BREXIT: UK businesses reliant on migrant workers must develop contingency plans ahead of EU vote, says expert

This is part of Out-Law's series of news and insights from Pinsent Masons' lawyers and other experts on the impact of the UK's EU referendum. Sign up to receive our Brexit updates by email.

Joanne Hennessy, a corporate immigration expert at Pinsent Masons, the law firm behind Out-Law.com, was commenting as annual net migration into the UK rose to 333,000, the second highest figure on record, according to the latest official figures. EU-only net migration, which refers to the difference between the number of people coming to the UK for at least a year and those leaving, reached 184,000 in 2015, according to the Office for National Statistics (ONS).

Separately, new research by the Social Market Foundation (SMF) think tank found that only 12% of the 1.6 million EU workers employed in the UK would qualify for a visa if the same rules were applied as to non-EU migrant workers. Less than 1% of those working in 'accommodation and food services' businesses, and almost all of those working in manufacturing, agriculture, administration and support and transport businesses, would not be entitled to work in the UK under the existing rules, according to the report.

Hennessey said that those industries heavily reliant on migrant labour in particular would be faced with a "difficult choice" if free movement of labour was constrained as part of any post-'Brexit' vote negotiations. These businesses would either have to "accept that their workforce will be impacted if employees are forced to leave the UK", or "tackle what could be a costly and time-consuming visa process to ensure those essential to their business can stay in the UK", she said.

"Whilst it is likely that freedom of movement would be negotiated in exchange for free movement of goods, the worst case scenario is that a proportion of your workforce will have to leave the UK," she said. "The issue will be particularly acute for industries heavily reliant on EU workers, such as the construction and technology sectors."

"Employers should consider, in that scenario, what contingency plans they have in place. Do they have other staff settled in the UK who can fill these roles if needed? Indeed, we're seeing some companies encourage workers to apply for permanent residency or citizenship to try and safeguard their status in the UK as far as they can. It's crucial that businesses assess exposure and prepare contingency plans," she said.

EU rules governing the free movement of workers give citizens of EU member countries, or those of countries that are members of the European Economic Area (EEA), the right to live and work in other EU and EEA countries. Individuals from outside the EU or EEA seeking to live and work in the UK usually have to apply for a Tier 2 (General) visa in order to do so, which are only available in respect of graduate-level roles that meet minimum salary requirements. Employers can only recruit from outside of the EEA if there is no suitably qualified worker with the UK or EEA to fill the role.

EEA workers currently make up 6% of the UK workforce across both the public and private sectors, with employers in London, the east and the south east of England, the East Midlands and Northern Ireland particularly reliant upon them, according to analysis by the SMF. Only 12% of these workers would qualify under the existing visa rules, with an even lower share of those working in the private sector qualifying.

Hennessy said that it would be a "significant shift from the status quo" if a post-Brexit UK was to limit immigration from the EEA to those seeking work in skilled or highly skilled occupations, in line with the non-EEA visa requirements. This could also put the government under pressure to review its 'shortage occupation list' in recognition of the impact that a restriction on freedom of movement would have on industries already struggling with labour shortages, she said.

"What should and should not be on the list is always a highly politically charged debate," she said. "Moving the goalposts is likely to compound this problem and prompt more wrangling between businesses and government."

"A period of transition means drastic changes overnight are unlikely. But if EEA nationals become subject to visa requirements, the associated burden of red tape and compliance could render the option inaccessible and too costly for many businesses," she said.

Voters who are also employers will need to balance whether the potential disruption in areas like immigration offsets and potential benefits in other areas, for instance a review of requirements brought about by the EU Working Time Directive.