The finalisation of Brexit is creating compliance challenges for U.K.-based companies that rely on international talent.
By Simon Kent
In the closing days of 2020, the U.K. and EU finalised the deal that would see Brexit achieved. Now that the agreement is in place, however, questions still remain as to how international talent can be managed. Recently, the entertainment sector drew attention to the absence of an easy pathway that would allow musicians and performers to tour the continent. Over the next few months, it is likely that similar issues governing international movement will emerge as both geographies get used to their new relationship.
According to David Enser, global mobility professional and founder of RES Forum, the impact of COVID-19 travel restrictions is currently masking the full extent of confusion around the travel issue. “It’s hard to know what the long-term effects will be between the EU and U.K. because COVID is the blocker right now,” he says. As travel restrictions lift, some of the more uncertain aspects of the new agreement will come to light.
In the meantime, HR needs to prepare if organisations want to continue accessing and moving talent around the region. According to Alan Price, BrightHR’s CEO, the end of free movement will make it more difficult for U.K. companies to recruit talent from overseas, but not impossible. As he explains, under the skilled worker route, incoming employees must score at least 70 points in order to be legally able to work in the U.K. As part of this, workers need to be sponsored by a company licensed to hire overseas workers, which in turn means all companies seeking to take on foreign nationals must get a license as soon as possible.
However, Price believes this shouldn’t alter the basic principles behind recruitment. “The law on immigration has changed but the best methods for conducting recruitment still apply,” he asserts. “Employers should approach this as they did before, aiming to attain the best people for the role whilst being compliant with the new laws. It will arguably be less expensive to employ from the U.K., so it could be in the company’s best interest to consider candidates from here before looking overseas if possible.”
Kathryn Barnes, employment counsel for EMEA at Globalization Partners, agrees that organisations are facing a tough challenge to understand employment law implications and ensure they have all the right paperwork in place. “Latest figures show that there are 1.3 million U.K. nationals living in EU countries,” she says. “That’s a significant administrative burden for firms to tackle.”
Currently, employers and employees have a six-month grace period (until June 30, 2021) to get that paperwork straight, but what happens after that is not clear. “It is likely that right-to-work checks will be carried out and EU citizens will need to satisfy the requirements, but nothing is confirmed,” Barnes says.
The issue of employee status with regard to the EU Settlement Scheme (EUSS) has already drawn warnings from the legal sector. Law firm Bates Wells has highlighted guidance from the U.K. Home Office stating that employers cannot ask employees about their status under the EUSS until after the June deadline. This is because EU nationals still have until then to apply.
Pre-emptive enquiries could therefore lead to charges of discrimination. “Employers will need to tread extremely carefully,” explains Victoria Cook, senior associate in Bates Wells’ employment practice. “Probing questions during recruitment could leave them vulnerable to claims that they have discriminated against candidates on the basis of their nationality.”
Barnes notes that some businesses have other options to explore if they want to use international talent without the headache of administration and regulations. “For those non-U.K.-based companies struggling to navigate Brexit’s choppy waters who can’t go down the points-based route to retain or hire talent in the U.K., an employer of record (EOR) could be a port in the storm,” she says. Under this option, an EOR would be an organisation responsible for an employee’s taxes, benefits, visa requirements, and so on, leaving the business free to simply benefit from the talent they need.
“It can also help employers manage hiring in EU/EEC countries without the need for relocation into the U.K. or without the company having to set up in other EU/EEC countries,” says Barnes. “This will ensure they have access to the highly skilled talent the business needs.”
Further questions remain over temporary intracompany transfers. Without free movement across the continent, organisations will need to pay close attention to the specific rules and regulations governing when a person is working in one country but employed in another. Again, these rules have yet to fully emerge.
Paul Sleath, CEO at PEO Worldwide, says that certain visa-free travel will be permitted for business purposes and the Brexit agreement incorporates a detailed “Protocol on Social Security Coordination,” meaning that social security contributions are due in the country in which the employee is working. However, things get more complicated for companies with detached workers, like those with U.K. employees sent to work temporarily in an EEA country or Switzerland and vice versa.
“There are special rules set out for detached workers,” says Sleath. “Certain conditions must be satisfied, including that the period of work in that country does not exceed a specified maximum—generally two years. EU member states can also choose whether or not to apply the detached worker rules, meaning the rules will differ depending on where the employee is working. For businesses operating across multiple countries, these varying rules can quickly become a cumbersome administrative burden.”
Enser wonders whether virtual collaboration will be a solution for companies, at least in the short term. Technology can bring together talent from around the globe, although time zones can make this problematic for some combinations of talent. However, he maintains that this kind of arrangement doesn’t maximise the value that can be achieved from creating international teams.
“Virtual teams don’t take away all the issues,” he says. “Working internationally is a chance for talent to shine, to work in different cultures, and so on. Diverse teams perform better over the long term—they work well with other ways of speaking, living, and thinking and that doesn’t happen so effectively if you just use technology.”
Cross-EMEA employers would do well to keep up to date with the details of the new way of working if they wish to continue to benefit from a productive mix of international talent.