The cost of keeping your workers: Budgeting for immigration

Many businesses are still unaware about the potential costs of sourcing their overseas talent in future

Recent research undertaken by Shakespeare Martineau with more than 500 UK business leaders has shown that organisations know immigration is going to cause them a headache, but are continuing to bury their heads in the sand. According to that research 78% of respondents recognised that immigration would be necessary to fill the UK’s skills gaps, however only 21% have made any move to analyse how this lack of talent and labour will affect their business.

UK organisations have become used to sourcing both skilled and unskilled labour from European migrants who are currently able to move freely between EU member states. However, this is set to change and soon there will be hefty price tags attached to the recruitment process for overseas workers.

Take, for example, a mid-sized business that wants to recruit someone from outside of the UK for a three-year fixed-term role after free movement has ended. The individual would need to apply for a work permit known as a Tier 2 general visa (the type currently used by non-EU migrants). For a single applicant alone the costs are staggering. These include an application fee of approximately £600, an immigration health charge of £600, an immigration skills charge of £1,000 to £3,000 per year of the contract, £200 for a Certificate of Sponsorship and £200 for use of a priority visa service. For one worker the total costs would rise to around £4,600.

This is excluding the fact that the individual may wish to bring their family members with them. And if a spouse and two children required visas as well, another £4,200 would be added to the bill. In total a family of four coming to live and work in the UK for three years would cost almost £9,000, excluding any legal fees that may be incurred throughout the process.

Written down on paper this cost is significant and highlights the urgency with which businesses must be factoring immigration costs into their post-Brexit business plans.

While individuals shoulder the burden of some of those costs, including the immigration health charge and visa application fees, under normal circumstances the costs are paid by the business seeking the talent. Larger organisations may be more used to the costs associated with recruiting overseas workers. But for smaller businesses, being hit unawares with this financial outlay could be devastating.

If the business is in a fortunate enough position to be able to foot the bill for every overseas worker, the prospect of the end to free movement is less worrying, however the vast majority of organisations won’t have that luxury. In this scenario looking closer to home to plug the talent shortage is essential.

Getting creative forms part of the answer and it is important to recognise the potential hidden in the current workforce. Look at who is already working within the business; can any training be provided to upskill individuals for new roles? From a wider industry perspective, building closer links with education and training institutions can be advantageous in ensuring that the organisation is front of mind during any careers sessions or roadshows.

Looking at the business itself, it is important that the outward-facing employee brand is as attractive to potential candidates as possible. Accentuate the positives and highlight anything that may set it apart from the crowd, whether that be comprehensive in-house training programmes, clear-cut progression paths or perhaps an industry-leading benefits programme.

Whatever the approach taken to source and secure talent before the end of the transition period, it is essential that businesses act sooner rather than later and recognise the financial impact that the end of free movement will bring. Waiting until the 11th hour is not a viable option and the shock experienced when talent streams appear to dry up could be devastating.

Tijen Ahmet is legal director a and business immigration specialist at law firm Shakespeare Martineau