Important changes for UK employers seeking to employ non-UK Nationals from January 2021

By Yuichi Sekine

02-2020

A wave of change is coming for UK employers seeking to employ non-UK nationals from Jan 2021

The Home Office has published its much awaited policy statement on the government's plan for a new points-based immigration system, which is expected to take effect from 1 January 2021. The statement has very significant ramifications for employers wishing to hire employees from the EU: they will need to take action now to ensure they are prepared for these changes. 

In essence, the policy statement confirms that the government will implement most of the recommendations made by the Migration Advisory Committee in their previous reports and introduce their own tweaks to the existing Tier 2 work visa route under the banner of a "new" points-based immigration system.

The proposed changes will impact employers differently depending on the sectors they operate in, the skill level of the workers involved and the level of their need for non-UK national migrant workers.

Employers with a sponsor licence will feel relieved that the overall immigration work visa requirements will be diluted and it will become much easier for them to hire skilled workers from outside of the UK.

The government will lower the overall threshold for the Tier 2 visa route from 1 January 2021 by introducing the following measures:

  • Removing the current annual cap under the Tier 2 (General) visa route
  • Lowering the skills threshold from RQF 6 to RQF 3
  • Eliminating the resident labour market test

However, the policy statement is bad news for employers without a sponsor licence as they will need to apply for one in order to hire EU nationals from outside of the UK from 1 January 2021. This will create significant disruption for all employers who rely on migrant workers from the EU who have yet to apply for a licence. The surge in sponsor licence applications will create a bottleneck for UK employers wishing to source skilled workers from outside the UK.

Worryingly, there is also no mention in the policy statement of the previously promised streamlined system for employers when interacting with the Home Office to sponsor migrant workers from outside of the UK. There is no mention of a new sponsor licence system being introduced for SMEs, for example. This is likely to exacerbate delays.

Employers without a sponsor licence are therefore urged to act immediately to apply for a sponsor licence, as their source of skilled labour from outside of the UK will be cut off in the next 10 months and the process of obtaining a licence is likely to be lengthy.

Employers with a sponsor licence should also be taking steps to prepare for the changes. We recommend conducting a meaningful forecast of your talent pipeline, as we expect there to be a further delay to the Home Office’s standard processing time of 14-18 weeks to grant additional allocations for sponsorship of migrant workers.

Other key takeaways from the policy statement

We have set out below some of the remaining key provisions from the policy statement.

Medium to high skilled workers There are no fundamental changes to the current Tier 2 (General) worker route. However, applicants must score a combination of 70 points under "mandatory" and "tradeable" attributes in order to qualify. Applicants can score 50 points by possessing the following mandatory attributes: (1) having a job offer from an employer holding a sponsor licence; (2) intending to engage in a skilled job at or above RQF 3 level; and (3) meeting the requisite English language requirement. The remaining 20 points can come from "tradeable" attributes, such as a higher salary or higher academic qualification. For example, applicants with a salary offer of £25,600 or above can score 20 points. The minimum salary cannot go below £20,480 under any circumstances. This new approach introduces more flexibility in the system by allowing an individual with a shortage occupation job offer to score 70 points and obtain a Tier 2 visa with a minimum salary of £20,480. If implemented, this flexible salary scoring system will allow individuals engaging in shortage occupation job with low salary to qualify for a Tier 2 (General) visa. We await the publication of detailed Tier 2 policy guidance to illustrate how the tradeable points will work in practice.
Low skilled workers

If implemented as stated in the policy statement, the new Immigration Rules will revolutionise the composition of our workforce in the UK. Those with highly-skilled and medium-skilled jobs will be prioritised at the expense of low-skilled workers.

In contrast to the approach taken by Theresa May's government, this government has eliminated the proposed low skilled worker route. This draconian policy may not work in practice as it fails to recognise the lead time needed by employers who have traditionally relied on EU migrant workers to change their staffing model. Such employers now have only 10 months to wean themselves off their reliance on EU workers and find replacements, which is likely to be a challenge in an economy with an unemployment rate of 3.8% (Feb 2020).

Sectors which rely on abundance of cheap labour from the EU will feel a major impact. From 1 January 2021, employers will need to look further to source their low skilled workers. It is expected that individuals with a Youth Mobility Scheme visa, spouse visa, Tier 4 visa and Tier 2 dependant visa will be in high demand.

Unless additional special schemes are introduced (e.g. for agricultural workers) to alleviate the disruption that will inevitably come from the elimination of the low skilled workers route, we foresee the public feeling the negative effects of a deterioration in service in the food, retail, social care, health and construction sectors.

Visa process There will be a more streamlined visa process for EU nationals applying for a Tier 2 visa. It is envisaged that they will not need to enrol their biometrics at a visa application centre when they apply for a Tier 2 visa. Instead, they will be able to rely on a system similar to the EU Settlement Scheme where their biometric information can be captured using an "app". Non-EU nationals will continue to be required to attend a visa application centre to submit their Tier 2 visa applications.
Visitors The government has confirmed that EU nationals can continue to come to the UK as visitors without having to applying for a visa in advance. They can also continue to use e-Gates for the foreseeable future until this unilateral policy is reviewed subject to further negotiations with the EU.
Legal right to work

For those EU nationals who are residing in the UK as of 31 December 2020, they must apply under the EU Settlement Scheme by 30 June 2021 to preserve their continuing right to work in the UK.

Eligible EU nationals who have not applied under the EU Settlement Scheme between 1 January 2021 and 30 June 2021 can continue to use their passports and national ID cards for legal right to work purposes. This is a welcome change from the government’s previous position.

Although freedom of movement ends as of 31 December 2020, there is a six-month gap during which eligible EU nationals who have not applied under the EU Settlement Scheme are indistinguishable from EU nationals who arrive in the UK for the first time on or after 1 January 2021.

This new transitional arrangement is likely to create confusion amongst employers who must determine if their new EU national recruit falls under the EU Settlement Scheme or under the new points-based system.

It is unclear whether an employer will be liable for civil penalties if they hire an EU national between 1 January 2021 and 30 June 2021 based strictly on their representation that they have yet to apply under the EU Settlement Scheme, if that information turned out to be false. Employers are advised to tread very carefully during this period as issues could easily arise with unscrupulous applicants.

The policy statement is unclear on the risk to employers if they recruit EU nationals who appear to qualify under the EU Settlement Scheme but whose application fails after the registration deadline of 30 June 2021, as they will not have a continuing right to work in such circumstances.

Summary

Employers must act swiftly in the next 10 months to prepare for these drastic changes in the Immigration Rules.

Those employers without a sponsor licence must consider whether they would need a licence to expand their operations in the near future. Employers with a sponsor licence must take action to prepare for the surge in EU national employees who must be sponsored. This will involve budgeting for the additional work visa cost, setting the expectations of the relevant businesses and training HR on the legal “right to work“ implications.

After a long period of uncertainty, there is a clear vision of where the government is headed. Regardless of its shortcomings, employers must be prepared to survive the confusion and delay caused by implementing the most significant changes to the Immigration Rules in a generation.

We have an expert team of lawyers capable of assisting clients on all aspects of business immigration, including sponsor licence applications, Tier 2 work visa applications and compliance advice. For more information please contact our Head of UK Business Immigration, Yuichi Sekine.