We have officially left the EU and are in a transition period, but it is this transition period which is key phase as it will result in how the UK and EU conduct future trade. Negotiations are currently ongoing to determine the future relationship between the UK and EU.
The agreement will be vital in determining how Brexit impacts on the UK economy, and ultimately the UKs employment levels. It is difficult at this stage to precisely indicate what will happen, we can though anticipate what could happen and therefore help us, to some extent, to plan ahead based on what we know now.
We know that if a deal cannot be negotiated, the UK defaults to trade rules set by the World Trade Organisation which will see tariffs and border checks being applied to UK goods travelling to the EU. Consequently, this will be a serious concern for businesses and could drive an increase in unemployment levels. We have already seen businesses announce a move away from operating within the UK, and depending on the outcome of the negotiations, we risk more employers taking the same approach, if as a result of Brexit, it becomes more costly to operate.
Covid-19 and Unemployment
The added complexity is Covid-19, and the UK, has already been hit in terms of unemployment levels. We are going through a turbulent time and, we know from the Office for National Statistics (ONS) that between June to August 2020 estimates showed that 1.52 million people were unemployed, which is around 200,000 more than the previous year. The UK is also at risk of further lockdowns, whether these are local or national. So, the coming weeks ahead are going to be challenging for all.
We also know from the ONS that we are seeing lower vacancy levels than those pre covid-19, which is about 40.5% less than a year ago. Whilst we are seeing a gradual increase between July and September we need to consider that during the summer, covid-19 levels declined and levelled off and so we must wait to see how the current situation impacts on recruitment.
Settlement Scheme and New Points Based Immigration System
EU nationals already working in the UK, will need to apply to the Government’s Settlement Scheme. The deadline for doing so is 30 June 2020, although they must already be in the UK by 31 December 2020. If this deadline is missed, then whilst it may not necessarily affect UK wide unemployment, it could see employee retention and recruiting challenges within certain sectors who rely on EU nationals, such as the health and social care sector.
Additionally, a new points-based immigration system will be introduced for EU nationals arriving in the UK from the 1 January 2021. A job applicant will be required to earn at least 70 points through a process where points are earned based on differing characteristics, such as salary, qualifications. This means that from next year, Employers will be required to apply for a Sponsor Licence if they are to recruit from outside the UK, which will incur fees, in addition to the immigration skills charge.
Brexit Risk and Compliance Audit
Brexit should be a top priority for businesses alongside Covid-19; you can access our Brexit HR Audit which will help you in identifying whether you are Brexit ready, along with our GDPR Risk and Compliance audit, which will help you to assess if your current working practices remain compliant, as we expect the UK to introduce its own data protection laws post Brexit which it is anticipated will be based on the existing laws.
Now is also a good time to review your recruitment needs for 2021 to determine whether you are likely to need to recruit from outside the UK and if so, whether you will need to apply to become a sponsor. We would recommend you do this sooner rather than later; current processing times are around 8 weeks.
You can also watch our two recent webinar recordings, on demand, for further HR guidance: