Do you and your UK supply chain know how many EU workers you employ?

Do those EU workers know what action to take to continue working in the UK after Brexit?

Will you support your workers and supply chain in making the appropriate applications for residency documentation?

Panel session on 6 June 2018

We recently held a breakfast seminar on the impact of Brexit on the UK construction workforce.

Our experienced panel was chaired by Kirsti Olson, partner in our Construction team, and included Dentons' UK Head of Immigration, Jessica Pattinson, Joseph Dromey (of the Institute for Public Policy Research (IPPR)) and Fergus Harradence (construction sector lead at the Department for Business, Energy and Industrial Strategy (BEIS)).

Together, the panel presented some hard facts about the current make-up of the UK's construction labour force and flagged up issues that could lead to labour supply shortages after Brexit. For example:

• a significant proportion of the overall UK workforce is over 35 – fewer, young UK nationals are entering the industry;
• self-employed workers made up more than 40% of the construction workforce in 2016;
• 54% of the construction workforce in London (in 2014) consisted of foreign-born workers. Many of them are skilled workers (e.g. 15% are carpenters; 8% are civil engineers).

A summary of what the government is doing about the issues was also explained, including a focus on procuring for better value, industry-led innovation and skills for the future.

What are the issues for employers and contractors?

Many European Economic Area (EEA) workers work for or as sub-contractors on projects across the UK. Some might be aware of the need to apply for UK residency but might not be in a position to make the application. For some, returning home or working elsewhere in Europe might be far simpler and more attractive than the hassle of complying with the UK's immigration procedures.

Given the substantial number of EEA workers employed on UK projects – particularly those based in London and the surrounding counties – employers and contractors in the construction industry cannot afford to ignore the potential effect of Brexit on their labour supply. The panel made clear that:

• EEA nationals and their family members who arrive before the end of the Brexit transition period (31 December 2020), will be able to remain in the UK, but must apply for new residence documentation prior to 30 June 2021.
• Applications for residence documentation under the "EU Exit Settlement Scheme" will open to non-UK workers later this year.
• Employers and contractors (as well as SMEs themselves) have a role to play in ensuring that those involved in their projects comply with this process as soon as possible.
• Contractors themselves might employ few EEA workers – but a high proportion of their SME sub-contractors could be either EEA workers themselves or employers of EEA workers.

If those sub-contractors fail to carry out the application procedures in time, they may find themselves without the necessary documentation to work legally in the UK from 1 July 2021. The consequent fall in the labour market is likely to cause potentially massive labour shortages, make the remaining workforce more expensive to employ and delay projects.

What can you do now?

The avalanche of Brexit information has led to overkill and many have, understandably, switched off from the issues. This is understandable but short sighted. As our speakers explained plainly, the potential effect on the construction labour market is likely to be significant, especially when combined with the impacts of having an aging workforce.

To find out more, read our summary of the panel session below, including some of Jessica Pattinson's useful tips on how contractors and employers can work with their EEA employees and sub-contractors to navigate the residency application process.

To appreciate the full extent of the issues that face the industry, we recommend you watch the recording of the session which is available on request by emailing: amy.clark@dentons.com or by contacting your usual Dentons contact.

The immigration status of your supply chain is not one of those Brexit-related issues that can wait until after Brexit. Commercial directors and human resources teams who act quickly and collaborate with their supply chains could make a significant difference to their operations and reduce the risk of costly delays.

How can we help?

Jessica Pattinson is Head of Immigration at Dentons and runs a UK-based team who are experts in immigration issues. They have spent the last year advising organisations on how to address Brexit-related immigration and visa issues. They can advise you on the risks for your business and/or facilitate seminars and clinics for your supply chain to ensure EU workers can, where possible, remain working in the UK – on your projects.

Request a copy of our immigration guide or the recording of the seminar

For more information or for a copy of our "Guide on Immigration and Brexit for UK-based EU nationals", get in touch with Jessica Pattinson or Kirsti Olson or one of the Construction team listed under Key Contacts. They can also provide you with a link to the recording of the event.

Overview of the panel session: the impact of Brexit on the UK's construction workforce (and how to manage it)

Fergus Harradence, Construction Sector Lead at BEIS and Joseph Dromey, IPPR

• Construction is one of the sectors most heavily reliant on EU migrant labour (along with agriculture, health and social care). This is especially the case in London.
• Migrant labour takes the strain caused by an ageing UK-born workforce (1/3 are over 50) that is not being replaced fast enough by young people coming in (who are also not always being taught the skills most in need).
• If you apply the various proposed models for regulating immigration post Brexit to the current EU migrant construction workforce in the UK (as if they were new migrants):
  • on the most migration-friendly model (a points-based system), 67% of them would be excluded;
  • on the least migration-friendly model (the Tier 2 approach currently used for non-EU migrants), 93% of them would be excluded.
• The fragmented character of the industry, in which a large proportion of workers are self-employed, makes events like Brexit and its impacts harder to manage.
• Individual EU migrants – particularly the self-employed – are likely to decide whether to stay in the UK based on factors such as:
  • fluctuations in the value of sterling (and the consequent impact on the value of their earnings/remittances);
  • the costs and hassle factor of applying for post-Brexit residence documentation (which will be necessary if they are to retain the right to work in the UK after 30 June 2021).
• In terms of construction sector policy, the government "has a plan", but it is a long-term one based around technology. (So, for example, it is planned that future new builds will include a much greater proportion of components made off-site.) Being a long-term plan, this will not show results for another 10 years or more.
• The work being done by the independent Migration Advisory Committee for government on Brexit labour market impacts is important (and likely to be influential). Their final report is due in September 2018.

Jessica Pattinson, Head of Immigration, Dentons

• Employers can help affected employees through the process of applying for residence documentation in the UK by:
  • alerting people to what they need to do and helping them with the application process;
  • paying the application fee (which is likely to be £75 per person, so quite expensive for families);
  • providing access to technology including Android phones (HMG's specially designed "app" does not work on iPhones so will be inaccessible to half the population).
• It is important for employers to think about the range of employees affected. Many employers do not have systematic records of the nationality of their employees. Collating this information might not be a straightforward exercise: it will involve lateral thinking (for example, whether to include the Italian national seconded to Bahrain for two years).
• It is in contractors' interests to help their sub-contractors navigate the application process.