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Brexodus continues

Net migration from the EU has plummeted from 165,000 in 2016 to 90,000 in 2017.

As expected, in the latest statistics released by the Office of National Statistics today, net migration from the EU has plummeted, with fewer EU nationals moving to the UK and more leaving:

2016 2017
EU nationals who immigrated to the UK 268,000 220,000
EU nationals who emigrated from the UK 103,000 130,000
Net migration +165,000 +90,000

This is of significant concern to industries and sectors that rely heavily on EU talent, with health and medical services, and farming and agriculture already dealing with considerable labour shortages.

The UK will officially leave the EU on March 29, 2019, and even though this is still over 12 months away, employers are already feeling the impact.

The other interesting statistic released today is the huge increase in EU nationals applying for British citizenship. In 2016 15,460 EU nationals applied for British citizenship—following the Brexit referendum this number more than doubled to 38,528 in 2017.

What we can take from both of these statistics is that the lack of certainty in citizens’ rights and future immigration policy following Brexit is forcing individuals to consider and protect their position in the UK. At one end of the spectrum we can see that EU nationals are securing their rights in the UK by naturalising as a British citizen, and at the other end EU nationals are reassessing whether the UK is the place to establish a life and career in the first place. Without certainty on citizens’ rights and future immigration policy we can expect these statistics to continue on the same trajectory.

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Brexodus continues

Stretched resources: immigration and gender pay equity

Two stories in the UK headlines today relate to stretched resources: The Home Office preparing its immigration system for life after Brexit, and the Equality and Human Rights Commission (EHRC) enforcing employers to publish information on their gender pay gap.

Immigration system

According to the British House of Commons, it is unlikely the UK will have an immigration system in place when Britain leaves the EU in March 2019. The government has not published its future policy. This is causing distress for EU citizens living in Britain, and for UK businesses that rely on EU citizens.

An estimated three million EU citizens will need to register as having the right to be in the UK. Border force agencies will struggle to carry out checks on EU citizens arriving in the country. Agencies like Visas and Immigration, Immigration Enforcement and other departments of the Home Office will also feel the impact of the extra caseload. These services are already finding it difficult to cope, resulting in occasional poor decision-making. Dentons has worked with clients to help overcome these poor decisions.

The UK government is due to publish a white paper on immigration policy; already postponed from last autumn, it seems unlikely to see release before March 2019. Ministers working on the white paper have said the delay is to consider the Migration Advisory Committee’s report due in September 2018. Dentons contributed to this report, so we hope to see the collated views of our clients reflected in the future shape of UK immigration rules.

Gender pay equity

By April 4, 2018 companies with 250 or more employees are required to report the gender pay gap in their workforces. Questions have already been raised about whether the gender pay gap regulations under the Equality Act have teeth to motivate business to properly comply. On top of this, it seems likely the EHRC will struggle with having sufficient resources to enforce the regulations.

However, EHRC Chief Executive Rebecca Hilsenrath has distanced the commission from the responsibility of ensuring compliance. She has described the EHRC to the Financial Times as a “strategic enforcer” that looks at novel points of law”, and “at cases which will clarify the law”, and “where impact lies.” Therefore, the EHRC does not see itself as taking on all breaches of the Equality Act.

This bears out in the EHRC’s budget information: The government is not allocating additional resources for work on gender pay reporting. The EHRC will seek to increase its budget if many companies fail to comply with gender pay reporting. Having already seen its funding cut by 25 percent in the 2016–2020 spending review, a crystal ball is probably not needed to predict how any request for a budget increase will be answered.

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Stretched resources: immigration and gender pay equity

Home Affairs Committee issues report: Building consensus around immigration policy

The Home Affairs Committee consists of 11 Members of Parliament drawn from the three largest political parties (Conservative, Labour and the Scottish National). It has been chaired by Yvette Cooper MP (Labour) since 2016.

The Committee is currently managing a number of immigration-related inquiries. The most relevant to business immigration are:

  • Home Office’s capacity to deliver immigration services post-Brexit (launched October 5, 2017), which explores the capacity of the Home Office to meet the demands that Brexit will present, such as whether it can process applications from the 3 million EU nationals currently residing in the UK. Evidence has been gathered and we are currently awaiting the Committee’s report.
  • Building a consensus around immigration policy (launched October 17, 2017), which looks into the public perception of immigration and how the government might go about achieving greater consensus on immigration policy.

On January 15, 2017, the Committee published its report on the latter topic: “Immigration policy: basis for building consensus.” Click the UK Parliament website to read (i) the report summary, (ii) the report conclusions and recommendations and (iii) the full report.

To summarize the report’s main themes:

  • There is a lack of trust in official data, targets and decision-making on immigration policy.
  • Rules are complex and hard to understand, and there is concern that they are not being enforced.
  • Stronger coordination is needed between immigration policy and labor market policy.
  • Action is needed to address the impact of immigration, including appropriate investment in housing, public services and integration plans.

As the saying goes, perception is truth. While immigration rules are arguably easier to understand now than prior to the introduction of the points-based system, if public perception is the opposite then there is work still to be done.

If we look at the last 15 years there have been a number of events that have had an impact on the perception of immigration, such as the global financial crisis, the EU’s expansion into Eastern Europe and, most recently, the referendum on exiting the EU.

The report makes a number of compelling recommendations to address the public’s negative perception of immigration. With inevitable changes due to Brexit we have an opportunity to develop an immigration system that will be viewed positively by the wider population.

Some of the recommendations that are most relevant to business immigration and employers are:

  • Scrap the current net migration target and replace it with a new framework of targets and controls based on evidence.
  • Publish an annual migration report on migration flows, the economic contribution from migration and the measures taken by the government to manage impacts and pressures.
  • Link immigration policy for work purposes to strategy for improving investment in domestic skills and training with the target of reducing dependency on migrant labor.

Assess whether over reliance on migrant labor in some low-skilled jobs is due to poor pay, terms and conditions, and what restrictions and controls are needed to prevent undercutting and exploitation.


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Home Affairs Committee issues report: Building consensus around immigration policy

Trade deals and immigration

How will future trade deals impact UK immigration policy?

With Brexit negotiations between the UK and the European Union progressing, the UK is keen to start trade talks with the EU as soon as possible. While a trade deal with the EU is a priority, other countries, including India and Australia, have expressed that, in the fullness of time, they also would like to negotiate their own trade deals with the UK.

The UK’s Brexit Secretary, David Davis, has stated that he is looking for a “Canada Plus Plus Plus” trade deal with the EU, a reference to the recent deal between the EU and Canada. Labor mobility is a key element of that deal, making it easier for certain skilled professionals from Canada to work temporarily in the EU, and vice versa.

We can also learn from other trade deals:

  • The Trans-Pacific Partnership (TPP) trade deal currently being negotiated between 11 Pacific Rim countries (notably not including the US, which withdrew from the pact) is also looking to include an element of labor mobility. For example, it is proposed as part of this deal that it will be easier for Australian employers to recruit people from Canada, Chile, Japan, Malaysia, Mexico and Vietnam by exempting them from the usual requirement of advertising the role to Australians as part of the immigration process. In return, Australians will get reciprocal access to the labor markets of these six countries.
  • Likewise, one of the outcomes of the Australia-United States Free Trade Agreement (AUFTA), which came into effect in 2005, was the US E-3 visa, which is available only to Australians. The E-3 visa is similar to the H1-B visa, however more generous in that it has a separate quota of 10,500, is renewable indefinitely and has the additional benefit of the spouse of the main visa holder being able to work. In contrast, the H1-B visa has a quota of 65,000 (for applicants of all other nationalities), is capped at six years and the spouse of the main visa holder is not able to work. Singapore and Chile enjoy similar preferential immigration routes to the US as a result of their free trade deals.

One of the key arguments for voting to leave the EU was that the UK would be able to negotiate its own trade deals. So what are our likely trading partners saying?

  • Australia has spoken of the need for “greater access” to the UK for Australian business people.
  • India has already stated that the UK will need to relax immigration rules and make it easier for professionals and presumably students from India to come to the UK.
  • The EU is another matter entirely with many competing priorities and parties. The degree of labour mobility post Brexit will depend on whether we see a “soft Brexit” or a “hard Brexit”, which is still very much to be decided.

What is certain is that any trade deal the UK negotiates after Brexit will be about more than goods and services. Labor mobility will be a key element and it is therefore inevitable that any future trade deals the UK agrees will have an impact on immigration policy.

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Trade deals and immigration

Mind the gap

Employment law issues seem to be rife with gaps at the moment. We have already reported on the gender pay gap, brought to the fore by the UK’s new reporting regulations for gender pay that took effect on April 6, 2017. However, it looks like we are now dealing with another gap: the skills gap that commentators believe will be one of the consequences of the UK exiting the EU. In fact, we are already seeing the effects, as potential migrant workers are reluctant to come to the UK at a time of such uncertainty. As a result, there is a significant shortage of workers to fill such typical blue collar jobs as drivers, electrician assistants and construction workers. Sectors such as healthcare, retail and construction are among those feeling the squeeze, as they are heavily reliant on EU migrant workers. A study by the Recruitment and Employment Confederation (REC) points out that EU migrants are over-represented in low-skilled jobs, filling 15 percent of them, compared with 7 percent by non-EU migrants and 78 per cent by Britons.

Furthermore, Brexit has led to curbed planned growth and investments for one in four small and medium-sized enterprises (SMEs), according to the latest “UK SME Confidence Index” from Vistage. And the shortage of workers has forced employers to raise starting salaries. According to the REC study, in August salaries increased at the fastest pace in nearly two years. This trend may not be sustainable over the long haul if it impacts too negatively on profitability and business sustainability.

In the meantime, automation and digitalization have been proposed as possible solutions to bridge the gap. However, whether replacement of people with machines is quite what voters intended back in June 2016 when the referendum took place is questionable at best.


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Mind the gap

H-1B blast off countdown 2017

T minus 59 days. The countdown has begun.  The date is coming.  It will be here soon.

It is the biggest event of the year in United States immigration.

Hundreds of thousands will apply, but only a lucky few will be chosen. Employers keen to recruit and employ the best and brightest talent from around the globe to meet American business needs are already gearing up.  Professionals eager to pursue their career in the United States are updating resumes and collecting diplomas and reference letters. This program is not the best way for a country to succeed, but the United States Congress continues to lack the will and wisdom to change a law almost 25 years old.

Are you ready?

April 1, 2017, is the first day that the United States Citizenship and Immigration Services agency (USCIS) will accept new H-1B specialty occupation worker nonimmigrant visa petitions by employers for foreign professionals.  It is important for global mobility and human resource managers to start work now to secure preliminary Department of Labor approvals, foreign degree evaluations, etc., to be ready to file the petition for an April 1 receipt date.

Limited supply

Only a limited number of new H-1B visas are accepted each year due to legal quota restrictions. Every year, 65,000 new H-1B visa petitions can be granted, of which 6,800 are set aside for citizens of Chile and Singapore under free trade agreements with those countries. To the extent there were unused free trade agreement H-1Bs, those are added to the quota for the next fiscal year. There is an additional allocation of 20,000 new H-1B visa petitions that can be accepted if the foreign professional in question earned a graduate degree from a university in the United States.

Not all H-1B visa petitions are subject to numerical limits. Individuals already holding H-1B visas are not counted against the quota, and petitions filed by institutions of higher education or related or affiliated nonprofit entities, nonprofit research organizations or governmental research organizations are exempt from the limits. And H-1B workers performing labor or services in the Commonwealth of the Northern Mariana Islands (CNMI) and Guam may also be exempt from the H-1B cap, provided their employers file the petition before December 31, 2019. Employers may not file a petition or an extension request for an employee more than six months before the employee’s intended start date.

Overwhelming demand

Last year, the USCIS received so many new H-1B visa petitions in the first week of April that the agency ended the application window on April 7. Approximately 236,000 new petitions were received, as compared to 233,000 in the prior year. As the regulations mandate, officers then selected—at random—which envelopes to open, and returned the rest unopened with the government filing fees. Only then did the agency begin the often long process of approving or denying the selected petitions on the merits of eligibility.

This year, the USCIS will once again receive more than it is allowed to accept. Again, the agency will randomly decide which envelopes to open and which to return unopened. The likelihood of a petition being selected in April 2017 is much lower than last year, taking into consideration the current state of the economy, the relatively low rate of American unemployment in typical H-1B specialty occupations, and the labor needs of US employers.

The countdown begins now (download dates directly into your Outlook)

T minus 59 days (February 1):  Start working with legal counsel now. Identify current and prospective employees who will need new H-1B visa petitions.

T minus 44 days (February 15):  By now, you and legal counsel should have requested the labor condition application certification from the Department of Labor.  Employers new to the process or who have not filed recently will need to create the appropriate accounts with the Department of Labor. Because the USCIS relies on Dunn & Bradstreet data (DUNS) as part of its employer background verification process, it is important for employers to create or update the company’s DUNS records to avoid inconsistencies with H-1B visa petition filings.

T minus 31 days (March 1):  Have all the required USCIS forms and supporting documents been signed and filing fee checks prepared?  There is still some time left to get last minute details completed, but this is when it gets very hectic. Government systems often become overloaded and delays at the Department of Labor for late filings are common.

T minus 1 day (March 31):  Envelopes should be properly addressed and delivered to the express service of choice with next business morning delivery instructions.

T minus 0 (April 1):  Just like at NASA ground control, this is the stage in the process where all the hard work resulted in successful delivery of the visa petition and you have to wait for the USCIS to announce whether the petition is selected or returned—usually within 3 weeks or so.

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H-1B blast off countdown 2017

The Trump wild card: what employers can expect from the new administration

Thursday, January 26, 2017
1:00 PM – 2:00 PM EST

With Donald Trump’s election as the 45th president of the United States, and the Republican Party retaining control of both the Senate and House of Representatives, employers can expect some changes.

Join us for an engaging discussion on the Trump administration’s workplace policy priorities, their likely impacts on employers, and what you can do now to prepare for the changes to come. Among the topics to be covered are: the effect on the labor pool of proposed changes in immigration policy; the impact of Obamacare “repeal and replace” on employer-sponsored health plans; compensation issues; the future of regulations covering whistleblowing and human rights protections; the Trump NLRB; the DOL’s Fiduciary Rule; and workplace discrimination. Dentons partner Cynthia Jackson will lead a panel of Dentons lawyers as they tackle these questions and more.

Meeting agenda

Immigration outlook: labor force issues

Campaign promises to increase worksite visa audits and investigations, build a wall along the Mexico border, establish a deportation force, and place new restrictions on immigration from some majority-Muslim countries may become law. The new Administration is likely to adopt policies even before Congress acts. How will these developments impact employers who rely on business visas to hire the best and brightest from around the world? We will predict the future and provide guidance on how employers can prepare now.

The repeal of the ACA and other developments post-ObamaCare

The election of Donald Trump to the presidency, together with Republicans maintaining control of Congress has, for the first time since the Affordable Care Act’s enactment, put the law’s future in serious question. With the new Administration taking the reins of government on January 20, we will discuss the distinct possibility of the ACA’s repeal and replacement, including options for the White House and the expected congressional timeline for debating and passing legislative changes.

Compensation and other DOL regulations

The Department of Labor raced to the end of the Obama administration with a wave of regulatory activity applying to the public sector and government contractors relating to overtime, blacklists, pay equality and sick leave. Courts stalled implementation of some of the more controversial regulations. How will the new administration act in its initial days regarding the recent flurry of regulations?

Whistleblower and human rights developments

During the campaign, President-elect Trump stated that he would dismantle Dodd-Frank, repeal President Obama’s executive orders and unburden companies of excessive regulation. We will address how that will impact whistleblower and bounty hunter programs at the SEC and elsewhere, as well as laws impacting eradication of human trafficking and slavery.

The DOL’s fiduciary rule and the evolution of the NLRB under Trump

The Trump NLRB is expected to reverse recent Board decisions relating to concerted activity, joint employment, election processes and other issues favoring labor. But when will the reversals begin? This presentation will address both NLRB issues and processes during the first year of a Trump presidency. In addition, we will briefly discuss the status and likely future of the DOL’s fiduciary rule.

Workplace discrimination

The Obama administration broadly interpreted Title VII to include anti-discrimination protections on the basis of sexual orientation and gender identity. We will look at whether that trend will continue under Trump. Other current trends in anti-discrimination enforcement and litigation will also be discussed, with a focus on statements made by the President-elect and his team during the campaign and the transition.

Register Now

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The Trump wild card: what employers can expect from the new administration

UK Employment Law Round Up, Volume 1, Issue 10 – 2016

UK Employment Law Round-up

In this issue we look at recent case law decisions which have provided a useful reminder of the position when dealing with contracts tainted by illegality and taking prior disciplinary warnings into account. We also bring you up to date with the latest thoughts on calculating holiday pay, and the scope of ACAS Early Conciliation certificates. We review the new judicial assessment procedure in the employment tribunal, along with proposals to inspect corporate governance and to ask employers to disclose employed foreign nationals.

Read the full newsletter here.

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UK Employment Law Round Up, Volume 1, Issue 10 – 2016

New UK penalties for unauthorized foreign workers and their employers starting July 12, 2016

Suit in handcuffs

Effective today, July 12, 2016, employers found guilty of “knowingly” employing unauthorized foreign workers in the UK may face an increased prison term, and unauthorized foreign workers will be subject to criminal liability. This results from provisions of the Immigration Act 2016 which are aimed at further deterring workers who do not have the legal right to work in the UK from entering the nation. Provisions of the Immigration Act 2016, which take effect today, are slated to be implemented in stages over the coming months and while Brexit will certainly have implications for UK immigration law in the long-term, in the short-term our concern is with the provisions that begin to take effect today, which are as follows:

There will be an increase in the criminal penalties that may be applied to employers who employ illegal workers.

  • It is already a crime to knowingly employ an illegal worker, the penalty for which has been a fine of up to £20,000 and a prison term of up to two years. While the level of the fine remains the same under the 2016 Act, the maximum sentence upon conviction has been increased to five years in prison from the current two. In addition, experience has shown that proving that an employer knew that an employee was working illegally can be difficult. Therefore, beginning today an employer will be guilty of this criminal offence if the employer has reasonable cause to believe that an employee was working illegally. It is no longer necessary to prove that the employer actually knew this; only that he should have known it in view of the circumstances.

Illegal working will become a criminal offence.

  • Prior to today, the sanction applicable for employees guilty of working illegally is deportation, and a record of the illegality became part of the person’s immigration file. From today, working illegally will be a criminal offence subject to a sanction of up to six months in prison and/or a potentially unlimited fine. As working illegally is now a crime, any proceeds from working illegally also be subject to seizure as proceeds of crime. This provision has caused particular concern among certain human rights groups who have argued that it may lead to illegal workers feeling unable to speak out against exploitation for fear of themselves being criminally charged.

While UK employers should already be undertaking appropriate right-to-work checks, the stricter provisions that take effect today should serve as a reminder to make sure that current right-to-work checking processes are as robust as they can be.

The ever-changing landscape of UK immigration law has never been more fluid or uncertain than it will be over the coming months. We will keep you updated as matters develop.

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New UK penalties for unauthorized foreign workers and their employers starting July 12, 2016

Brexit, a global perspective in the immediate aftermath…

Brexit Immigration

Following the UK’s EU referendum, the UK has a clear mandate for exit from the European Union. There is doubt, however, about what the future may look like for the UK and its relationship with Europe or the rest of the world. It is likely that there will now be a prolonged transition period, with the next UK government needing time to plan, prepare and negotiate the UK’s future.

Some key thoughts in the meantime:

  • For UK nationals living elsewhere in the EU, and EU nationals living in the UK, there will be no immediate change. Protection of citizens already established in those states is likely to form part of negotiations between the UK and the EU.
  • Free movement of EU citizens is expected to be negotiated as a condition of any trade deal between the UK and the EU. However, if ultimately the UK decides to no longer share in the EU’s right to free movement of labor, then citizens of other member states will not enjoy an automatic right to work, travel and live in the UK. Similarly, UK citizens will not enjoy EU citizenship rights. Prior to the referendum, the UK had already made it more difficult for EU citizens to gain permanent residence in the UK. However, the UK government will be aware that imposing fundamental limits on the free movement of labor at this time could make the UK a much less attractive destination for international businesses and skilled and educated migrants.
  • Nationals of other countries working in the UK, such as from the US, should see no imminent changes. The UK government is saying that the UK is open for business on a global scale. This is an opportunity to grow and strengthen relationships across the globe. At present the UK is not seeing any large-scale recruitment freezes or job losses.
  • Trade and investment are good for the UK’s employment growth and stability. The UK government will want to keep a level playing field with the UK’s European counterparts, and look for opportunities across the globe, at this crucial time. One key area where it will want to display its good practice is data protection. Realistically, a trade deal between the UK and the EU may also mean the UK continuing to be subject to key EU legislation.
  • The UK has a body of homegrown legislation protecting UK employment law rights. The fundamental right that exists in the UK to claim unfair dismissal will not be affected by its withdrawal from Europe. The UK also had discrimination laws in place before its ascension to the EU; EU aims and legislation are so established in UK good employment practice that they are likely to remain fundamentally the same for now. While moving to a US-style system, where employees receive lower overall protection, is possible, it is unlikely in the short term, given the broader cultural change needed to accept the US norms.
  • Subject to the above, EU rights, or improvements in those rights, in the UK may eventually be diminished or lost. However, it seems likely that grand proposals will eventually be reduced to a few smaller, less significant changes. If the UK is not required to keep EU legislation in these areas as part of a broader deal, the government may review and make changes to the current position in a number of areas, such as: (i) harmonization of terms following a TUPE transfer, (ii) limits on bankers’ bonuses, (iii) working time controls, (iv) collective redundancy consultation, (v) agency workers’ rights and (vi) the absence of a cap on discrimination awards.
  • If the UK is no longer subject to the jurisdiction of the European Court of Justice, UK case law may develop in a slightly different direction. This may mean a gradual parting of ways between the UK and EU states.

On balance, it is most likely that the next government will want to preserve the status quo, at least in the short term, and wait for the dust to settle before looking for opportunities to make more fundamental and valuable changes. Dentons will keep you posted as the picture evolves.

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Brexit, a global perspective in the immediate aftermath…