Brexit Extension Is No Relief for UK Employers

Brexit Extension Is No Relief for UK Employers

Business leaders in the UK may have breathed a sigh of relief last month when the country’s deadline for leaving the EU, originally scheduled for March 29, was pushed back until October 31. The extension is good news insofar as it gives the UK government more time to finalize an agreeable Brexit plan and avoid crashing out of the union, with potentially devastating economic consequences. Likewise, it gives British organizations more time to shore up their own Brexit plans, if they had not done so already. For these organizations, however, and particularly for their HR functions, the extended Brexit deadline is a decidedly mixed blessing, and it would be a mistake to treat it as a reprieve.

One of the most disruptive effects Brexit has had on UK plc for nearly three years now has been to introduce major uncertainty into the business environment. Not knowing whether, or when, or how Brexit would finally happen has made it difficult for organizations to make long-term plans that depend on the outcome of this process. It would be one thing if the UK and the EU had decided that Brexit would definitely take place at the end of October, under a finalized deal and with a specified transition plan. The extension agreed upon in April did none of that; instead, it gave the UK government another six months to try and accomplish what it has been unable to do thus far and rally majority support in Parliament around either the deal Prime Minister Theresa May made with her European counterparts last year, or some alternative arrangement that the EU would also accept.

In other words, the uncertain environment that has prevailed since 2016 remains in place: Organizations still don’t know when Brexit will happen and whether it will be orderly or chaotic. As Steve Hawkes, deputy political editor at the Sun, remarked when the extension was announced, another six months of unpredictability “is possibly the worst outcome for business.”

If the UK ratifies the Brexit deal before October, the UK may leave the EU at the start of the following month. If the country fails to hold elections to the European Parliament at the end of this month, it will crash out with no deal on June 1. If Parliament still can’t pass a deal by the new deadline, the country faces the prospect of a no-deal Brexit in November or an additional extension, assuming the EU is willing to grant one. The delay has even amplified uncertainty around whether it will ultimately happen at all, though the government remains committed to achieving Brexit — and organizations must continue preparing for it.

To that end, businesses in the UK cannot afford to slow down their contingency planning for the various Brexit scenarios that may come in the next six months. This is especially true for HR, as Brexit’s impact on workforce planning, retention, and employee engagement are some of its most significant consequences for organizations. While the overall picture of the future remains cloudy, there are a few things of which HR leaders can be sure, at least in terms of what risks they need to plan against. Here are some things UK businesses should be thinking about as they move ahead with their post-Brexit talent strategies:

Read more

The Talent Ramifications of the Brexit Deal (or No Deal)

The Talent Ramifications of the Brexit Deal (or No Deal)

The UK’s planned exit from the European Union is fast approaching, and a new deal over the terms of that exit faces an uncertain future in the UK parliament. Whatever happens, there will be talent implications for employers and HR leaders in the UK and Europe. Below is our broad look at the background of the process and terms of the latest proposed deal, and what the potential consequences could be — viewing several key issues through the lens of HR, including immigration, employment law, and the risks of a no-deal Brexit.

Fast Facts

  • The UK will formally exit the European Union on March 29, 2019, marking the deadline for UK and EU negotiators to reach a deal on an orderly Brexit transition. UK Prime Minister Theresa May has reached a draft agreement with the EU that would provide for a 21-month transition period, after which the UK would be able to control immigration from the EU, while backstop measures would allow the UK to remain in the EU customs union and enable a soft border between Northern Ireland and the Republic of Ireland if a final trade deal is not reached by December 2020. The transition period could be extended once, into 2022, if the UK and EU agree to do so.
  • A scheduled Parliament vote on the deal with the EU was delayed on December 10 after the May government realized the agreement would most likely be rejected. May then survived a confidence vote two days later, and plans to continue lobbying for the deal, which will not be scheduled for another vote in Parliament until sometime in January.
  • May’s deal, as drafted, would preserve the free movement of labor between the UK and other EU countries for the duration of the transition period, while any EU citizens living in the UK before the end of that period would have a right to stay, but would have to apply for residency documentation. Afterward, EU citizens would no longer have special privileges in immigrating to the UK. May has proposed a skills-based system for admitting immigrants after Brexit, but some business leaders and the National Health Service fear this system will leave them short-staffed in roles that would not qualify as high-skill under May’s scheme but for which native talent is in short supply.
  • The UK government has pledged to uphold employment laws based on EU regulations after Brexit, but some of these laws may be partly amended to be more flexible for employers or to reduce their liabilities. Unions, however, fear that these protections may be weakened substantially.
  • If there is no deal by the March 29 deadline, the UK will face a “messy” exit from the EU—likely causing severe economic disruptions. In the event of a no-deal Brexit, the UK would revert to trading with Europe under World Trade Organization guidelines, reintroducing customs and border controls. A no-deal Brexit can be expected to hurt the pound and cause instability in the British financial sector, which could spread to continental Europe and the rest of the world.
  • In a no-deal scenario, the government has promised that EU citizens’ immigration status would not change before 2021, but it remains unclear what employers will have to do to ensure that their European employees are able to continue living and working in the UK. Many businesses have put contingency plans into action to protect against the consequences of a no-deal Brexit, but most HR managers in the UK are underprepared for this scenario. In any case, Brexit is expected to result in a labor supply shock and make it more challenging for UK employers to fill job vacancies.

Background

On June 23, 2016, citizens of the UK narrowly voted to withdraw their country from the European Union. The “Brexit” referendum sent a shockwave through the British, European, and global economies, and prompted concern and uncertainty at many organizations in the UK and abroad.

Conservative Prime Minister Theresa May, who came to power shortly after the referendum in 2016, has worked to cut a deal with Brussels that preserves the UK’s strong trade ties with the EU, but has also stressed that no deal is better than a bad deal as far as her government is concerned. UK and EU negotiators deadlocked over several key points where London and Brussels are at cross-purposes, and uncertainty over whether and how these obstacles will be overcome has been a major source of anxiety for UK businesses over the past two years.

Chief among these issues are immigration and the free movement of people between the UK and the rest of the EU. May has stressed the need for the UK to “take back control” of its borders, even if it meant losing access to the EU’s single market. Free movement of people is one of the “four freedoms” underpinning that single market; the UK wants to preserve free movement of goods, services, and capital, while regaining the right to restrict immigration from the EU. For its part, Brussels has resisted creating new forms of special treatment for the UK that would make Brexit easier, partly to discourage other EU countries from pursuing exits of their own. Another, related area of disagreement is the border between the Republic of Ireland and Northern Ireland, which forms the UK’s only land border with another EU country. Many businesses on the island of Ireland have supply chains that cross that border every day and employees living on both sides of it; creating a hard border with customs and immigration controls would be costly and complicated for these organizations.

The deadline for reaching an agreement is March 29, 2019. If no agreement is reached, the UK will “crash out” of the EU and trade with the bloc under World Trade Organization guidelines. May announced on November 25 that her Brexit negotiators and their counterparts in Brussels had reached a draft agreement that would solve some of these challenges.

A vote on the deal in the UK Parliament had been scheduled for December 11, but May called it off one day before when it was clear that the deal was going to be rejected. Many MPs opposed the agreement, claiming the proposed Brexit is too hard or not hard enough, or because they believe the country should hold another referendum on the question before proceeding.

Prime Minister May said on December 10 that she would ask the EU for new “reassurances” on the deal, and in particular the backstop plan for the Northern Ireland border, which many MPs said they opposed. The EU has maintained they will not renegotiate the agreement, however. May’s government offered no specific timeline as to when there would be another scheduled vote in Parliament on this or any revised deal — but has said it will not happen until January. There is also a January 21 deadline to present the deal to Parliament. May survived a confidence v

Here is a broad outline of what might happen next and the key issues HR leaders need to understand:

Read more

Labor Department Stepping Up Investigations of H-2B Visa Users

Labor Department Stepping Up Investigations of H-2B Visa Users

The Wage and Hour division of the US Department of Labor announced earlier this month that it was planning a campaign of inspections and investigations targeting employers who use the H-2B seasonal guest worker visa program to hire temporary employees from other countries. Billed as an “education and enforcement initiative,” the campaign will target hotels and landscapers, the two industries that rely most heavily on the H-2B visa, “providing compliance assistance tools and information to employers and stakeholders, as well as conducting investigations of employers using this program,” according to the Labor Department’s statement:

A key component of the investigations is ensuring that employers recruit U.S. workers before applying for permission to employ temporary nonimmigrant workers. “Any employer seeking workers under this program must be ready and willing to hire qualified U.S. applicants first,” said Bryan Jarrett, Wage and Hour Division Acting Administrator. “This initiative demonstrates our commitment to safeguard American jobs, level the playing field for law-abiding employers, and protect guest workers from being paid less than they are legally owed or otherwise working under substandard conditions.”

Last year, WHD investigations found more than $105 million in back wages for more than 97,000 workers in industries with a high prevalence of H-2B workers, including the hotel industry.

The H-2B is a six-month visa that allows foreigners to work for a US employer temporarily and is most commonly used in the hospitality and landscaping industries to fill labor shortages in the high-demand summer season. In a historically tight market for American workers, employers in these industries have grown more dependent on the H-2B program to keep up with seasonal demand and grow their businesses. The policies of President Donald Trump, who has tasked his administration with reducing the number of both legal and undocumented immigrants entering the US, have exacerbated the labor market challenges of many employers who rely on guest worker visa programs like the H-1B and H-2B.

Read more

UK Migration Committee Recommends Uncapping Tier 2 Visas After Brexit

UK Migration Committee Recommends Uncapping Tier 2 Visas After Brexit

The UK government’s Migration Advisory Committee issued a report this week assessing the impact of immigration from the European Economic Area and suggesting ways for the government to reform immigration policy in preparation for the UK’s exit from the European Union next March. Once Brexit is fully implemented in 2020, freedom of movement is expected to end between the UK and the EU, meaning UK employers will no longer be able to seamlessly recruit workers from other European countries, which employers fear may lead to labor shortages in a range of industries from agriculture and construction to hospitality, health care, and finance.

The MAC report concludes that there is no need for the UK to continue to have separate immigration rules for EU/EEA citizens and migrants from other countries. The committee’s main recommendation for alleviating these potential shortages is to remove the cap on Tier 2 skilled-worker visas, People Management explains:

Along with ending the Tier 2 (General) visa cap, the report also suggested extending Tier 2 eligibility to medium-skilled roles and abolishing the resident market test list but retaining the £30,000 salary threshold. It added the immigration skills charge should also cover EEA citizens. The report noted these changes “would allow employers to hire migrants into medium-skill jobs but would also require employers to pay salaries that place greater upward pressure on earnings in the sectors”.

Tier 2 visas became a concern for employers earlier this year as restricted certificates of sponsorship – which must be obtained by UK employers hiring non-EEA staff – were continuously oversubscribed for in the first half of 2018. Pressure on the system only eased after the government removed NHS doctors and nurses from the cap.

The main upshot of this proposal is that highly skilled talent would be relatively easy to recruit from other countries, but low-skill workers would not. Writing at Personnel Today, Kerry Garcia and Jackie Penlington from the law firm Stevens & Bolton LLP take a closer look at what the MAC’s scheme would mean for employers:

Read more

New USCIS Policy Expected to Increase Denials of US Visa Applications

New USCIS Policy Expected to Increase Denials of US Visa Applications

Under a new policy that came into effect on Tuesday, visa adjudicators at US Citizenship and Immigration Services are now allowed to deny visa applications or petitions without first issuing a notice of intent to deny or a request for additional evidence. In announcing the policy in July, the agency said the policy was “intended to discourage frivolous or substantially incomplete filings used as ‘placeholder’ filings and encourage applicants, petitioners, and requestors to be diligent in collecting and submitting required evidence. It is not intended to penalize filers for innocent mistakes or misunderstandings of evidentiary requirements.”

Immigration lawyers, however, tell ProPublica that the policy will effectively make it much harder for visa applications to succeed, adding to the various procedural barriers the Trump administration has erected to slow down legal immigration to the US. The attorneys expressed concern that “there is not enough oversight or clear standards to ensure fair handling”:

One reason the lawyers are worried is that they’ve seen a barrage of scrutiny directed at once-standard immigration applications since Trump took office. ProPublica spoke with a dozen lawyers and reviewed documentation for several of these cases.

Many responses cited technicalities: One application was not accepted because the seventh page, usually left blank, was not attached. Another was rejected because it did not have a table of contents and exhibit numbers, even though it had other forms of organization. “It seems like they are just making every single submission difficult,” Bonnefil said. “Even the most standard, run-of-the-mill” application.

Read more

Trump Administration Finalizing Plan to Revoke H-4 Visa Holders’ Work Authorization

Trump Administration Finalizing Plan to Revoke H-4 Visa Holders’ Work Authorization

The US Department of Homeland Security is close to approving a policy that will remove the right of at least some H-1B visa holders’ spouses to work in the US, the Mercury News reported last week, based on a new court filing:

Those affected hold the H-4 visa, a work permit for spouses and under-21 children of H-1B workers. It remains unclear if all spouses of H-1B holders will be banned from working, as Homeland Security has only said “certain H-4 spouses” will be targeted by the new rule. Because not all H-4 holders are allowed to work, it appears that “certain H-4 spouses” may refer to all who are work-eligible.

Controversy over the H-4 has spun off from the furor over the H-1B, which is relied upon heavily by Silicon Valley technology companies but attacked by critics over reported abuses. Homeland Security, which had earlier said it would make the change in February, filed an update in a federal court case on Monday to inform the court that the new rule was in the final “clearance review” and that the department’s intention to impose the ban was unchanged.

H-4 visa holders were granted the right to work under a policy change made by the Obama administration in 2014. The Trump administration began considering a reversal of this policy in April 2017 and it became part of the regulatory changes the government developed in response to President Donald Trump’s “Buy American, Hire American” executive order issued that month, which called for a crackdown on guest worker programs like the H-1B visa and stricter enforcement against allegedly widespread fraud and abuse in these programs. The Department of Homeland Security formally proposed ending work authorization for H-4 visa holders last December.

Read more

UK Labor Market Tightens as Europeans Leave, but Wages Remain Stagnant

UK Labor Market Tightens as Europeans Leave, but Wages Remain Stagnant

The latest labor market bulletin from the UK Office for National Statistics, released on Tuesday, shows that the number of citizens of other EU countries working in the UK has declined in the past year by the largest amount since the government began collecting comparable records two decades ago. Between April and June 2018, approximately 2.28 million EU nationals were employed in the country: 86,000 fewer than in the second quarter of 2017. In the same period, the number of employed UK nationals increased by 332,000 to 28.76 million, while the number of non-EU foreign workers increased by 74,000 to 1.27 million.

Gerwyn Davies, senior labour market analyst at the CIPD, comments on the report to Personnel Today:

“Today’s figures confirm that the UK labour market has suffered from a ‘supply shock’ of fewer EU-born workers coming to live and work in the UK during the past year, compared with previous years. This has contributed to labour supply failing to keep pace with the strong demand for workers; which is consistent with another welcome fall in unemployment.” …

“The tightening labour market is putting modest upward pressure on pay, but this still isn’t leading to more widespread pressure due to ongoing weak productivity,” said Davies.

New employer survey data released on Monday by the CIPD and the recruitment firm Adecco showed that UK employers were experiencing staff shortages due to the low-unemployment environment and a decline in migration from the EU. The survey found that the number of applicants per vacancy had dropped across all roles since last summer, while 66 percent of employers said at least some of their vacancies were proving difficult to fill.

Nonetheless, this tight labor market isn’t translating into higher wages for most UK employees.

Read more