Fundamental changes are coming for businesses looking to recruit non-UK nationals after the end of this year.
With a new immigration system being implemented with effect from 1 January 2021, businesses will have less than 6 months to prepare themselves for the new regime and ensure compliance with all of the new requirements.
There have been various statements from the Government throughout recent months, indicating that the post-Brexit transition period would not be extended after the end of this year. Notwithstanding this, many assumed that this was empty rhetoric, particularly in light of the challenges being faced by the UK economy as a result of the Coronavirus crisis.
However, we have now had confirmation that the transition period will not be extended. In a statement to the House of Commons on 13 July 2020, Michael Gove MP reiterated that no extension to the transition period was being sought, and that, in fact, the deadline for any extension had now passed.
On the same day, the Government published a 130-page document which adds some flesh to the bones of their February policy statement on the new immigration regime, and how this will impact on businesses when it comes into effect on 1 January 2021.
The end of free movement
EU nationals currently benefit from free movement under the terms of the EU treaties. Loosely speaking, this means they are able to exercise Treaty Rights to come and live and work in the UK with virtually no restrictions. EU nationals can take up any role with any business at any level and on any terms – whether on a fixed term temporary contract or permanent basis, whether as an employee or agency worker. They can also be self-employed and set up their own business, or work as a consultant. They do not need to apply for any special documentation or permission to do this (although they can apply for optional documentation, which typically they may do if, for example, their ultimate aim is to make a British citizenship application).
When Britain exited the EU on 31 January 2020, the Government agreed a transition period during which these free movement rights would remain effective. This period lasts until 31 December 2020.
Applying for Settled/Pre-Settled Status
Any EU nationals entering the UK during the transition period i.e. before 31 December 2020 (or those who are already resident here), are eligible to apply for a new visa, namely Settled or Pre-Settled Status.
Broadly speaking, once obtained, this status preserves many of the ‘free movement’ rights currently enjoyed by EU nationals, including the right to work for any employer in any role, to be self-employed etc.
Nearly all EU nationals who wish to stay living and working in the UK after the end of this year must apply for this visa regardless of how long they have been here, whether they have obtained permanent residence or even if they have married a UK national.
Notable exceptions who don’t need to take action are those who are Irish (to whom special rules apply), any EU nationals who already have Indefinite Leave to Remain, or those who have already naturalised as a UK citizen.
Importantly, Settled Status is not something which is obtained automatically; and individuals must apply for it. So far, the latest Home Office statistics indicate that some 3.6 million applications have been made, and 98% of these have been granted Settled or Pre-Settled Status.
Any EU nationals who are in the UK and miss the application deadline of 30 June 2021 will have no legal right to remain or work here. They will become overstayers and are likely to be subject to removal and/or deportation. In addition, they will be working illegally, giving rise to potential criminal and civil sanctions for their employers. Depending on the circumstances, where a criminal offence has been committed, the employer could face an unlimited fine or up to 5 years in prison. If a civil offence has been committed, employers face a potential fine of up to £20,000 per illegal worker, along with other consequences such as the reputational damage of being ‘named and shamed’.
We would strongly recommend auditing your workforce to understand how many EU nationals are present and their status, in order to assess the scope of any potential problems when free movement ends on 31 December 2020.
The new immigration regime
After free movement ends, EU nationals will no longer have priority status. The December 2018 White Paper, explained that it would be ‘workers’ skills that matter, not which country they come from’.
The new immigration regime will apply to all non-UK nationals seeking entry to the UK after this date (except for those who already have permission to live and work here, for example those who already have Settled Status).
The Government published a policy statement in February 2020 setting out its broad approach to future immigration, which has since been supplemented by “The UK’s Points Based Immigration System - Further Details” which was published in July 2020.
In terms of economic migration, the key route of entry will be the Skilled Worker route, which will apply to any non-UK national wanting to come to the UK to take up employment.
The Skilled Worker route
The Skilled Worker route will replace Tier 2 of the current Points Based System (which in turn replaced the old work permit system).
Applicants will need to score 70 points under several different criteria in order to be eligible to make a visa application under this route. 50 of these points are mandatory and relate to criteria that must be met. The remaining 20 points are tradable, so there is a bit of flexibility (although not much) as to how these criteria are satisfied.
Scoring mandatory points
The first, and perhaps the most important element, for businesses to be aware of, is that applicants will need to score 20 mandatory points for having a job offer from a “registered sponsor”.
In other words, businesses looking to make use of this visa route will need to pre-apply to become registered with the Home Office in advance of next year.
If the business does not hold a sponsor licence, they will not be able to even consider sponsoring individuals, which, in turn means that they may not be able to employ non-UK nationals at all (or at least not until they have gone through the process of obtaining a licence).
The Further Details document confirms that existing Tier 2 sponsors will be converted into Skilled Worker licenced sponsors. Currently there are some 33,000 registered Tier 2 sponsors. However, this is only the tip of the iceberg. There are approximately 6 million businesses in the UK. It seems self-evident that a significant number of businesses will need to make licence applications in the coming months.
The application process is currently quite onerous and involves a high degree of compliance. Although the Government has indicated that it intends to simplify sponsor obligations and compliance at some point in the future, we have not seen any such proposals. We would strongly recommend taking advice on these applications to avoid any problems in the application process and ensure that your business is properly compliant before making any application.
It is also worth factoring in the time being taken by the Home Office to consider these applications, particularly in the context of backlogs caused by COVID-19. To avoid delays in any recruitment plans, it is important that businesses start taking steps now to secure licensed sponsor status before the end of the year.
Applicants will also need to score mandatory points for being offered a skilled role (which must be at RQF Level 3 or above). This is essentially a role which requires the applicant to be educated at or above A Level standard. The employer is not able to decide which roles meet this standard; instead, the Government publishes lists of approved roles and their skill levels, and employers will need to determine where the roles fit within these lists.
Finally, applicants will need to demonstrate the required level of English language capability in order to score the mandatory points in this area. Again, this is an entirely new criteria for EU travellers coming to work in the UK.
Tradeable Points
Applicants must score a further 20 points in tradeable categories. This is based on their salary, whether the role is classified as a Shortage Occupation, and whether the applicant holds a PhD relevant to the role. Additional points can also be awarded where the applicant holds a PhD in a STEM subject relevant to their job.
If an applicant earns £25,600 per annum (p.a.) or the ‘going rate’ for the role (whichever is higher), they will earn all 20 additional points required. The going rate is defined by the Office for National Statistics and is published by the Government.
In all cases, the absolute minimum salary threshold for entry to the UK will be £20,480 per year, or at least 80% of the going rate for the role (whichever is higher). It will not be possible for migrants to enter the UK under the Skilled Worker route where they are earning less than this amount, no matter what other points they may earn in other tradeable categories. This includes those working on a part time basis, as the salary floor cannot be prorated based on part time hours.
If the applicant earns this minimum level, they will usually score no points for their salary and will, instead, need to make up additional points for example via their education qualifications or by taking up a job in a shortage occupation.
Where applicants earn at least £23,040 or at least 90% of the going rate, they will earn 10 points for their salary, and will need to make up the additional 10 points through their education or a shortage occupation role.
There are also some allowances made for ‘new entrants’ i.e. those who are starting off in their career with reduced salary thresholds although the absolute minimum of £20,480 p.a. must always be met.
Skilled Work: Health and Care visa
As part of the new Skilled Worker route, the Government has announced a special Health and Care visa. This will open to applicants from 4 August 2020 and will apply to specific occupations where the individual has a job offer from the NHS, the social care sector or an employer providing services to the NHS.
These applications will be fast tracked and will attract reduced visa fees. However, importantly, the skilled worker requirements will still apply, which means that applicants will need to meet the minimum skill and salary levels before applying. As such, there are significant concerns that this visa route will do little to address the needs of employers struggling to recruit in this sector.
The positives
On the positive side, the new visa regime brings some welcome relaxation to the current Tier 2 system:
- The skill level for sponsored roles is being substantially reduced from RQF Level 6 (equivalent to degree level) to RQF Level 3 (equivalent to A Level);
- The Resident Labour Market Test is being dropped in its entirety (which is the current requirement to advertise roles before sponsoring a migrant); and
- There will be no cap on the numbers of immigration applications (unlike the current limit of 20,700 per year, which applies to all applications subject to a Restricted certificate of sponsorship)
As such, employers looking to recruit non-EU nationals, and who are used to navigating the visa regime are likely to find it much easier to recruit than under the current rules. So, for example, sponsoring an Australian, US or Japanese national will no doubt be easier under the new proposals.
The negatives
On the negative side, the removal of free movement means many more employers will need to navigate the system to meet their recruitment needs. This poses particular challenges:
- Many more employers will need to hold a sponsor licence; they will have to pay the costs of applying for a licence and meeting the compliance requirements associated with holding sponsor status;
- The cost of recruiting EU nationals will increase greatly. All businesses looking to recruit under this route must pay the Immigration Skills Charge, which is essentially a flat tariff on recruiting non-UK staff of £1,000 per worker per year. This must be paid up front. This significant additional cost which will need to be factored into recruitment;
- EU nationals will face new limitations on the roles they can do and the salaries they can earn. This will pose particular problems in certain sectors with a high reliance on EU nationals in lower skilled/lower paid roles, for example, in the retail and hospitality sectors.
- There are significant restrictions on what sponsored employees are able to do. In particular, individuals are likely to need a new visa if they change employers, or if they have a significant change to their role. This is a major change for EU nationals who currently have no such limitations.
- The risk of non-compliance. A failure to comply could result in illegal working penalties, or the business’ sponsor licence being revoked. Where a licence is revoked, this would mean the business could not take on any new sponsored migrants (including those from the EU) and any migrants who were already sponsored would typically be given 60 days to leave the country (or find another employer to sponsor them).
These changes represent the biggest upheaval in UK immigration law in a generation. Businesses need to get to grips with the new system quickly in advance of next year and should take urgent advice about the implications of these changes on their plans and compliance obligations.
Our Business Immigration Team is highly experienced in helping clients with all of these issues. To find out more, please contact Laura Darnley or Brendan McAleese.
