Britain is the ninth largest manufacturer in the world, employs roughly 2.5 million people and accounts for 14 percent of business investment. The sector creates jobs year-on-year and is heavily reliant on migrant workers both from the EU and outside the EU due to a skills deficit within the UK.
The government is under political pressure to reduce migrant labour in the UK and this will provide serious challenges to the sector. For example, in April 2016 the government introduced a requirement for non-EU nationals to earn at least £35,000 per annum to be eligible to settle permanently in the UK. This has implications for the lower paid (but not necessarily lower skilled) workers in the sector and it might make it more difficult to recruit and retain lower paid non EU nationals on a permanent basis.
As part of the trend to reduce migration and increase minimum salaries required for non-EU migrant workers in the UK, the government has also announced that they are going to scrap the ‘Tier 2 Intra Company Transfer Short Term Staff’ visa category. This will mean that migrants must use the alternative ‘long term’ category and companies must pay a minimum salary of £41,500 per annum. This poses a challenge for international manufacturers bringing employees from an overseas office to the UK to work on short term projects or assignments.
Brexit will undoubtedly impact the sector. While the weak pound following the Brexit result has increased UK manufacturing to its highest level in two years, the longer term outlook is far from clear. The sector will arguably be hardest hit by any moves towards limiting the free movement of people in the EU. This could create issues with sourcing the required labour in the manufacturing supply chain and in some manufacturing sectors such as food production. EU migrant workers constitute 30 percent of all workers. Changes in the labour market as a result of Brexit may also lead to wages being driven up due to limits of available EU workers who might be willing to work for lower wages.
Impact of legislative changes
As the law around immigration changes so frequently, employers need to ensure that they keep abreast of all the upcoming changes in order to be proactive rather than reacting to upcoming changes. For non-EU nationals, employers can monitor salary rates offered to prospective migrants as well as existing migrants who might be making settlement applications. This will ensure that employers are not caught out by future changes and are able to recruit and maintain a skilled workforce.
For the large number of current EU employees in the sector, employers can assist current employees to obtain documentary evidence of their immigration status. EU nationals who have been working in the UK for five years or more should be eligible to make an application confirming their Permanent Residence in the UK. For those who have been in the UK for less than five years, they could submit EEA Registration Certificate applications, which would act as confirmation of their right to reside in the UK.
Understanding the changing immigration landscape
Employers who sponsor migrant workers must comply with sponsorship duties and are accountable to the Home Office should they breach those duties.
This can result in companies losing all their migrant workers and (if workers are illegal) the business premises closing for up to 12 months. The knock on effect is potentially delayed product launch or development, such as new drug or car model. The company’s value and reputation might also suffer.
Here are four ways to keep on top of sponsorship duties:
1. Keep ‘genuineness’ at the top of your list
Inflating a job description so that an individual can be sponsored, or incorrectly recording their salary in immigration documentation might never be detected, but if it is, your sponsor licence could be revoked.
2. Know what to report and when
Sponsors need to keep the Home Office informed about changes to their circumstances and to their sponsored migrants’ circumstances. There are very strict deadlines and adverse consequences for failing to meet them.
3. Keep compliant records
The Home Office can visit a business premises to perform an audit without notice and will assess your compliance with sponsorship duties. Keep accessible records for all sponsored migrants containing copies of documents relevant to their visas.
4. Undertake proper right to work checks
Always (1) obtain, (2) check, and (3) copy the original document permitting the individual to work in the UK. Do this for every worker, not just migrants. Sign and date the copy.
In addition to a possible £20,000 fine (per illegal worker), the maximum prison sentence for employing an illegal worker recently increased to five years. Liability can arise from knowing or have reasonable cause to believe that a person does not have a right to work in the UK. The Home Office can issue an ‘illegal working closure notice’ and can close business premises for 48 hours. This can be extended to 12 months with a court order.
Home Office reforms
Manufacturing is hugely important to the UK economy in terms of exports, employment and business investment. The Home Office has made many reforms over the past few years. Recognising various job shortages in the UK (many in the manufacturing industry) has been beneficial to companies. However, other reforms make employing migrant workers more difficult and more expensive and the ‘tens of thousands’ net migration target is still in the minds of many policy makers.
It is clear there is a manufacturing skills shortage in the UK. To help the UK secure its place as a top global manufacturer, companies must be able to hire the right people for the right jobs. A collaborative approach could see companies to work with the government to identify important areas of skill and implement policies to create a skills development initiative under which migrants could perform their job role and train the local workforce.