A Y & J Solicitors’ Yash Dubal provides insight on what the business owners need to know regarding the future of immigration – why this is the best time to get ahead of the curve and plan your finances.
UK immigration is about to undergo a fundamental change, heralded by the new law which introduces a post-Brexit immigration system. MPs gave their initial approval to the changes earlier this month (19 May). The House of Commons approved the general principles of the law by 351 votes to 252. It will now go on to receive further scrutiny.
Under the new regime, freedom of movement into the UK by EU citizens will be rescinded and replaced by a points-based system applicable to everyone from overseas who plans to work and live in Britain. In essence, the legislation puts EU and European Economic Area (EEA) citizens on an equal footing to immigrants from outside the bloc. The government hopes the new rules will create a “high skill” economy.
Reaction has been mixed. Many Brexiteers welcome the changes, while others argue they will affect the ability of care workers and other migrants to come to the UK, leading to key shortages. The corona virus pandemic has also added a layer of complexity. International travel is still largely at a standstill and no one knows when that will change or what restrictions will remain. The government has announced some transitional arrangements, such as visa extensions for those who cannot leave the UK because of travel restrictions. Some frontline health workers and their families will also get automatic visa extensions.
Start the financial planning now to hire overseas workers
Despite the uncertainty however, businesses who employ workers from the EU and beyond, or who plan to do so in the future, would do well to start planning now. Figures show that less than 30,000 of the UK’s employers are approved to employ foreign workers. With 1.4m British businesses employing people in 2019, this means only a tiny percentage are geared up to take advantage of the global personnel market.
Understandably, energies are currently directed towards responding to the pandemic, and will be focussed on recovery afterwards. Yet year-end will come soon enough and with it the end of free movement, which could leave those who are unprepared struggling to find workers, or on the wrong side of new immigration rules that require employers to become approved sponsors before they can employ overseas workers.
What is certain is that migrants will still be needed to fill positions in the UK and they will still benefit employers in many ways. I have been helping businesses secure visas for migrant workers for over a decade and clients report that migrants are generally more reliable, more productive and more focused on the job. The vast majority of those who come to the UK to work have a desire and a need to make a better life for themselves and their families, particularly when they come from less well off backgrounds and/or travel many miles from their home country to the UK.
Immigration and visa rules and regulations
From 1 January 2021, anyone coming to the UK to work will need to demonstrate that they have a job offer from a Home Office approved sponsor, that the job offer meets the required £25,600 salary threshold at the required skill level (generally A Level and equivalent) and that they speak English. The salary threshold can drop to a minimum of £20,480 if the job offer is in a specific shortage occupation or the applicant has a PhD relevant to the job. There is no cap on the number of people who can come to the UK through this ‘skilled worker route’, which is designed to attract a wide pool of skilled workers from anywhere in the world.
In order to benefit from the global skills pool, businesses need a Home Office licence. There are several requirements and considerations. Employers also need to consider what type of worker they want to sponsor. There are two main categories of visa for skilled workers: Tier 2 for long-term job offers, and Tier 5 for skilled temporary workers.
Applications for a licence can be made through the Home Office website. However, the process is cumbersome, and many employers prefer to let legal experts prepare the application for them.
In order to get a sponsor licence, businesses must demonstrate they have:
- The necessary systems in place to comply with Sponsor Licence duties and responsibilities.
- No past convictions or breaches in immigration or any other area of law.
- No history of breaches of UK Visas and Immigration’s (UKVI) sponsorship duties.
Applicants for Tier 2 sponsor licences can expect a visit from a UK Visa and Immigration (UKVI) compliance officer to check there is a genuine need for a licence and to ensure correct systems are in place to manage sponsored workers. The officer also checks that the application details are accurate.
If successful, businesses are then obliged to maintain an ongoing compliance system which involves:
- Updating the Sponsorship Management System (SMS). This is an online system provided by UKVI.
- Keeping records of checks undertaken. These include verifying foreign workers have the necessary skills, qualifications, and professional accreditations.
- Conducting a Resident Labour Market Test (RLMT) to ensure no settled worker can fulfil the role.
- Ongoing monitoring of sponsored employees, including attendance and changes in contact details.
- Advising UKVI of any non-compliance by sponsored workers.
Sponsor licence holders are also required to appoint individuals to key roles. They need an authorising officer, a key contact and someone to undertake day-to-day management of the SMS.
Costs for visas and hiring overseas
There are several financial implications to becoming an approved sponsor, which need to be weighed up against the advantages of hiring staff from overseas. As at May 2020, licence fees for small businesses and charities cost £536 per year, rising to £1,476 for medium and large sponsors (small businesses are classes as those with an annual turnover is £10.2 million or less with 50 employees or fewer).
There are some exceptions to some of the fees (for example, those who are switching between Tiers and Tier 4 students) but these are the main ones that will apply to most workers.
Once approved, sponsors can issue a certificate of sponsorship, or CoS, to workers they wish to hire. The worker then uses the CoS to apply for their visa. The cost of issuing each certificate is £199.
There is also an Immigration Skills Charge which is essentially a tax levied on businesses for employing foreign workers. For a small or charitable sponsor, the Immigration Skills Charge is £364 for the first year and £182 for each additional six months. For a medium or large sponsor, the charge is £1,000 for the first year and £500 for each additional six months.
Fees are also levied on migrants. Visas up to three years in a non-shortage occupation are £610 and £1220 over three years. Visas up to three years in a shortage occupation are £464 and £928 for more than three years. There is also a controversial Immigration Health Surcharge on top of the application fee of £624/per year/ per person OR £470 per year/per child under 18 years old. Family members accompanying migrants are also required to pay the outlined fees. Before sponsorship goes ahead, I would always urge employers to check with the individual whether they have family and to reach an agreement as to who will bear the relevant costs. The sponsor can, for example, agree that the worker will pay their own application fee and Immigration Health Surcharge. Sponsors cannot however, lawfully pass the Immigration Skill Charge on to individuals. The licence fee must also be paid by the sponsor.
Overseas recruitment, the main points
As you can see, there are many considerations to bear in mind and the situation can be complex. The benefits to business of using overseas workers however, are well-established and with a change in regulations, complicated by the corona virus, it makes good business sense to start planning now.
5 key considerations:
- Recruitment consultant’s fees
- Shortage of skillset in the UK
- Company policy around paying visa fees for the overseas worker and their family
- Cost of visa application fees
- Timeline to recruit the right staff
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