Implications of recent developments in the UK; our 2nd largest market
In the last few days there have been some developments in the UK such as the extension of Furloughing scheme, passing of the Immigration bill by Commons and presentation of a draft FTA between EU & the UK. While we continue to watch the developments in these area, below is our analysis on how are these are likely to impact the industry, what should we plan for and areas where NASSCOM will continue to engage.
A brief analysis on some of the recent developments in the UK, our outlook and proposed next steps are below:
- Extension of Coronavirus Job Retention Scheme / Furloughing : This is UK Governments flagship scheme for employment retention under which the government will provide the employers a grant worth 80% of an employees’ wage, up to £2,500 a month. The scheme has been extended till Oct 2020 with no change in the entitlement till end of July. From August onwards there will be greater flexibility to support the transition back to work including bringing furloughed workers back on a part-time basis. From August firms would be expected to contribute more towards the costs of running. Further details are expected shortly and our member companies should prepare for this scenario, and plan for reintroducing furloughed staff into the work place, including keeping some on part time furlough and part time work.
- Brexit & trade: Its almost certain that UK will not seek an extension and hence will not be bound by the rules of the EU from 1st Jan 21. While there is a possibility but it is highly unlikely that there would be a trade agreement arrived at between the EU & UK in the next six months. Our member companies should therefore plan ahead keeping this scenario in mind. The subject has gathered further steam with the UK publishing a draft FTA with EU. While number of changes to this draft are expected, it does give a useful steer for the intentions of the UK Govt. The areas of our interest are below:
- Data Adequacy: Data adequacy arrangements are not a part of the FTA negotiations and adequacy remains a unilateral decision to be taken by the EU. The UK has already stated that it will allow UK data to flow freely to the EU in the event of no-deal to minimise disruption, but this is not reciprocated by the EU yet. The UK can seek an adequacy decision and would therefore need an independent data protection regime that is robust enough for it to be granted an adequacy decision by the EU. From this perspective, NASSCOM will continue to engage with the UK Government to ensure that its data protection regime is sufficiently robust.
- Recognition of Professional Qualifications: The draft agreement sets out that each party shall “accord to service providers – no less favourable” treatment if they have obtained their qualification in another country than they would for people who gained their qualification in their own country. This would be of a definite advantage for our member companies.
- Mobility: The draft proposes that both sides “shall allow the temporary employment in its territory of intra-corporate transferees”, and sets out that specialists and senior personnel will be permitted to stay for up to five years, and graduate trainees up to one year. Additionally the partner and dependent children will be granted entry for the same period as the transferee. This flexibility will be of definite hep to our member companies
- Immigration Bill: The immigration which is currently broad and more details are awaited has been recently passed by the Commons is designed to bring in the long debated Australian style points based immigration system. The regime is designed to make EU, EEA and Swiss citizens subject to UK immigration controls and the new framework will apply from 1st Jan 21, once the UK has left the EU.
The Immigration Health Surcharge increases from £400 to £624 per year, as outlined in the budget in March and also in the Conservative party’s manifesto before last year’s elections. The charge will be extended to include EU citizens and will also be applicable for partners and children. The opposition echoed many of the points made by NASSCOM on whether the surcharge is appropriately directed to the funding of NHS where it is intended to go or acts as a secondary form of taxation on migrants who already pay into the NHS through VAT, income tax, fuel duty etc. Given the pressure from several quarters, the Government is likely to think of ring fencing the funds, which has been NASSCOM’s long standing ask, and introduce the increase in a staggered phase.
The bill treats migrants from outside of the EU same as those from within the EU – This is welcomed by NASSCOM and something we have pushed for a long time. The bill will now be debated in the Committee stage in the Commons.
UK is our second largest market and the team will continue to engage with the Government on the above areas at the same time highlighting the importance of tech workers; the essential services they deliver and how they are central to any economy’s capability to bounce back from the crisis in the quickest and deepest of manner.