How the UK’s immigration policy will affect business in 2016

News article

Matthew Davies, Fox Williams Last Published  05 January 2016

New rules will make it harder for employers to rely on migrant workers

Immigration has been hailed as the defining issue of our age, and anxieties about the potential security, economic and social impact of immigration are shaping the government's agenda. 

One of the previous coalition government’s first policy resolutions was to affirm the Conservative manifesto commitment to reduce annual net migration from hundreds to tens of thousands by the end of that Parliament. However, net migration figures for the year ending March 2015 show an increase to 330,000, well above the previous peak in 2005. Nearly 40 per cent of the EU migrants coming to the UK intending to work had no job to go to.

Home Secretary Theresa May confronted the conventional wisdom that net immigration is both a sign of, and a contributor to, economic strength by telling Conservative conference delegates in September that the UK does not need the present high level of net migration and must act firmly to curb it. The Prime Minister supported her in the face of disquiet from business leaders, having already announced in May tougher immigration measures and new powers to enforce them. 

The new Immigration Bill 2015-16 sets out mechanisms to remove illegal migrants more effectively, reduce demand for skilled and unskilled migrant labour, and renegotiate European obligations on in-work benefits which act as a pull factor to EEA migrants largely exempt from UK immigration control. 

The bill makes working without permission a criminal offence, so illegal workers’ earnings become proceeds of crime, and “facilitating” such illegality becomes a new danger for employers, already subject under previous immigration legislation to criminal and civil penalties for employing migrant workers without the right permissions. The government will be able to be more involved in licensing regimes for high-risk employment sectors, and a pilot scheme penalising private landlords who fail to carry out prescribed checks on tenants’ immigration status is to be extended. Immigration officials will receive wider powers to seize property, enter, search and close down business premises.

Small businesses are often the first in line for enforcement, as they operate in sectors perceived as high risk for illegal immigration such as cleaning, independent retail and fast food, although they are least well equipped to carry out potentially onerous checks. The Immigration Act 2014 removed most grounds for appeal against immigration decisions; the new bill proposes a ‘deport now, appeal later’ approach for anyone whose appeal is not based on human rights grounds. 

For employers, the Points Based System has become the tool to grapple with. It was always intended to make those employers who benefit most from immigration more accountable for its cost and control and has been progressively tightened. In 2016, employers will need to make contingency plans for more changes. Last year, the cap on Restricted Tier 2 (General) Certificates of Sponsorship (set at 20,700) was reached more than once. The cap is to stay at this level in 2016, so this is likely to happen again. The government may also decide to prioritise some skills shortages to the detriment of others, and impose time limits on certain sectors to stay on the designated shortage occupation list. The Migration Advisory Committee has been asked to report on restricting the current automatic right of Tier 2 dependents to work.

Other expectations are that Tier 2 (Intra Company Transfers) will become more difficult – immigrants may have to pay a full health surcharge, and minimum salary levels (set out in the Standard Occupational Classification-based Codes of Practice) may rise. Employers are likely to encounter additional reporting and monitoring duties as sponsors, less flexibility on variations to terms of employment for sponsored migrants, and a requirement for sponsored migrants to be earning a minimum of £35,000 to be eligible for indefinite leave to remain in Tier 2.

Then there is the vexed issue of Europe. The government’s plan to negotiate with Europe to cut in-work benefits and reduce the pull factor for low-skilled EEA migrants to the UK is fraught by legal difficulty. The UK has been wrong-footed in the PR stakes by Germany’s calculation that admitting asylum seekers could address the economic challenge of its rapidly falling population. And national security is an ever-present issue: terrorist groups openly boast that their operatives are among the refugees reaching Europe and investigations into the Paris attacks in November confirm it. 

David Cameron declared his frustration that immigration policy in 2015 “hasn’t worked so far”. In 2016, employers who rely on migrant labour may conclude the same.

Matthew Davies is a partner at Fox Williams LLP

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