By Gerwyn Davies, Senior Labour Market Adviser.

Whilst the UK has been given a six-month extension to finalise its arrangements for exiting the European Union, the Brexit-related uncertainty that many businesses face remains. However, the extension does offer some reassurance that the prospect of a ‘No-Deal’ outcome has now been reduced, given the retrenchment from the no-deal option on both sides of La Manche. While both parties are working actively to avoid this scenario, it is worth noting that no-deal does remain a distinct possibility. 

Given these developments, the UK Government’s new registration scheme for EU citizens and immigration policy appear ever more likely to go ahead as planned. This is because both Theresa May’s Withdrawal Agreement and a Customs Union, arguably the two likeliest contenders among the Brexit options in consideration, would require the roll out of the EU Settlement Scheme over the next two years and the introduction of migration restrictions in 2021.

This extension gives employers valuable time to prioritise their planning for the fundamental changes that are therefore likely to be made to the entire immigration system in 2021 (especially for low-skilled employers). These include extending the current points-based system for non-EU citizens to cover EEA (European Economic Area) citizens, which will see the introduction of a new minimum salary threshold of £30,000^[1] and a skill requirement of A-level standard (RQF Level 3) or above for recruiting all non-UK citizens.

To mitigate the impact of these proposed changes, the Government plans to offer a safety valve for employers via a Youth Mobility Scheme for all 18-30 year-old EU citizens, which will allow them to live and work in the UK for up to two years. Temporary one-year visas will also be offered to all EU citizens. This may prove particularly attractive to low-skilled employers and those daunted by the potential cost and administrative burden of the new system; although the Government is seeking to find ways of making this easier for employers. 

Employers who hire non-EU citizens can look forward to some positive changes from 2021, such as a lowering of the skills threshold to include occupations at the intermediate skill levels from graduate occupations. Others include the removal of the Resident Labour Market Test, which requires employers to advertise roles for 28 days before recruiting from overseas and giving international graduates six-months to find permanent, skilled employment. 

However, the overall net effect of the proposals will inevitably mean less migration, which will heighten recruitment difficulties - especially if the extraordinary performance of the UK labour market in recent years continues. As the labour market tightens, employers will be forced to widen their recruitment channels and make their organisations more accessible. This is a process that will be helped by the creation of a workforce development plan.

Furthermore, the sharp fall in EU net migration to the UK in recent years reflects some of the retention challenges many organisations have been facing. As a result, many employers have sought to assist EU citizens registering for the EU Settlement Scheme. On a positive note, employers will no longer feel compelled to provide financial assistance since the applications recently were made free. With the recent extension to Article 50, the deadline for applying to the Settlement Scheme is 30 June 2021; although with the scheme already underway, most EU citizens will be keen to secure their settled status or pre-settled status documents well before then.

The next six months will undoubtedly see yet more political twists and turns. However, the advice for employers is to use this time valuably and plan accordingly to the Government’s timetable, not least because the other key alternatives, such as the Norwegian model or not leaving the EU at all, would see the free movement of labour retained.

[1] Exemptions to this rule include shortage occupations, entry-level roles and some public service occupations such as nurses where the salary requirement is lower