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The cost to keep your workers:
budgeting for immigration

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The cost to keep your workers: budgeting for immigration

Published: 2nd May 2018
Area: Corporate & Commercial
Author: Sophie

The future of UK immigration has so far, and will continue to be, central to all of the ongoing conversations surrounding Brexit.

However, whilst there is finally some clarity around the rules and restrictions facing foreign migrants at the end of the transition period in December 2020, many businesses are still unaware about the potential costs of sourcing their overseas talent in future.

Recent research undertaken by the firm with over 500 UK business leaders has shown that organisations know that immigration is going to cause them a headache, but are continuing to bury their heads in the sand. According to research by Shakespeare Martineau, 78 percent of respondents recognised that immigration would be necessary to fill the UK’s skills gap, however, only 21 percent have made any move to analyse how this lack of talent and labour will affect their business.

For years now UK organisations have become used to sourcing both skilled and unskilled labour from European migrants who are currently able to move freely between EU member states. However, this is set to change and soon there will be hefty price tags attached to the recruitment process for overseas workers.

Take, for example, a mid-sized business that wants to recruit someone from outside of the UK for a three-year fixed-term role after free movement has ended. The individual would need to apply for a work permit known as a Tier 2 general visa, the type currently used by non-EU migrants, for example from the US or Australia. For a single applicant alone, the costs are staggering. These include an application fee of approximately £600, an immigration health charge of £600, an immigration skills charge of £3,000 – £1,000 per year of the contract – £200 for a Certificate of Sponsorship and £200 for use of a priority visa service. For one worker alone the total costs would rise to around £4,600.

This is excluding the fact that the individual may wish to bring their family members with them and if a spouse and two children required visas as well, another £4,200 would be added to the bill. In total, a family of four coming to live and work in the UK for three years would cost almost £9,000, excluding any legal fees which may be incurred throughout the process.

Written down on paper, this cost for a single worker is significant and highlights the urgency with which businesses must be factoring immigration costs into their post-Brexit business plans.

Whilst individuals do shoulder the burden of some of those costs, including the immigration health charge and visa application fees, under normal circumstances the costs are paid by the business seeking the talent. Larger organisations may be more used to the costs associated with recruiting overseas workers, but for smaller businesses which may find themselves facing a seriously-diminished stream of talent after the transition period ends, being hit unawares with this financial outlay could be devastating.

If the business is in a fortunate enough position to be able to foot the bill for every overseas worker, the prospect of the end to free movement is less worrying, however the vast majority of organisations won’t have that luxury. In this scenario, looking closer to home to plug the talent shortage is essential.

Getting creative forms part of the answer and it is important to recognise the potential hidden in the current workforce. Look at who is already working within the business; can any training be provided to upskill individuals, allowing them to take on new roles? From a wider industry perspective, building closer links with education and training institutions can be advantageous in ensuring that the organisation is front of mind during any careers sessions or roadshows.

Looking at the business itself, it is important that the outward-facing employee brand is as attractive to potential candidates as possible. Accentuate the positives, highlight anything which may set it out from the crowd, whether that be comprehensive in-house training programmes, clear-cut progression paths or perhaps an industry-leading benefits programme.

Whatever the approach taken to source and secure talent before the end of the transition period at the end of 2020, it is essential that businesses act sooner rather than later and recognise the financial impact that the end of free movement will bring. Waiting until the eleventh hour is not a viable option and the shock experienced when talent streams appear to dry up could be devastating.

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