Contractors and Builders
The Government has announced a new points-based immigration system that will enter into effect next year (1 Jan 2021), ending the free movement of people from the European Union and putting EU citizens on an equal footing with the rest of the world.
Ministers have ruled out an exemption for unskilled or low-skilled workers and the Home Secretary has set a £25,600 salary (or going rate of listed job) threshold for eligibility to entry to the UK for ‘Skilled Workers’. Those who earn less than the going rate (but not less than £20,480) may still be able to enter by trading ‘points’ e.g. if the job offer is a shortage occupation. Skilled Workers are detailed by a list of occupations designated by the Home Office and available via the links at the bottom of this page.
The Points-Based System will mean that all migrant workers will require:
- To pay an Application Fee
- To pay the Immigration Health Surcharge
- To meet a specific English language requirement (depending on occupation/route entry)
- Employer sponsorship (unless deemed ‘Highly Skilled’)
- Have enough points to enter if they are not coming in through the Skilled Worker route
- The sponsoring business to pay the Immigration Skills Charge and this will apply to all migrants, including those from the EU/EEA. Discounted rates are available for SMEs.
Further information is available at the following links:
- Guidance on the Points-Based System is available here: www.gov.uk/guidance/new-immigration-system-what-you-need-to-know
- Full policy details are here: www.gov.uk/government/publications/uk-points-based-immigration-system-further-details-statement/uk-points-based-immigration-system-further-details-statement
- The Shortage Occupation list is available here: https://www.gov.uk/guidance/immigration-rules/immigration-rules-appendix-k-shortage-occupation-list
- Skilled Worker occupations are listed here: https://www.gov.uk/government/publications/uk-points-based-immigration-system-further-details-statement/uk-points-based-immigration-system-further-details-statement#annex-e--eligible-occupations-and-going-rates-for-the-skilled-worker-route
The Migration Advisory Committee’s forthcoming report to the UK Government - due in September 2020 - will be crucial to the construction industry’s workforce planning. In March 2020, ministers commissioned the MAC to compile a Shortage Occupation List to focus on occupations above RQF level 3 - notably HNCs, HNDs and Foundation Degrees.
The Home Office has published guidance on the Right To Work and what employers must do to prevent illegal working by conducting checks before taking on new staff.
- Right to Work Checklist: www.gov.uk/government/publications/right-to-work-checks-employers-guide
- Which documents give someone the Right to Work: www.gov.uk/legal-right-work-uk
- Check details of a job applicant’s Right to Work in the UK: www.gov.uk/view-right-to-work
EU Citizens currently working in the UK
The expiration of the transition agreement with the EU will also mean changes to the rights of EU citizens to live and work in the UK; the date for these changes is currently set at 30 June 2021. EU citizens wishing to remain in the UK after this date should therefore take action before then. Changes to EU citizens’ rights in the UK will occur whether or not an agreement is reached, as HMG has been clear it intends to end freedom of movement. As such, members may want to consider encouraging and supporting their EU-citizen workforce to consider applying for settled or pre-settled status, which will give them either permanent right to live and work, or a 5 year right to live and work respectively.
HMG has produced the following guidance to help individuals and businesses apply:
- Apply to the EU Settlement Scheme (including pre-settlement): www.gov.uk/settled-status-eu-citizens-families
- Employers’ guide to support EU citizens: www.gov.uk/government/collections/eu-settlement-scheme-employer-toolkit
In the event of no agreement with the European Union, UK public procurement notices will no longer be posted in the Official Journal of the EU (OJEU). If an agreement is reached it may be possible that notices will be included in the OJEU although that will depend upon the terms of the agreement. Instead, HMG will advertise public procurement through a new UK specific service called ‘Find a Tender’ for all public bodies to advertise through, this is due to launch on 1 January 2021.
Companies will still be able to use existing portals such as Contracts Finder, MOD Defence Contracts Online, Public Contracts Scotland, Sell2Wales and eTendersNI to view low-value or location-specific notices.
- Guidance on the new system can be found here: www.gov.uk/guidance/public-sector-procurement-after-a-no-deal-brexit
Contracts and Uncertainty
Leaving the transition period, whether with an agreement or not, may result in a number of impacts to normal business practice both intended and unintended. Specifically, it is possible that prices and availability may fluctuate and therefore costs and time could be affected.
For example, the British Merchants Federation is warning about potential delays caused by businesses’ unfamiliarity with the rules and procedures associated with the new Customs regime and the negative impacts on costs and availability of products associated with businesses’ stockpiling because of uncertainty.
Members are therefore strongly advised to thoroughly risk assess the situation and ensure that the fluctuations are mitigated as much as possible in their building contracts before entering into them. Specifically, additional ‘BREXIT’ clauses could be considered, on the advice of professional legal advice.
- Those using JCT contractors may wish to read this opinion on the JCT website: https://corporate.jctltd.co.uk/the-fluctuating-fortunes-of-brexit/
- NFB members can access the NFB’s Legal Advice Line by visiting: https://www.builders.org.uk/member-benefits/advice/construction-law-advice/
- To find out more about the likely changes to tariffs of imported goods, read the ‘Imported Goods’ section produced for Merchants here [LINK].
Cashflow and Retentions
The uncertainty caused by the expiration of the transition period is likely to impact on cashflow and businesses should consider this when planning jobs and entering contracts over the transition expiration period.
As mentioned in the contracts section, fear of delays, availability and price rises will prompt companies throughout the supply chain to stockpile goods and materials in order to hedge the risk of uncertainty. A ‘just-in-case’ approach rather than ‘just-in-time’. However, this will have unintended consequences for all businesses, including:
cashflow: large sums of money are tied up in stock;
storage: available space in factories, yards & depots is at a premium;
prices: especially for imports like timber which is bought & sold in different currencies;
hoarding stock: values change due to fluctuating exchange rates meant paying too much as one currency subsequently falls against others.
The result of these actions will lead to increased costs which will in turn affect reserves, cashflow and margins and likely inflate the cost of projects going forward.
Members are therefore strongly encouraged to thoroughly plan for the period over transition and speak to their clients about their BREXIT planning and contingencies. Effective contingency planning should help to ensure that retentions do not increase by virtue of higher job costs, avoid non-performance leading to greater or full return of retentions, produce pre-emptive solutions if material or labour shortages emerge and give greater confidence to clients.
The UK is currently in alignment with EU Data law through the General Data Protection Regulations (GDPR), for the duration of the transition period, data flows remain unaffected.
However, after the expiration of the transition period, if no agreement between the UK and EU is reached, data flows may be interrupted. This depends upon whether the European Union declares the UK a ‘data adequate’ third country. As it stands, the EU has said that without an agreement, the UK will have to apply after the transition period, pending a decision by the European Commission. The UK Government has indicated that it will consider the EU data-safe, although is keeping this position under review.
To protect yourself, the solution is to use standard contractual clauses. They are model data protection clauses approved by the European Commission that enable the free-flow of personal data when put in a contract. They contain contractual obligations on UK companies and their EU partners - and rights for individuals whose personal data is transferred. If you are a multi-national group of companies - and receiving data from within the group - you may not need standard contractual clauses if your group already has as approved binding corporate rules in place.
The UK Information Commissioner has provided guidance and resources to help you prepare: https://ico.org.uk/about-the-ico/news-and-events/news-and-blogs/2020/01/statement-on-data-protection-and-brexit-implementation-what-you-need-to-do/