What do the proposed immigration changes mean for employers who recruit from overseas?

We consider how the UK’s immigration system will operate come 2021 and discuss how employers can best prepare

21 July 2020

New Home Office statement on the UK’s pointed-based immigration system

On 13 July 2020 the Home Office published a statement setting out further detail on how the UK’s immigration system will operate after freedom of movement ends on 31 December 2020. 130 pages in total, the latest statement builds on the detail set out in the Policy Statement issued on 19 February 2020 and is broadly divided into those 'coming to work', 'coming to study', 'coming to visit' and 'other immigration routes'. Here we consider what this statement means for employers who recruit from overseas and in particular EU, EEA or Swiss nationals (whom we collectively refer to as 'EU' nationals). We also set out our key recommendations on what employers should be doing now in order prepare for these changes before they come into effect on 1 January 2021.

How does the current system operate?

Currently, EU nationals (and certain other categories of individuals, such as relevant family members) have the freedom to live and work in the UK without a visa and, whilst employers need to check their right to work in the UK, this is straightforward and is typically done by checking the migrant’s passport or national identity card. EU citizens already living in the UK prior to 31 December 2020 can continue to rely on these documents as evidence of their right to work in the UK until 30 June 2021. However EU citizens and their family members who want to stay in the UK beyond June must make an application under the EU Settlement Scheme ('EUSS') before 30 June 2021 and be awarded either 'pre-settled' or 'settled status' in order to retain the right live and work in the UK. For further information on the EUSS please see: What you need to know about the EU Settlement Scheme.

Non-EU nationals cannot work in the UK unless they have a visa and are 'sponsored' by their employer. Therefore, employers wishing to recruit non-EU nationals must hold a sponsor license in order to employ them. Employers who currently do not have a sponsor licence but who will want to recruit from outside the UK from January 2021 will need to apply for a sponsor licence. Applications must be made online and as part of the application employers must pay the relevant fee and enclose the correct supporting documents .

Currently, there are two key types of work visa for those who do not have the right otherwise to work in the UK:

  • Tier 2 (General) – this route is available to highly skilled migrants with a job offer and who are able to speak English to an acceptable standard. The level of skill required to perform the role must be at RQF Level 6 or above, meaning degree-level or equivalent, and the role must meet the minimum salary threshold (£30,000 or the going rate for the job they’ve been offered, whichever is higher, subject to some limited exceptions). After five years in the UK under this visa, the worker can apply for permanent settlement. However, this route is being replaced from 1 January 2021 – see below.
  • Tier 2 (Intra Company Transfer) ('ICT') – this route is available to highly skilled migrants who are moving from an international branch/subsidiary of a company abroad to one within the same company in the UK for a period of up to five years (or nine years if they earn over £120,000 a year). Migrants must be paid a minimum salary (£41,000 for long-term staff or £23,000 for graduate trainees) or the going rate for the job - whichever is higher. This route does not lead to settlement (i.e. the migrant must return home after five or nine years in the UK (as applicable)). Whilst this route remains from 2021, changes to the way it operates are being implemented – see below.

What does the new statement say?

In broad terms, the latest statement echoes the information set out in the Policy Statement issued earlier this year. It confirms that from 1 January 2021 EU nationals will no longer benefit from freedom of movement. Anyone from outside the UK and Ireland coming to the UK after 1 January 2021 will need a visa if they want to work in the UK. Employers will need to hold a sponsor license in order to sponsor employees for these purposes.

What are the new immigration routes from 1 January 2021?

EU nationals arriving in the UK after 1 January 2021, or who have not applied under the EUSS by 30 June 2021, will need a visa in order to work in the UK. The two main work visa options for overseas migrants (including EU nationals) will be a 'Skilled Worker' visa (which will replace the current Tier 2 (General) visa) or a Tier 2 (ICT) visa. If an employer is found to employ a worker who does not have the immigration permissions necessary to work in the UK they may be subject to significant civil and criminal penalties, including fines and/or a period of imprisonment of up to five years.

The new Skilled Worker visa

The Skilled Worker visa is very similar to the current Tier 2 (General) visa summarised above. There are, however, a few important differences:

  • The skills threshold will be lowered from RQF Level 6 to RQF Level 3. Jobs categorised under RQF Level 6 typically require the jobholder to hold a degree-level qualification or equivalent, while those at RQF Level 3 typically require the jobholder to hold A level qualifications or equivalent.
  • The minimum salary threshold will be lowered. The current minimum salary threshold is generally the higher of £30,000 or the rate specified for the role. From 1 January 2021 this will be reduced to £25,600 or the 'going rate' for that particular job (whichever is the higher). As before, there will be exceptions to this – for example certain roles in the NHS or in the education sector, or if the individual has a PhD in a STEM subject relevant to the job. Where an exception applies, the worker must still be earning a minimum of £20,480.
  • In a move which will be welcomed, employers will no longer be required to advertise the role for 28 days in prescribed media to give UK-based workers a chance to apply for the position first (known as the Resident Labour Market Test). However, employers cannot simply create a new role just to bring someone into the UK – they will still need to have a genuine vacancy.
  • The annual cap on the number of Tier 2 (General) visas which can be granted will be removed, meaning that there will be no limit on the number of Skilled Worker visas which may be granted under the new system.

Tier 2 (ICT)

Under the new system, the Tier 2 (ICT) route will be maintained. As is currently the case, workers will need to be highly skilled (at RQF Level 6 or above) and the route will not lead to settlement. However, the latest statement sets out some changes:

  • The 'cooling off' rules, which were designed to stop people from abusing the system in order to gain settlement in the UK, will be relaxed. Currently, migrant workers cannot apply for a Tier 2 (General) visa if they have had leave as a Tier 2 (ICT) migrant in the past 12 months. This was the case even if the Tier 2 (ICT) migrant had only come to the UK for a few months. Under the new system, the cooling off rules will only apply if the individual has had more than five years’ leave under Tier 2 (ICT) in any 6 year period.
  • After a Tier 2 (ICT) migrant finishes their five years in the UK, they can 'switch' into a Skilled Worker visa, provided they meet all the relevant eligibility requirements, without leaving the UK. Currently this is not possible and the migrant would have to leave the UK, wait a year (the 'cooling off period') before they can apply for a Tier 2 (General) visa which would then lead to settlement.

What does this mean for employers who will recruit overseas nationals on and after 1 January 2021?

Unless the migrant has an alternative route of entry, employers will need to sponsor the migrant through either the Skilled Worker or Tier 2 (ICT) visa routes. This will significantly increase the time it takes to recruit (arranging sponsorship through these routes can take several months) and it can be expensive; employers will need to pay a fee to assign a Certificate of Sponsorship to the migrant (£199) and the Immigration Skills Charge (£1,000 per migrant per year of sponsorship). The migrant will also need to pay for the visa itself (costing between £409 and £1,480) and the Immigration Health Surcharge (currently £400 per year but increasing to £624 per year from 1 October 2020). These fees are in addition to any fees the employer may need to incur in applying for or renewing a sponsor license if required (costing up to £1,476).

What should employers be doing?

You should:

  1. Review your existing workforce. You should identify the number of EU nationals (and those who have the right to work in the UK by virtue of their relationship with an EU national) in your workforce. You should encourage those who have yet to do so to make their EUSS application. The application is free and can be completed online.
  2. Review your recruitment and global mobility strategy. You should examine how heavily your business relies on EU nationals and consider whether this approach remains viable, given the additional costs, time and resource involved in sponsoring a migrant under the Skilled Worker or Tier 2 (ICT) routes and maintaining a sponsor license. Your recruitment processes should be updated depending on the outcome of this review, although you should take care that your recruitment processes are not discriminatory.
  3. Apply for a sponsor licence (if you don’t already have one). If EU or other migrants will continue to make up part of your workforce, you will need to apply for a sponsor license as soon as possible. This will allow you to sponsor incoming migrants so that they can apply for a visa. It can take several months to apply for and obtain a sponsor licence. You should act now in order to safeguard against any potential business interruption in the event you do not have a sponsor license set up in time.
  4. Train staff and allocate internal resources. You should ensure that your employees who are responsible for recruitment are trained on the UK’s new immigration system so that they are prepared for when the changes come into effect on 1 January 2021. This training will be particularly relevant for those involved in recruiting employees to your business. It will also be important for those who will have overall responsibility for ensuring that your organisation complies with its sponsor duties to be familiar with the Tier 2 and 5 Guidance and Immigration Rules.

It may be tempting, with Coronavirus continuing to take centre stage, to put off the thinking on this for the moment. However, if your organisation relies on EU workers as a mainstay of your workforce you would be well-advised to invest time now to appreciate the implications of the changes and take action sooner rather than later to make sure you and your workforce are well-prepared. We are advising many of our clients on what the changes to the UK’s immigration system means for their businesses and how they can prepare. If you would like to know more, please do not hesitate to get in touch.

Key contact

Adrian Martin

Adrian Martin Partner

  • Head of Employment
  • TUPE: Business Transfers and Outsourcing
  • Restructuring and Redundancy

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