Published Editorial

Brexit and its impact on immigration

September 2016

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Surabhi Marwah

Partner & Immigration Leader, People Advisory Services, EY

From the pre-Brexit era to the post-Brexit era, immigration has taken centre stage and been an instrumental factor in contributing to the historic decision of the UK to leave the European Union (EU). The focus has always been on immigration as it was a highly debated topic during the final weeks leading up to the referendum.

The need of the hour for all global organisations is to establish a Brexit Steering Group with key business stakeholders as this will ensure that all functions of the organisation such as employment tax, payroll, legal, HR, etc are aligned towards the same vision. In terms of immigration, this group needs to focus on two time periods in parallel – short term and long term.

In the short term, organisations need to manage the uncertainty on the future nature of the UK’s relationship with the rest of the EU and the immediate concerns that arise for the corporates as well as their individuals. It may also be a good practice for organisations to develop effective communication for their leadership as well as their employees to ensure that all the functions receive appropriate information along with some reassurance. This would help individuals to gain some clarity amidst all the uncertainty.

Employers should also take steps to get a better understanding of their UK-based workforce, especially the nationality and work function of their employees as, currently, Europeans and UK nationals are still able to travel and remain in their respective host nations. However, this freedom of mobility may not remain once the formal separation occurs. Therefore, employers need to consider how workforce plans and recruitment and training policies will develop in the future.

In the long term, organisations need to play a much bigger role and formulate a strategy in line with their own vision, keeping in mind the uncertainty of the change in regulations. Brexit may also prompt organisations to focus on planning initiatives such as potential headcount freezes/downsizing, workforce relocation – into or out of the EU/around the UK and an increase in the use of a contingent workforce.

One of the most likely scenarios of Brexit will be the shortage of a skilled workforce due to the decrease in international mobility on account of uncertainty regarding the access of benefits and restricted access to the international talent pool from EU member states.

Therefore, organisations would need to find a way to tackle this scenario. Use of a contingent workforce or mobility of its existing employees is a strategy that most employers would deploy. However, this technique comes with its own set of challenges such as an increased compliance and taxation cost to employers as well as the employees and also increased cost to use temporary workers from the EU.

However, since UK immigration policies post Brexit have not yet been finalised, one thing that all employers should work towards is to stay informed regarding the immigration policies as they develop and play an active role in policy consultation.

As per news articles, Theresa May, the new UK Prime Minister, in an attempt to curb immigration, plans to further ‘scrutinise student visas’. This further scrutiny comes after her earlier major student visa reform in 2012 where she closed the post study work route, which allowed students two years to seek employment upon completion of their course.

Work-related visa restrictions have already resulted in a fall in the number of Indian students studying in British universities from 22,385 in 2012-13 to 18,320 in 2014-15, according to the UK Council for International Student Affairs (UKCISA) and in case the new reforms make obtaining UK student visas’ stricter, Indian students may have to look elsewhere for their further education.

Even though Article 50 of the Lisbon Treaty, the only mechanism by which a country can leave the EU, has not yet been invoked by the Prime Minister of UK, it is advisable for organisations to have strategies in place to manage the uncertainty in order to steer themselves through the upcoming changes. For now it’s a wait and watch for further developments.