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Guest opinion: Engineered for success? Immigration and the automotive industry

The manufacture of cars and commercial vehicles has increased enormously worldwide – more than 25% in the last decade alone.

According to recent figures released by the Organisation Internationale des Constructeurs d'Automobiles (OICA), the UK saw car production increase by over 5% between 2014 and 2015.

The demand for automobiles is clearly greater than ever and, therefore, so is the sector’s need to hire the best people for a vast array of jobs – especially highly skilled engineer roles.

However, the automotive sector encounters difficulty in recruiting candidates from within the UK labour market due to a lack of required skills, particularly in the much-needed field of engineering.

Because of this, employers are increasingly looking further afield to America, China and India, to source their labour. Consequently, immigration activity has increased by almost 50% in the Professional, Scientific and Technical Activities industry sector since 2011, according to recent Home Office statistics.

Times have changed in the automotive sector, with extraordinary gadgets and features becoming a standard part of most models. With the advent of Bluetooth-enabled vehicles and self-parking cars, ‘engineering’ has also developed into something very different to what it was when Ford made the Model T and Bugatti’s Type 35 first appeared. 

The landscape of immigration law has also changed and will continue to do so.

Home Office rules and policies

The automotive industry will face new challenges over the coming months, with the Home Office looking likely to implement various new policies and rules.

The full impact of these changes remain to be seen, but the sector will need to consider minimum salary requirements, additional charges and the possibility that certain engineering roles will be more difficult and expensive to recruit for from outside the UK.

For instance, new hires employed outside a company structure have been liable to pay the Immigration Health Surcharge.  This applies to migrants applying from overseas and migrants who are sponsored by a different UK company. 

From Autumn 2016, employees transferring from the same company overseas (known as ‘Intra Company Transferees’) will also be liable to pay this fee.  This is calculated as £200 per person per year and is payable in one lump sum at the time of application. 

Where a family of four will come to the UK for five years, this will be an additional £4,000 on top of application fee and other fees – not an insignificant amount.

In April 2017, other changes will also take place, including the introduction of the Immigration Skills Charge. The exact sum is yet to be finalised, but it is expected to be charged at £1,000 per year. 

As no rules have been put in place yet, it is not possible to predict how this fee will affect applicants, but it is anticipated to apply only to the main applicant and not to family members. This is significant, however, as the automotive sector relies on very skilled labour – potentially racking up a large bill.

Also in April 2017 will be the closure of the Tier 2 (Intracompany Transfer) Short Term route. Applicants who would have come to the UK under this route (where the minimum salary level required was £24,800) will now have to be paid the same minimum salary as those in the Long Term route – currently £41,500 per year.

This is particularly important as the industry encounters difficulty in recruiting candidates from within the labour market due to a lack of required skilled and qualification.

To recognise the skills deficit, the Home Office designates some of these engineering roles as ‘Shortage Occupation’ roles.  Essentially this means that there are not enough resident workers to fill the available jobs in the sector.

An advantage of the ‘Shortage Occupation’ designation is that employers are not required to undertake the Resident Labour Market Test (RLMT) and can sponsor migrants more quickly than if they did have to satisfy the test.

However, it is entirely possible that the Home Office may decide that these roles are no longer shortage occupations, requiring employers to undertake the RLMT. 

It is not possible to predict when or even if this might happen.  If it does, there will be an increase in the cost, administration and scrutiny of applications.  For manufacturers or dealer groups who employ significant numbers of non-EEA migrants, this could represent a substantial increase in expenditure.

Other issues facing automotive employers are not necessarily specific to the industry, but the changes will likely make it more difficult to bring someone over, for example on a discreet development project that lasts for a set amount of time.

However, if the automotive industry is to continue to grow in the UK as it has done in recent years, companies will certainly need to hire the best employees for the jobs. With costs increasing substantially, what remains to be seen is whether the automotive industry can justify the expense of having to fill a large gap in the domestic labour market or if they will need to find ways of nurturing UK talent to avoid the issue altogether in the future.         

Authors: Neil Jennings and Sam Koppel, associates in the immigration team at the law firm Lewis Silkin LLP. 

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