Mind the Gap! The challenge of managing skills shortages and a dynamic workforce during Brexit

For a number of years, the automotive industry has highlighted the difficulty in getting the right skills required for the sector (whether it be research, design, manufacture, support or sales) and this will only continue as we move into a more technological age. While numerous projects are in hand to “grow our own” talent within the UK, they will take time to deliver the results required.

In the meantime, membership of the EU allowed free movement of people, giving UK automotive companies easy access to a wider pool of people for recruitment purposes. Not only that but staff from the UK could be transferred to other parts of the business within the EU with ease to allow the support of particular projects or on a longer term basis. The Society of Motor Manufacturers & Traders (SMMT) has highlighted in its priorities to Government for the Automotive sector that the ability to access talent freely and from across the EU is key, with the UK still lagging behind in terms of the number of graduates/people educated to the level of Upper Secondary or above within the sector.

So what happens when we leave the EU? How will recruitment arrangements work and will the current proposals help or hinder the recruitment and retention of staff and development of businesses in the automotive industry?

If we have a deal

If the UK leaves the EU with a deal there will be no change to the rights and status of EU workers. Free movement will continue during an “implementation period” until 30 December 2020; so there will be no immediate legal impact to recruitment of EU staff. However, issues will likely arise on the expiry of the implementation period – at which point EU workers will be subject to the same visa requirements as migrants from the rest of the world and companies will find their access to EU talent limited.

The Government has already set out its proposal for a new, skills-based immigration system to begin in January 2021. This system is subject to change but of particular interest is the proposed minimum salary requirement of £30,000 per annum. Although the Government has indicated that the new system will allow for low skilled workers to be recruited into the UK, a high salary requirement will likely prevent this from happening and could be very problematic if implemented. As a further consideration, the employment of overseas workers will become more closely regulated and impose a greater administrative burden on companies who are able to sponsor workers.

The good news is that a deal scenario would allow any EU national who entered before 30 December 2020 to make use of the EU Settlement Scheme – basically allowing them to apply for a settlement status and therefore protect their right to live and work in the UK regardless of whatever the new immigration system ends up being.

The clarity and protection surrounding the deal scenario cannot be overstated. The assurances put in place by the Withdrawal Agreement will allow employers to undertake effective workforce planning and to continue to attract EU talent to the UK. Recruitment should remain largely unaffected and retention will be protected to an extent by the Settlement Scheme.

If there is no deal

The situation is slightly more complicated in the event of a no-deal Brexit. The current proposal is that all EU nationals will continue to be able to enter the UK without the need for a visa. Once here, EU nationals will be permitted to remain for up to three months without the need for further documentation. They will have a right of work during this period so they could enter for the purposes of seeking, or accepting employment.

For those who wish to remain for more than three months the Home Office has proposed a new type of status – European Temporary Leave to Remain (ETLR). This will grant EU nationals three years’ leave to remain within the UK and permit them to work and study here. Crucially, holders of ETLR will not accrue any rights or status beyond the validity of that visa and will need to apply for an appropriate visa under the new immigration system once their ETLR expires.

Employers will rightly be concerned that holders of ETLR only have a confirmed three-year period of residency, with no guarantee of any status after that date. The new immigration system will hopefully integrate into these transitional arrangements well and prevent any lacunas from emerging in the status of EU nationals. But there would remain an element of risk until the new system is confirmed. Unfortunately, this is likely to impact on recruitment and retention of EU staff, who may be wary of accepting employment in the UK with limited assurances of their future rights.

As with all things Brexit, there remains a huge level of uncertainty around the future and the position is subject to change. Hopefully the upcoming challenges to the sector will be minimised through a deal scenario, but employers should be cautious in the weeks and months ahead.