UK: The Revised Regime

A report on what the work-related immigration system should look like post-Brexit has been released

Last month the Migration Advisory Committee (MAC) published its final report, setting out its recommendations to government on what the work-related immigration regime should look like post-Brexit and how the UK can best adapt to the likely end of free movement. The report concludes that the impact of high-skilled migration is more beneficial across the board than low-skilled migration.
Although the report acknowledges many employers are concerned about reduced access to low-skilled labour, if freedom of movement ends, it does not recommend any designated entry scheme for lower skilled workers to the UK.

Currently, the main scheme for high-skilled workers to enter is Tier 2 (General). Applicants must have an offer of a graduate job above a certain skill level and minimum salary threshold. Entry under Tier 2 is currently capped at 20,700 high-skilled migrants per year.

Key recommendations

The MAC report suggests that, if free movement ends, the skills threshold will need to be reconsidered, and draws a series of other conclusions about how the immigration system ‘could be designed to better benefit the resident population’ of UK born workers. The report’s key recommendations to government are: focus on attracting higher-skilled workers; no preferential treatment for EEA workers (although this may be subject to negotiation with the EU); expand Tier 2 to cover ‘medium-skilled’ jobs; no reduction in Tier 2 salary thresholds (to place upward pressure on earnings and ensure that migrants make a positive contribution to public finances) and abolish the Tier 2 Immigration Cap.

The report also recommends that the Immigration Skills Charge (currently an upfront cost of £1,000 per year for medium and large sponsors) should be retained and extended to EEA citizens. However, it proposes that the Resident Labour Market Test (RMLT), which requires employers to demonstrate that they were not able to find a suitable candidate from the UK-born workforce before recruiting a migrant worker, should be scrapped.

The MAC has rejected calls for minimum salary thresholds to be varied for UK regions (where average pay may be lower than London and the South East) and for the Public Sector (where it is argued that pay may not reflect the value of word done when compared to the private sector).

Importantly, the MAC’s recommendations tackle ‘broad principles more than detailed rules.’ If the Government puts some or all of these recommendations into practice, there is much more work to be done to amend and refine the details of any new immigration scheme. Both Theresa May and Sajid Jadiv confirmed, at the Conservative Party Conference, that the government would adopt MAC proposal for no preferential treatment for EEA workers.

Internal investigations

The Court of Appeal in Serious Fraud Office (SFO) v Eurasian Natural Resources Corporation (ENRC) Limited, considered whether and to what extent documents prepared during an internal investigation should be protected by legal privilege.

Following a whistleblowing allegation of corruption within ENRC, the company instructed solicitors and forensic accountants to conduct a full internal investigation. The SFO commenced its own formal investigation against ENRC and sought production of all documents generated by the internal investigation. The company resisted on the grounds that the work done by its accountants was subject to litigation privilege (as it was produced with the sole or dominant purpose of defending a criminal prosecution) and that the notes of the lawyers’ investigation were subject to legal advice privilege.

The Court of Appeal overturned a controversial High Court decision and held all documents generated by the internal investigation were subject to litigation privilege. The company’s ‘purpose’ of carrying out internal investigation for governance and compliance reasons could not be completely distinguished from the related purpose of defending potential criminal proceedings. It was clearly in the public interest for companies to investigate allegations fully. There was no general principle that these investigatory steps could not be privileged. Even though no decision to prosecute had been taken, and ENRC did not know the extent of their potential exposure, litigation privilege was still triggered and applicable.

Workers on boards

Jeremy Corbyn announced proposals, at the recent Labour Party Conference, that a future Labour government would require companies, with workforces of 250 or more, to set aside at least one third of places at the boardroom table for worker representatives. This would apply to both public and private companies. There would have to be a minimum of two worker representatives.

These proposals have similarities with those made by Theresa May on the steps of Downing Street, when she became Prime Minister, to give employees greater representation in the boardroom. However, she has since abandoned this policy.

National minimum wage

The government has published a report on the national minimum wage (NMW) detailing evidence on compliance and enforcement in 2017/18. It notes that the government has been increasing efforts to ensure compliance, for example:

• The government identified a record £15.6 million of underpayments, benefitting over 200,000 workers
• This year the government prioritised the social care, retail, commercial warehousing and gig economy sectors for targeted enforcement, alongside employment agencies, apprentices and migrant workers
• Between August 2017 to July 2018, 678 employers were identified in the government’s ‘naming and shaming’ scheme for NMW underpayment
• HMRC ran a pilot Assisted Self Correction scheme under which employers volunteered for self-review, which led to £246,000 in arrears being identified for 689 employees. HMRC are reviewing the outcomes of the scheme and considering the options going forward.

Parental leave policies

Ten large companies, including leading legal and accountancy firms, have agreed voluntarily to publish details of their parental leave and pay policies on their websites. The change is a response to Liberal Democrat MP, Jo Swinson, and her call for all companies with over 250 employees to be required to publicly provide this information alongside gender pay gap data each year. Swinson believes such a requirement would avoid the need for candidates to ask about a company’s policy in interviews and would promote transparency and good practice. 

Paul McFarlane is a partner in employment, pensions and immigration
at Weightmans LLP

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