The decision which was made by the referendum in June 2016 has potentially massive repercussions for the Global Mobility industry. For instance the restriction of Immigration within the UK potentially has a huge impact on the mobility of the workforce, both coming in to the UK and for Brits seeking work within the EU.
This is a time of uncertainty for everyone in Britain, and at this point all that can be done is to speculate on what will unfold in the coming months. It seems likely that Article 50 of the Lisbon Treaty will not be triggered until there is a new Prime Minister, following David Cameron’s resignation. It can be estimated that Article 50 will be triggered towards the end of 2016 and potentially even the beginning of the New Year.
Once Article 50 has been triggered there will be a period of 2 years where it will not be in effect, this is when the majority of the negotiations will take place between the UK and the EU. However once again we can speculate that this is highly likely to take longer; as for one, it has been 40 years since the UK has last had to negotiate our own trade agreements with the EU.
Once this period has been served any EU directives, treaties or regulations, will all cease to apply; unless they have been expressly adopted by the UK in the negotiation period. All European courts will no longer hold any jurisdiction over the UK Courts, either with their legislative, or case law powers.
However, again this is all speculation, as everything will rely on the outcome of the negotiations that will soon be taking place. The UK currently wants continued access to the single market; yet it has been heavily implied that the EU will not give this to the UK unless the UK agrees to continue to have freedom of movement. So you can see that these negotiations will undoubtedly problematic as Immigration control has been one of the crucial arguments in leaving the EU.
There is also the issue of passporting to consider, this is where large financial institutions, such as HSBC and J.P Morgan Chase, have the right to provide financial services without restriction within the EU. This is also an EU directive, therefore the UK will no longer have this right. Unless of course they negotiate for it like Switzerland; if not UK based banks will either have to apply for licencing, or leave the UK and relocate headquarters, which has the potential to be devastating to the UK economy, and would be a very costly and long process.
With regards to Immigration there is going to be a lot for the new government to consider, they could either move back to Domestic Immigration Law which was in place when we were the British Commonwealth; Or the most likely out of the two we could move to a points based system, which is currently being used for all non-EU nationals.
Currently the route that is being used for EU nationals is pretty straightforward, they are merely exercising their rights under the freedom of movement of people. This will only be scrapped once Article 50 has reached fruition, which will all be determined by the next PM. However as this is likely to take some time, potentially years, it is likely that if we are going by the current system for non-EU nationals the majority of EU nationals currently residing in the UK will be eligible for permanent residency. Which is the equivalent to a US green card. Therefore it may be the case that the current EU National population of the UK would not be adversely impacted.
We can speculate on the post-Brexit immigration rules that may come about in the next few years, however we can definitely say that Immigration will not change until the period of negotiation is complete, which will be in 2018.
There are then two options that the UK will have, we could either; keep the current freedoms held by EU nationals and keep the single market. Which is extremely unlikely to happen, as the UK will have to agree to keep the freedom of movement.
Or we will apply the Domestic Immigration Rules; which will incorporate aspects of EU Freedoms. These would be Work Permits or Permanent Residency, going by the current Tier system. From a legal perspective however this would be very difficult to accomplish, as Politics and Law are two completely separate entities in the UK and more often than not they do not run parallel to one another.
There is no past legal precedent on this issue, therefore new legislation will have to be developed; taking into consideration legitimate expectations. Meaning that the UK will have to protect the interest of an individual against any administrative action with regards to the right to be heard. In layman’s terms it is very unlikely that people will be kicked out of the country without lengthy and costly cases.
We will also not be allowed to give any countries any preferential treatment, we will have to keep it completely equal if we were to take in EU nationals or Non-EU nationals. And if the UK were to show any preferential treatment there would be major repercussions.
What we can be certain about is that employers will be presented with a variety of new challenges, the most important advice that can be given to employers right now is to stay in communication with your employees. Currently there are 2 million EU nationals working within the EU, and this does present a significant problem. As it would be very difficult to staff the deficit with purely UK nationals, as the majority of these positions are core highly skilled individuals.
This now means that company sponsorship will become much more common and much more expensive. It would also mean that sponsorship will become harder to obtain for EU nationals and a lot harder for the UK to process. Looking at this retrospectively, the industry that is going to suffer from this the most is the agricultural sector, as the Tier 3 visa for Unskilled Migration has not been in function since the freedom of movement came into action.
The next practical steps that can be taken by employers is to gauge the metrics of your position; ask yourselves, how many EU nationals do we employ? How many of them are eligible for permanent residency? How many will we have to sponsor? Can you train non-skilled migrants so they would be eligible for a work permit? Will any of them relocate to other EU cities? It is important to anticipate the coming struggles that as a company you may be presented with, if you have all your documentation, regarding your EU national employees and their families, you will be better equipped to deal with any problems.
What can be hypothesised that relocation and global mobility as an industry will develop and there will most certainly be an increase in the demand of the global workforce. To put this in perspective it has been mentioned that HSBC are now planning to move 1000 jobs to Paris, and J.P Morgan Chase is planning to move around 4,000 employees. There has already been an influx of requests for Irish Nationality, going from 200 applications a day to a staggering 4,000, and with 1 in 4 UK nationals having links to Ireland that number is looking to increase.
There is a monumental level of uncertainly for the UK economy now, people are wondering if companies will be moving out of the UK, or if US companies will be avoiding the UK entirely. What can be said is that banks will almost certainly be applying for licences now to continue to provide their services in the EU; especially as there is a risk that passporting will be abolished.
It also seems likely that the large EU cities will become larger hubs of business, specifically Dublin and Frankfurt, due to attractive tax regulations and cheap workforce's. However this does come with some major obstacles. With such a massive influx of employees relocating to these cities there is a high risk that the delicate city infrastructures will not be able to withstand the pressure; specifically within the schooling and housing systems. It is also likely that Amsterdam will become a target for large financial institutions, as it is very easy to transfer employees; it is a small city that is currently looking to expand; however once again there is a concern that the infrastructure would struggle with the influx of employees.
What can be said is that at the moment immigration in the UK is not very difficult at all, but the likelihood is that it is going to get a lot harder for relocation and global mobility companies to actually move the workforce, and companies that offer such services will certainly be in a much higher demand.
Other areas of law which should also be mentioned that could have an effect on the Global Mobility industry are Employment law, Data Protection, and taxation.
All of this information however is still speculative, as it all depends on the outcome of the negotiations that will be taking place in the following months. It is a view of many that the UK does not have much bargaining power with the EU, as we are the first country to ever leave. Meaning we have no leverage, and it is likely that the EU will try to make it as tough as possible for the UK, so as to deter other countries from leaving. We will be given no concessions at this point, they are going to make it very difficult for the UK.
That being said, the UK remains an economic and military power, with considerable political and cultural influence around the world and there have been some encouraging developments, even though there are likely to be many challenges to UK based businesses.
In fact the US may even look to move to the larger EU cities, and they would actually make more money from the UK at the moment due to the loss of the pound. Also we continue to have no restrictions for graduates and students moving to the UK, aside from the fact that they may need to acquire sponsorship.