UK business and immigration: A rocky road ahead

Businesses and law firms alike will need to include immigration
on their agendas over the coming year, advises Rajiv Naik

In my last article for the Solicitors Journal,
I commented on the Migration Advisory Committee's (the MAC) review into UK business immigration and what suggestions
it had made to the government.

Well, after a period of conjecture, the government has started to implement some
of the proposed changes. It has also outlined further changes to be introduced between now and April 2017.

There is a great deal of literature and comment available on the upcoming changes so I will not dwell on all of them in turn. However, we are facing an interesting time for UK business immigration, with a number of key events and changes that lawyers and businesses alike will need to keep
an eye on.

A hostile environment

The introduction of the Immigration Bill last September saw measures introduced that are aimed at creating a 'hostile environment' for
illegal or unwanted migration into the UK. However, it is not only illegal immigrants and private organisations that will be impacted by
the Bill. In fact, over the course of the next year it is going to become increasingly more challenging for UK businesses to obtain work authorisation visas for their non-UK/European Economic Area (EEA) staff, primarily as a result of the costs associated with the visa application process.

The government has moved away from its rhetoric of 'reducing net migration to the tens of thousands' - as per the Conservative party's 2015 manifesto - but it is apparent that it is still keen to reduce the number of migrants in the UK and the MAC's recent involvement has clearly shown us that the government is taking a keen interest in
the UK business immigration sector.

Brexit?

One event that is looming on the horizon that is impossible to ignore is the Referendum on the UK's membership of the EU. As the 'Remain' and 'Leave' campaigns ramp up, businesses and law firms are receiving an influx of questions concerning
the possible impact of a Brexit and what the consequences will be for those EU migrants already in the UK or those planning to travel or work here.

We do not know what the exact ramifications would be of a Brexit but one thing is for certain: if the UK left the EU we would face at least one to two years of uncertainty while the nation reviewed and reformed its relationship and position with Europe.

One of the questions I am often asked is: 'What will happen to those EU nationals who are already here in the UK? Will they lose their rights to remain here?' I would have thought this to be highly unlikely; those who are already here will most
likely retain their rights of residence and not
face removal. The cost alone of implementing a removal scheme would, in my opinion, make this prohibitive, despite it potentially being illegal under international law.

There is an argument that under the 1969 Vienna Convention those migrants who have already acquired rights under EU law to live and work in the UK will retain those rights even if there was a Brexit. However, this is still a subject of debate with some experts arguing that the convention does not guarantee those rights should we leave the EU. This may eventually be a topic for debate in the courts.

While removal is unlikely, it is possible that the government will implement a form of registration scheme for those migrants already in the UK. Companies and law firms alike might be familiar with the Worker Registration Scheme (WRS), which allowed nationals of the eight countries that joined the EU in 2004 (Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia) to work in the UK. This scheme was closed in 2011 but it is possible that a Brexit would see the introduction of a similar scheme, with migrants having to register within a certain timeframe and employers obliged to carry out
right to work checks.

Should the UK vote to leave, it will take a number of years for a finalised immigration system to emerge. Without doubt, transitional arrangements will need to be implemented after the referendum to help manage the change, so watch this space.

Visa application levies

Core legislation has remained fairly constant over the last five years but UK businesses looking to
bring staff to the UK will now have to consider two additional and substantial payments:

• The Immigration Health Surcharge (IHS): Introduced in 2015, the Home Office is now asking businesses seeking to bring new hires
  to the UK to pay £200 up front for each year the individual, and their family members, will be in the UK. So, if you have a new employee who will require a work authorisation visa to work in the UK (let's say for five years), he or she will need
  to pay an IHS payment of £1,000 at the initial application stage, as will each of their dependants. This is non-refundable, even if the employee leaves the UK or changes employer. This currently only applies to new hires, but intra-company transfers will also have to make this payment from the autumn.

• The Immigration Skills Charge (ISC):
  Coming into force in April, the ISC is levied
  on employers that wish to employ migrants
  in skilled areas. It is designed to reduce the number of employers taking on migrant workers and encourage employers to train British staff to fill those roles. The ISC is set at £1,000 per employee for each year they plan
  to be in the UK. So, taking the example above,
  an employee will end up having to pay £5,000 upfront as part of the entry clearance visa application process.

In short, the impact of these changes for UK businesses and law firms is that the cost of bringing foreign migrants to work in the UK is going to increase dramatically. At Fragomen we ran some cost projections for our clients, and for those larger organisations the introduction of the ISC alone would see their annual UK immigration costs increase by millions of pounds. This is likely to be prohibitive for businesses that are considering bringing foreign migrants to the UK for work.

Sponsor licence renewals

Finally, another event on the horizon is the sponsor licence renewal that a number of UK companies are facing later this year. Introduced in 2008, a sponsor licence is valid for four years. Therefore, those companies that applied for licences straight away will be coming up for their second renewal.

While typically a fairly administrative process, the Home Office has been aiming to carry out a number of compliance audits as part of the renewal process. It is important for those companies renewing their licences to keep an eye out for correspondence
from the Home Office in case an audit is planned. That said, a number of audits are unannounced. Before submitting a renewal application I would recommend that companies ensure their immigration and human resources files and process are up to date and to be prepared to guide a Home Office compliance officer through these if required.

With a host of upcoming changes, and the possible impact of a Brexit, the next 12 months should certainly prove interesting. One thing is certain, however, UK businesses and law firms alike will need to include immigration on their agendas over the coming year. Change, albeit to what extent we do not know, is certainly afoot.

Rajiv Naik is a manager and solicitor at Fragomen @fragomen