EEA recruitment - the business context

Posted: 04/03/2014

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Employers should not be put off employing candidates from Romania or Bulgaria by the Government’s restriction on social security benefits, triggered by an anticipated “flood” of job seekers resulting from the ending of work restrictions. It has led, however, to the EU Employment Commissioner warning of a risk of the UK being perceived as the “nasty country” and, given the context, it is not surprising that this debate has arisen and there is a concern that businesses will suffer indirectly. The many EEA-based opportunities for business are rarely touched upon by the media.

Immigration Bill

The work rights of Romanians and Bulgarians are not in doubt. The current Immigration Bill concerns immigration by non-EEA nationals, principally reduced appeal rights and illegal immigration. An amendment to the Bill has been proposed by backbenchers that would extend transitional work restrictions on Romanians and Bulgarians which have been in place since 1 January 2007 by a further four years. However, the amendment would breach EEA law and the Government has rejected the proposal.

New member states

As of 1 January 2014, nationals of Romania and Bulgaria no longer need permission to work in the UK. Employers can now accept their passports, national identity cards or UK-issued residence certificates as proof of their right to work.

There are 26 other members of the EEA and, with one exception, nationals of all member states (and Switzerland) are free to work in the UK. The exception is Croatia which joined on 1 July 2013. Nationals from Croatia are currently subject to their own seven year transitional restrictions and must obtain permission to work unless they come under a particular exemption. This work authorisation scheme is based on the UK points-based immigration system. The criteria are modified in several respects to make it slightly easier for Croatians to qualify. Highly skilled Croatians, for example, are given a simplified route if they can demonstrate high level skills and high earnings. 

Croatian businesses, on the other hand, (including self- employed individuals) are free to trade in the UK.  Member states must (with very limited exceptions) remove all restrictions that hinder businesses from setting up temporarily or permanently in another member state or from engaging in cross-border trade. They also must remove duties, charges, taxes and other trade barriers affecting Croatia. The EEA’s procurement regulations mean that member states must open up opportunities for public contracts across the EEA. UK businesses need to ensure that they exploit their own rights in these respects when trading across the expanded EEA.

Another consequence of Croatian membership will be EEA business regulation. For example, transfer of undertakings (TUPE), working time, data protection, equality and competition, all of which are familiar in the UK.

Job seekers and benefits

In this context, the Government’s rushed decision to amend social security legislation from 1 January 2014 in order to limit benefit claims from job seekers from all member states of the EEA - not just from Romania and Bulgaria - appears clumsy at best. Until now, nationals of those 25 other EEA countries have been able to come to the UK to look for work and claim benefits, if necessary. 

The main changes will stop EEA jobseekers from claiming jobseekers’ allowance for the first three months and will thereafter impose a harsher test on whether or not a jobseeker is genuine. The potential effect will be to deter job seekers who do not have savings from moving to the UK to search for work. Since this applies to all EEA nationals, the total effect may be significant. If so, it will reduce the number of job applicants in the labour market, particularly for lower skilled roles and in the expensive South East.

The removal of benefits is open to legal challenge, since the EEA principle of freedom of movement exists to facilitate not only movement between jobs but also job hunting. Job seekers are regarded as being “economically active” and, as such, they are protected by EEA law. 

The Government does not want employers to be deterred from recruiting EEA nationals, including those from Bulgaria and Romania, but there is some danger that their public statements and the benefit changes will lead to some stigma being attached to job seekers from these countries - which would be highly unfortunate. It is also unfortunate that the debate tends to present EEA membership as a zero sum game, where the gains of new member states are at the cost of the existing member states. Businesses in the UK have real benefits from EEA membership and it is important for businesses to understand and assert their interests in the EEA.

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