport –  think about the role of transport logistics in the UK’s COVID-19 crisis response. The same research also found that the rules would disproportionately impact the immigration of EU women at a time when we are looking at how to improve from a  Diversity and Inclusiveness (D&I) perspective on every view.

This all impacts future workforce and talent planning

It is great news that:

  • The UK will reintroduce the post study worker visa – allowing qualifying students in the UK to apply for 2 years leave at the end of their studies to work / look for work
  • That the global talent visa has been enhanced 
  • That the Government will look to introduce a separate unsponsored route in its phase 2 of immigration reforms 
  • We may also see more favourable rules for trade partner nationals through mobility frameworks within free trade agreements 

Let me return to the point on administration and bureaucracy – this is an area where the COVID-19 experience can trigger fundamentally positive changes.

Read more: The cost of the UK’s 2021 Immigration System to Financial Services

We have seen unthinkable innovation delivered overnight – government flexibilities around immigration policy and enforcement have shown what is possible without compromising the integrity of the system:

  • Not only in the UK,  over 50 countries have ripped up the red tape and granted automatic extensions for migrant workers and business travellers, to protect them from becoming overstayers
  • 20 countries moved to online processing at least in the interim
  • The UK granted automatic extensions for essential workers, ripped up the rules on switching and facilitated indefinite leave for the families of bereaved essential workers – there is an opportunity now to pivot a lot of that innovation to the 2021 system

Moving to the outbound issue

Freedom of movement of course continues until 1 January 2021. UK nationals already residing in an EU country will maintain their residence and work rights in the EU country where they reside, subject to a registration process specific to UK nationals.

EU countries are taking varying approaches to that, e.g. recognising existing registrations, asking UK nationals to take some additional steps and sending letters with invitations to register. It is critical to be familiar with those processes and the country by country deadlines.

Read more: We must do more to tackle racial inequality in the workplace

After transition ends on 31 December 2021, in the absence of any preferential agreement, the assumption is that UK nationals will default to 3rd country national status. Each country will have its own set of rules and immigration rules in the EU are vastly different in terms of eligibility, process and timelines. The UK and EU have announced a joint visa waiver allowing visitors to spend 90 days in any 180-day period. However, permitted business activities as a visitor differ. Assignees and new hires will need work permits. On  9 July 2020, the European Commission reiterated that:

UK nationals travelling to the European Union and the Schengen area will be treated as third-country nationals, and therefore subject to thorough checks at the Schengen area border.

Cross border remote workers who have increased in number as a result of COVID-19 and found more flexible ways of working, and frontier workers, will be particularly impacted. Current provisions on this are limited.

Key takeaways

  1. Know your exposure to all of the above in your UK business and EU operations – make sure your CFOs have this built into future cost planning.
  2. Plan strategies against the assumption of 3rd country national status to optimise the routes available to you now, and in the future system, for planned recruitment cycles. In the transformation climate, make the most of your global workforce, reduce your corporate carbon footprint and support D&I – but in doing that be mindful that the right to work for remote workers will be different now from 1 January 2021. Ensure you have properly enabled and protected remote workers taking into account individual and corporate tax and regulatory risks.
  3. Communicate risks and have appropriate risk strategies in place. From a Brexit lens you start with the challenge of re-educating your workforce around restrictions that they will not be used to and you must do that mindful of the additional risks COVID-19 throws into the mix.