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As Brexit edges nearer, how can SMEs retain EU workers?

With research showing that nearly half of high-skilled EU workers are considering leaving the UK in the next five years, George Koureas, a partner at immigration law firm Fragomen, explains what SME owners can do to retain EU talent.
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With research showing that nearly half of high-skilled EU workers are considering leaving the UK in the next five years, George Koureas, a partner at immigration law firm Fragomen, explains what SME owners can do to retain EU talent.

A significant challenge for SMEs in 2018 stems from a skills shortage, which is being exacerbated by the exodus of EU citizens from the UK after it voted to leave the EU.

Some 21 per cent of small employers currently have EU workers, according to the Federation of Small Businesses (FSB). However, research from Deloitte shows that nearly half (47 per cent) of high-skilled workers from the EU are considering leaving the UK in the next five years.

The latest immigration figures show that net migration has fallen by nearly a third (27 per cent) since the Brexit vote, a trend largely driven by an increase in the number of EU citizens leaving the UK

This exodus is largely the result of uncertainty around EU citizens’ rights post-Brexit, together with the perceived anti-immigrant sentiment and the devaluation in the Pound, which has essentially narrowed the gap between what foreign workers earn in the UK compared to their country of origin.

It was only in the last few months that EU citizens had anything close to certainty and, even now, that guarantee isn’t water tight. Although EU workers in the UK will be able to stay if we strike a deal with the EU, the government has refused to promise that they can stay in a no deal scenario. Questions also remain around the rights of any EU citizens who arrive during the Brexit transition period.

Falling immigration presents two systemic challenges for small businesses in retaining existing EU workers while also ensuring that they have access to the talent they need in a future where the UK is home to fewer EU citizens.

The skills shortage has been a significant concern for SMEs, even before Brexit. Recent analysis from Open University, however, shows that the shortage has been exacerbated by uncertainty around Brexit, and now costs companies more than £2bn a year in higher salaries, recruitment costs and temporary staffing bills.

Whilst the uncertainty around Brexit makes it a difficult event to fully prepare for, there are steps that SMEs can take in order to help their EU workers stay in the UK post-Brexit.

What can SME owners do to help EU workers?

Our clients often ask us what other businesses are doing to prepare for Brexit so they can benchmark their activities against others. Businesses that are planning for Brexit are focused on these areas:

  • Gathering data to understand who their people are and what they do, whether they’re EU nationals in the UK, or British nationals working in Europe
  • Developing policies on financial support for applications for Residence Cards, Permanent Residence Cards and citizenship
  • Engaging with and providing reassurance to staff who are worried about what Brexit will mean for them and their families
  • Considering alternate staffing streams

Businesses are gathering data on their employees because when the law changes, they may need to track their right to work. Building an understanding of who their EU workers are enables businesses to assess how exposed they potentially are to changes in immigration rules post-Brexit, while also identifying who they need to guide through the visa application process.

Existing residence documents obtained by European nationals and their family members in the UK under the current European regulations will be deemed invalid after the UK exits the EU, so there could be some confusion around what EU workers need to do to stay in the UK post-Brexit.

European nationals and their family members may need to apply for a new “settled status” if they wish to remain in the UK. Settled status will essentially grant the same rights as permanent residence, however it will only be available to those who have spent five or more years in the UK.

New applicants would also have to pay an application fee, which is expected to be around £80, although the government has suggested that there will be no cost for applicants already holding permanent residence.

One of the questions we’re frequently asked by clients is whether other businesses expect to pay for their employees’ settled status applications. Our research shows that a quarter (23 per cent) of employers expect to pay for their employees’ settled status application, while half (54 per cent) are not yet sure.

Those clients who have actively engaged with their staff and offered financial assistance with applications are reporting heightened engagement and appreciation from impacted individuals. Paying for your employees’ application fees could therefore be a great way to retain staff by providing them with reassurance and making them feel valued.

Understandably, not all employers could afford to pay this, but they should at least provide their EU workers with guidance and advice on the application process. We are also seeing immigration support being offered by some businesses as a recruitment incentive in order to attract job applicants.

Brexit is undoubtedly a significant hurdle for small businesses to overcome, particularly when it comes to recruitment and access to talent. Although companies can’t fully prepare for Brexit until significant progress is made in Brexit negotiations, there are some things they can do to retain existing EU workers. Providing staff with the reassurance and support they need should be at the forefront of those efforts.

George Koureas is a partner at Fragomen, an immigration law firm.

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