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Could ambiguous rules spur IT personnel offshoring bonanza?

Could the combination of Brexit and ambiguous rules on recruitment enable businesses to hire IT staff from overseas to carry out work remotely?

More than ever, businesses have to be agile and adaptable to survive the threats posed by the coronavirus and Brexit.

One issue increasingly affecting businesses in the UK arising from these twin factors is the supply of skilled manpower. While Brexit has bought free movement of labour from within the EU to an end, international travel has all but stopped because of the pandemic, leaving some businesses starved of workers.

This year, the new points-based immigration system was introduced. According to the government, it throws down the welcome mat to the “brightest and best” skilled workers in the world.

It is described as an Australian-style system, but has one fundamental difference. In Australia, points are awarded to individuals with the specific skills the nation requires. In the UK, points are awarded based on the job the person has applied for, so in Britain, skilled workers will not be able to come to the country, shop around for a job or start up their own business – they have to be employed first.

Also, in order to gain a visa under these rules, there are many complicated hoops employers and their prospective foreign employees have to jump through. Consequently, few British firms have applied to become migrant worker sponsors.

The result that many migration experts predict will be manpower shortages in a range of professions, and IT is expected to be one of them. Indeed, the official Home Office list of shortage occupations (UK roles where personnel is in short supply) includes programmers, web designers and cyber security specialists.

In the past, to address domestic skills shortages and reduce costs, the industry has outsourced to foreign companies, with mixed results. But given the current circumstances, future UK workforces could consist of international employees scattered around the globe who never set foot in the UK.

This scenario, which is legally feasible thanks to ambiguous rules, could become an attractive option for struggling businesses looking for novel cost-saving solutions and easy ways to fill the skills gap.

Businesses hit by skills shortages may increasingly be forced to look beyond UK shores to find employees. The trend will be driven by new home working practices, which present more opportunities for overseas workers to work in the UK, virtually, circumventing the complicated new immigration system.

Complete new culture

We could see a complete new culture where recruitment is no longer bound by geography, particularly in sectors where being physically present is not required, such as IT.

Legally, in cases where businesses employ overseas workers, the normal practice is to offer the worker the choice of jurisdiction. However, if no choice of jurisdiction is specified in the contract, then the contract is governed by the law of the country in which the work is generally carried out.

Many countries in Eastern Europe, South America and the Far East have highly skilled staff looking for jobs and these prospective employees come at a fraction of the cost of those in the UK. Remote employees are particularly attractive for companies seeking workers with skills in data processing, IT support, telesales, product support, software and web technologies.

According to HR consultants TimelessTime, regulations are vague, and some UK firms are already taking advantage of this grey area. It reports that conceptually, a UK firm could issue a UK employment contract to a worker in Bratislava and call them an employee – even though the concept would be meaningless.

There is possibly no UK tax liability for the company or the “employees”, even though their efforts will generate income for the British “employer”. Foreign workers employed in this way have no locally enforceable employment rights and would effectively be self-employed in their own country.

Theoretically, there is nothing to stop these businesses recruiting in India or China, rather than domestically. The pandemic has disrupted many elements of business, and recruitment could well be one of them.

Yash Dubal is a director at AY&J Solicitors 

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