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IMPACT – HIGH
What is the change? The allocation of Tier 2 restricted certificates of sponsorship for the month of December has been reached, triggering a points threshold.
What does the change mean? To be approved in December, Tier 2 (General) applicants must earn a minimum of 65 points, which means they must have a Resident Labour Market Test and a salary of £68,000 or higher. However, there are reports—though unsubstantiated—of approvals with lower salary levels.
Background: The annual quota for Tier 2 (General) migrants is 20,700, apportioned into monthly quotas. In 2016, the monthly distribution was changed to provide higher quotas during high-demand months of April through September and lower quotas in other months, thereby shifting pressure on months at the end of the fiscal year (December through March). When the monthly quota is reached, applications are ranked by points obtained, with more points earned for shortage occupations, higher salaries, and certain Ph.D.-level roles.
BAL Analysis: The reaching of the monthly quota indicates increased demand for Tier 2 workers that could carry over to successive months. Companies that recruit higher earners will continue to be more likely to have their applications approved.
This alert has been provided by the BAL Global Practice group in the United Kingdom. For additional information, please contact uk@bal.com.
Copyright © 2017 Berry Appleman & Leiden LLP. All rights reserved. Reprinting or digital redistribution to the public is permitted only with the express written permission of Berry Appleman & Leiden LLP. For inquiries please contact copyright@bal.com.
IMPACT – MEDIUM
The House of Commons narrowly defeated the government’s Brexit bill, voting 309-305 Wednesday to insert an amendment that will explicitly require any Brexit withdrawal deal to be approved by a vote of Parliament.
The government’s EU Withdrawal Bill is the U.K. national legislation that will remove all EU law from British statutes on the day of Brexit. Prime Minister Theresa May has sought greater latitude to negotiate and finalize a Brexit deal with the European Union without being explicitly subject to Parliamentary veto. The government has only indicated that Parliament would have a “meaningful vote” on the exit terms.
Some Tory MPs, led by Dominic Grieve, mounted a Conservative revolt, joining Labour and Liberal Democrats to pass the amendment. Grieve, a former attorney general, warned that without the amendment, the bill could lead to “constitutional chaos.”
Brexit secretary David Davis said after the defeat that the government will now consider whether to make further changes to the bill as it moves through Parliament.
EU negotiator Michel Barnier said there would be “no turning back” from commitments the U.K. made last week on phase one Brexit issues of EU citizens’ rights, the Irish border, and the divorce bill. Earlier this week, EU Council President Donald Tusk said it would be a “furious race against time” to complete Brexit negotiations in time. The parties will need to reach a Brexit deal by roughly September 2018 to give individual EU countries time to approve it before the deadline for the U.K.’s exit in March 2019.
BAL Analysis: Though a majority of MPs opposed the U.K. leaving the EU, they have repeatedly said they will honor the voters’ will. So while Wednesday’s vote will not reverse Brexit, it could give a stronger hand to those who want a softer break from the EU and closer future ties, potentially complicating the U.K.’s negotiating stance as it heads into Brexit trade talks early next year.
What is the change? The Home Office has published its latest statement of immigration rules for non-EU/EEA migrants.
What does the change mean? Several business immigration related changes affect points-based visa holders and their dependents, those applying for permanent residency, and students converting to Tier 2 visas.
Background: The changes relevant to business immigration, which will affect applications made after Jan. 11, are as follows:
BAL Analysis: The changes provide positive news for Tier 2 applicants who will no longer be disqualified from permanent residency due to long breaks in employment, as well as for employers recruiting Tier 4 students switching to the Tier 2 category. However, dependents of Tier 2 and other points-based migrants will need to observe the 180-day absence rule to remain eligible for permanent residency. BAL welcomes any attempt to streamline the visa process and looks forward to positive effects for business travelers, in the mid-term, while anticipating teething issues in the short-term.
The European Union and the United Kingdom have reached a deal on phase one Brexit issues, with the U.K. making key concessions on the rights of EU citizens in the U.K. and agreeing to avoid formation of a hard land border between Ireland and Northern Ireland, and both parties agreeing to the methodology of a financial settlement.
EU and U.K. negotiators issued a 15-page joint report Friday detailing the agreement in principle and the commitments of each side to be reflected under a full withdrawal agreement. The agreement allows the negotiators to move on to phase two talks dealing with trade.
Key immigration-related provisions are summarized as follows.
Citizens’ rights:
Ireland and Northern Ireland:
The agreement recognizes the unique challenges presented by the U.K.’s withdrawal from the EU and notes that this agreement will not predetermine the outcome of wider discussions. Nonetheless, the following principles are key:
BAL Analysis: The agreement provides greater certainty for EU citizens living in the U.K. (and British citizens living in the EU) regarding their current and future rights and should help them plan accordingly. In particular, the cutoff date for retaining EU rights will not be earlier than the date of withdrawal, meaning that all EU nationals in the U.K. and British citizens in the EU exercising treaty rights on the day of Brexit will have these rights preserved at least until they have gained permanent residence. (This is likely to be called “settled status” under the U.K.’s domestic regime). They will be permitted to bring family members even after Brexit and after the two-year transition period. They will have their EU permanent residence rights recognized by the U.K., which provides an incentive to apply now for permanent residency. Those who have not yet accrued the five years needed for permanent residency will gain residence status using streamlined procedures with evidentiary flexibility that prevents rejection based on administrative errors and omissions.
Brexit negotiations have broken down over the issue of Ireland and Northern Ireland, as U.K. Prime Minister Theresa May’s proposal has been rejected by the Democratic Unionist Party, the largest party in Northern Ireland. The DUP is staunchly in favor of Northern Ireland remaining part of the U.K. and currently supports May’s minority government.
In a leaked draft proposal, May proposed that Northern Ireland keep some form of “regulatory alignment” with European Union regulations and remain in the single market, essentially creating an exception to the U.K.’s withdrawal from the EU. The DUP, however, sees the proposal as treating Northern Ireland differently from the rest of the U.K. and a step toward Irish reunification, which it opposes.
“We have been very clear,” DUP leader Arlene Foster said. “Northern Ireland must leave the EU on the same terms as the rest of the United Kingdom. We will not accept any form of regulatory divergence which separates Northern Ireland economically or politically from the rest of the United Kingdom. The economic and constitutional integrity of the United Kingdom will not be compromised in any way.”
The breakdown of Brexit talks not only puts EU-U.K. trade talks on ice, but also weakens the fragile U.K. Conservative governing majority and could significantly complicate Brexit.
Ireland’s Prime Minister Leo Varadkar expressed surprise and disappointment at the last-minute failure of the EU-U.K. agreement that Ireland was ready to approve. He said that Brexit talks cannot move ahead without assurances from Britain that no hard border will be established between Ireland and Northern Ireland. “The ball is very much in London’s court,” he said. On Wednesday, according to press reports, the Irish government expressed its willingness to accept an additional provision within the EU-U.K. agreement stating that the agreement would not compromise the integrity of the U.K.
Those seeking a softer Brexit quickly seized on the moment to indicate that if Northern Ireland is exempted from Brexit, so too should others. Scotland’s First Minister Nicola Sturgeon said on Twitter that if one part of the U.K. can retain regulatory alignment with the EU and effectively stay in the single market, “there is surely no good practical reason why others can’t.” London Mayor Sadiq Khan and Wales’ First Minister Carwyn Jones chimed in, saying that their regions would also seek to remain in the EU single market.
BAL Analysis: The collapse of the agreement on Ireland threatens to delay or derail Brexit talks. May and the DUP reportedly have until Sunday at the latest to reach an agreement with the EU on the Irish border issue. This would conclude phase I of Brexit negotiations and is necessary before they can move on to discussions about the U.K.’s future trade relations with the EU. BAL is following all Brexit developments and will report on any new developments. For background on the Irish issues involved in Brexit, read BAL’s white paper, “Brexit: What’s at Stake for Ireland.”
Net migration to the United Kingdom has fallen to 230,000, the lowest level since 2014, according to the Office for National Statistics’ quarterly migration numbers.
Key figures:
BAL Analysis: The historic decline in net migration may be an indication that EU nationals are leaving the U.K. at least in part due to the uncertainties caused by Brexit, and appears to reinforce business concerns of a drop in available skills and the availability of talent.
The following is a roundup of recent developments concerning Brexit negotiations and the United Kingdom’s withdrawal from the European Union.
News Summary
At the EU leaders’ summit this month, British Prime Minister Theresa May got a political boost from German Chancellor Angela Merkel, who acknowledged that “both sides need to move” on Brexit talks and downplayed concerns about the pace of negotiations by saying that a deal will be reached by the deadline of March 2019. It is hoped that the softening tone will break the impasse and help bring an early resolution to the issue of EU citizens’ rights and immigration before trade negotiations begin.
At home, where May faces mounting pressure to deliver, the Migration Advisory Committee has closed its call for public comments on EU migration and a post-Brexit immigration system. In response to the call for evidence, BAL has submitted a consolidated response on behalf of clients, highlighting U.K. companies’ reliance on EU workers, the need for continued access to EU talent and why a one-size-fits-all immigration system would hurt U.K. businesses.
While the EU readies to negotiate its future trade relations with the U.K. post-Brexit, on the other side of the Atlantic, Canada and the EU have concluded a major trade deal that eases mobility into the EU for Canadian professionals and could signal how the U.K. approaches immigration and trade relations in the future.
Politics
Will Merkel’s backing of May help settle immigration issue?
Merkel’s backing of May at the EU summit represents a new pragmatism in negotiations that could push key issues over the finish line before phase two of negotiations begins. On immigration, Merkel’s cooperation could be a positive signal that the EU and U.K. may be able to smooth over their remaining differences by early next year, rather than prolong debate over immigration until negotiators begin to tackle trade talks. An agreement on immigration now hinges on a few key issues, such as the length of the transition period after Brexit (two to four years), whether EU nationals in the U.K. can access the European Court of Justice, whether EU nationals who already hold permanent residency will need to apply for settled status, and how family members of EU nationals will be treated post-Brexit.
Immigration
‘First big Brexit win’?
A deal is “imminent” to preserve the Common Travel Area (CTA) arrangement between Ireland and the U.K., according to Ireland’s Minister of Foreign Affairs Simon Coveney, who hailed it as the “first big win of Brexit.” The agreement is not a surprise, as the EU and U.K. both signaled at the outset their desire to keep the status quo. Continuation of the CTA would retain free movement for Irish and U.K. citizens, but does not resolve the difficult issues involving formation of a hard border between Ireland and Northern Ireland and resulting impacts on trade and customs. For in-depth analysis of the key Brexit issues involving Ireland, read BAL’s White Paper “Brexit: What’s at Stake for Ireland?”
EU-Canada trade agreement: future of free movement?
The EU has provisionally implemented a major trade deal with Canada that liberalizes trade and mobility for several categories of high-skilled professionals, including intracompany transfers, business visitors, service providers under contract, and investors. Under the Canada-EU Comprehensive Economic and Trade Agreement (CETA), which Theresa May supports, the U.K. would make concessions on immigration in exchange for significant trade deregulation. The deal could be a blueprint for how trade and immigration are linked within bilateral agreements post-Brexit.
BAL responds to MAC call for evidence After meeting with members of the Migration Advisory Committee in London in October, BAL has formally responded to the committee’s call for evidence on EU migration and UK’s post-Brexit immigration system. In its letter to the MAC, BAL has included feedback from U.K. companies based on BAL surveying data that employers, particularly in the IT sector, have seen worrying concerns from EU national employees and job recruits about the overall impact of Brexit, the reduction in interest in response to U.K. job vacancies, and specific concerns about the status of their family members and whether London will continue to be an attractive place to work. Companies have also reported the skills gaps in the U.K. workforce that EU nationals currently fill and that they advocate revisions to the shortage occupations lists to include several roles in the IT industry, including software engineers, senior engineers, data scientists, and others.
EU nationals in the UK
While the MAC prepares its report, the U.K. government may have already predetermined its approach to the status of EU nationals. According to its proposed plan, eligible EU nationals will need to register with U.K. immigration authorities and apply for “settled status.” After a transition period, those EU nationals not eligible for either settled status or limited leave to remain would have to qualify for residence permits based on their skills, with high-skilled EU workers being eligible for three- to five-year permits and low-skilled EU workers being limited to a maximum of two years. One issue that remains in dispute is how long the transition period will last, during which EU nationals would be allowed to continue to live and work in the U.K. The transition period is intended to avoid a cliff edge and provide time for businesses and EU nationals to plan for new immigration rules. The U.K. government’s proposal indicated the transition period would last two years. The biggest sticking point with the EU is likely to concern access to the ECJ and also the continuing rights of EU nationals during transition and beyond – for example, the ability of certain family members (e.g., children over 18 and parents or grandparents of EU nationals) to join their U.K.-based EU national family member.
Preparing Your Company
The results of BAL’s two surveys and our engagement with clients about Brexit indicate that companies and EEA employees remain anxious about their future mobility, their families’ status and the potential for changing hiring practices by U.K. companies as a result of Brexit.
As the post-Brexit immigration requirements for EEA nationals become clearer, companies should work with their BAL professionals to plan best strategies for their EEA populations. BAL continues to recommend that companies keep close track of their European workforce needs, including their current numbers of EEA national employees, the roles they fill, time in the U.K., tenure with the company, and skills and salary levels. BAL can assist in assessing and tracking the necessary data for a smooth transition after Brexit.
Should you have any questions or require more information on how BAL can help with Brexit planning, please contact us at uk@bal.com.
The Migration Advisory Committee, a nonpartisan panel of economists, has been commissioned by the U.K. government to research and provide its recommendations on EU/EEA migration to the U.K., its effects on the domestic labor market and the most suitable post-Brexit immigration system for the U.K.’s economic strategy. The MAC is seeking public comments from immigration stakeholders by Oct. 27 and is expected to publish a full report by September 2018.
In the first of a series of Brexit policy papers to be released in coming days, the U.K. government today released its proposal for an interim customs union that would be a temporary measure when the U.K. leaves the EU in March 2019 to avoid the sudden imposition of trade barriers and prevent a hard border between Ireland and Northern Ireland. However, the U.K. would seek the right to negotiate bilateral trade deals with individual countries during the interim period – something currently prohibited by the EU Customs Union.
Many companies are not waiting for negotiators to reach agreement on trade and are putting plans into action to allow them to operate in post-Brexit Europe – moving headquarters or certain operations from the U.K. to elsewhere in Europe to protect against a hard break with Europe that would disrupt their operations across the region. The U.K.’s investment banking sector in particular will be required to move certain sectors of its business, which, given its size in the U.K. economy, could see a large number of jobs and capital leave the U.K.
Ireland may be one of the beneficiaries, with predictions of 4.8 percent GDP growth this year. Ireland topped the agenda at the last round of Brexit negotiations in July when both sides agreed that they want the Common Travel Area to be maintained. The issues involving Ireland, however, are complex and pose unique concerns for Ireland’s immigration, borders and trade, as examined in a BAL white paper released last week. The U.K. is scheduled to set out its proposal for avoiding an EU/U.K. land border between Ireland and Northern Ireland this week.
Migration Advisory Committee Call for Evidence
The MAC has put out a call for evidence from immigration stakeholders, including businesses that rely on EU/EEA migrants in their labor force. The committee has asked a wide-ranging series of questions based on three categories:
The responses will help inform the MAC’s final report and advice to the U.K. government on the impact of EU/EEA workers on the U.K.’s economy and how the U.K.’s immigration system post-Brexit should be aligned with a modern industrial strategy. A full list of questions and how to provide responses is available here. BAL will be providing clients with additional analysis and guidance in coming days.
Brexit and Ireland
The EU and U.K. have agreed to prioritize Ireland in Brexit negotiations and, following a meeting in July, stated their mutual intention to maintain the Common Travel Agreement and avoid a hard border between Ireland and Northern Ireland. The CTA provides British and Irish citizens special rights to travel without document checks and rights to reside without needing to apply for a residency permit. While the consensus on the CTA is positive news, the historical ties and geographic realities between the U.K. and Ireland present complex issues that are not likely to be resolved quickly or easily. To read further analysis, view BAL’s full white paper, “Brexit: What’s at Stake for Ireland” here.
Business
Temporary customs union?
The U.K. government is proposing a temporary interim customs union that would provide a transition period after the U.K. leaves the EU. The proposal would allow the U.K. to benefit from a customs union while attempting to negotiate bilateral trade deals with individual countries before the end of the interim period – a term that is unlikely to be accepted by EU negotiators. The arrangement would either be a streamlined customs union managed by Britain or a new customs arrangement with the EU that would not require a customs border.
Brexit’s impact on banking
The U.K. could lose more than 40,000 investment banking jobs to the EU if a hard Brexit forces banks to establish new units to continue operating across Europe. The funding of new EU operations is estimated to cost $30 billion to $50 billion, according to a report by consulting firm Oliver Wyman. Smaller firms may leave Europe altogether. Brexit threatens to remove the U.K. from EU law that allows banks in the U.K. to operate branches in Europe and European banks to operate in the U.K. without separate capitalization.
EasyJet headed to Austria
Among the companies moving their headquarters from the U.K., homegrown airline EasyJet has applied for an operating certificate in Austria. The certificate will allow the company to set up headquarters in Vienna and continue flights within Europe in the event that there is no deal on aviation by Brexit day in March 2019. Unlike trade, there are no default aviation rules that would kick in should the U.K. and EU fail to reach a deal about airline flights. According to EasyJet, the company already has staff in mainland Europe and would not need to transfer U.K. jobs.
NHS join other employers in voicing staffing fears
Brexiters campaigned that leaving the EU would revitalize the National Health System, but the NHS’s reliance on nurses from the EU has led the Royal College of Nursing to call for more certainty about their status, as well as that of new recruits post-Brexit. Nurses trained in the EU have already begun leaving the U.K. and applications have dropped 96 percent since the Brexit vote. To read an analysis of the U.K.’s current proposals concerning the free movement of people, click here.
Companies concerned about how changes in their industries due to Brexit will impact their high-skilled workers may wish to contact their BAL professional to explore all options.
BAL also strongly encourages companies to provide their opinions and feedback to the U.K. government and engage in the policy debate over EU/EEA immigration by responding to the MAC’s Call for Evidence either directly or in coordination with BAL.
Earlier this year, BAL conducted a benchmarking survey that provided valuable insights into how U.K.- and EU-based companies have been impacted by Brexit and how employers in different industries have begun to plan for their high-skilled EU/EEA workforces. Employers seeking guidance on how to respond to the Call for Evidence or for information on BAL’s advocacy efforts to the MAC should contact BAL.
Home Secretary Amber Rudd has asked the Migration Advisory Committee to work with stakeholders to research and produce a report on the impact of Brexit on the U.K. labor market and to give its recommendations on how a future U.K. immigration system should be designed to best align with larger economic strategies.
The Home Office also issued a statement emphasizing that today’s commission does not affect EU and EEA citizens already living in the U.K. and confirmed that “EU citizens do not need to apply for documentation confirming their status now.”
In her letter to the MAC, Rudd also confirmed that the U.K. government will end free movement of EU/EEA nationals on Brexit day (in March of 2019) and reiterated the U.K.’s June 26 offer to the EU on the status of EU/EEA citizens’ rights – a phased approach that would set an eligibility cutoff date and a post-Brexit transition period before requiring EU/EEA nationals to apply for settled status. The rights of EU citizens living in the U.K. and vice versa were a key point in Brexit negotiations last week and the parties jointly issued a chart comparing where they each stand on the issue.
The Home Office is seeking the MAC’s advice on a future immigration system after Brexit that will cover the migration of EU citizens.
The chair of the MAC, Professor Alan Manning, responded that the committee will put out a call for evidence from immigration stakeholders shortly to gather their input. A suggested deadline for the report has been set for September 2018, though there are concerns that this would not leave a sufficient amount of time before formal Brexit.
The MAC has been asked to provide advice and evidence on the following issues:
Background: The Migration Advisory Committee is an independent group of economic experts that periodically is commissioned to provide advice on government policy. The committee is expected to put out a call for evidence to immigration stakeholders shortly, take evidence, provide interim reports, and produce a final report and conclusions by September 2018.
BAL Analysis: The commissioning of the MAC and forthcoming call for evidence are welcome developments. BAL will be engaging with businesses and individuals on each of the above issues, and expects to submit a package of responses and recommendations to the MAC that highlights business concerns and needs.
What is the change? The Home Office has published a statement of immigration changes that will require its officers in certain cases to consider alternative sources of income or financial support in determining whether a U.K. citizen or settled person meets the £18,600 minimum income for purposes of sponsoring a non-EEA family member. If successful, the non-EEA family member will be granted entry on a 10-year track to settled status (instead of five years), with the potential to apply for the five-year route if they subsequently meet the minimum income requirements.
What does the change mean? The change does not affect Tier 2 workers or points-based migrants or European nationals and their family members; however, the new policy will benefit some family unification cases for U.K. citizens and residents who do not otherwise meet the income threshold.
Background: The policy change comes in response to a Supreme Court ruling in MM (Lebanon) & Others in February that upheld the minimum-income requirement but also demanded that the Home Office allow more flexible proof of alternative sources of income to address the harsh results of applying an absolute income threshold.
The new rules only apply in “specified circumstances,” namely:
If the two conditions are met, the Home Office will consider the following forms of alternative funding sources:
Applicants must present verifiable documentary proof of the alternative sources. Home Office decision-makers will make assessments on a case-by-case basis and must consider certain factors in determining whether the alternative sources are genuine, credible and reliable.
BAL Analysis: The change does not affect Tier 2 workers or points-based migrants or European nationals and their family members, but helps to relieve a harsh rule that affects some low-earning British citizens and permanent residents.