UK employers should carry out a Brexit impact assessment and review their recruitment and retention policies as a matter of urgency in light of forthcoming changes to the country's system of immigration.
The UK government's plans for reform aim to reduce migration to the UK, end free movement of people into the country from the European Economic Area (EEA), and prioritise migrants with the highest skills and greatest talents.
However, there are potential implications for some sectors of the economy that already experience skills shortages. It is therefore imperative for employers to understand how their operations might be impacted by the changes, which are scheduled to take effect from 1 January 2021.
Full details of the proposed legislation are expected to be published in March 2020. Migrants look set to be able to apply for the right to stay and work in the UK under the new system from this autumn.
What is changing: overview
Despite being heralded as the introduction of a new points based system (PBS) of immigration, the proposals essentially tinker with the UK's existing system. The UK already operates a PBS via the Tier 2 General scheme, which is often utilised by non-EEA nationals with a job offer for highly skilled work coming to the UK. Under the new plans, the PBS will apply to EEA nationals too, bringing to an end the current system of freedom of movement much more abruptly than many hoped.
Some relaxations to skill and salary requirements, the points needed for a visa and abolishing the resident labour market test will be welcomed, although the real beneficial impact of them for employers remains to be seen.
The most significant impact will be on the recruitment of EEA nationals to the UK. It will be more complex, expensive and time-consuming to recruit such individuals, and in some cases impossible.
Crucially, the PBS does not currently permit non-EEA nationals to enter the UK for low-skilled work – these new plans also do not cater for such workers.
There is no temporary route to avoid a cliff edge scenario for businesses, as was previously promised by Theresa May's government. This is a significant concern for affected businesses and the impact should not be underestimated on the care, hospitality, food processing and retail sectors, all of whom already face skills shortage. The knock-on effect could be widespread, including in many business supply chains. The government wants businesses to reduce reliance on such workers and instead invest in "staff retention, productivity, and wider investment in technology and automation".
What is changing: the details
A summary of what is to change in the PBS is set out below:
|
Issue |
Current position |
New rules |
Comment |
|
Nationalities covered |
Non-EEA only |
Non-EEA and EEA nationals as of 1 January 2021 |
This was expected, although we assume that in the event that the current transition period is extended, that will impact the implementation of these proposals. The government announcement does not address this though. |
|
Minimum salary threshold for Tier 2 General (no proposed changes to Tier 2 Intra-Company Transfer rates confirmed) |
£30,000 p/a (£20,800 p/a for new entrants) |
£25,600 (£17,920 p/a for new entrants) |
Migrants will still need to be paid the higher of the salary applicable to their specific occupation or the general threshold. Accordingly whether this will have any real impact will depend upon the level at which occupation-specific salaries are set. For certain jobs, points for salary and qualifications will be tradeable, effectively allowing certain roles paying below the minimum threshold to qualify. The plans do not provide for any regional salary variations. |
|
Cap on Tier 2 General migrants |
20,700 per annum |
Cap abolished |
These changes will be welcomed by those familiar with the PBS. |
|
Resident labour market |
Most Tier 2 General roles must first be advertised to the resident labour market and only offered to a migrant if a suitable settled worker cannot be found |
Resident labour market test abolished |
|
|
Points required for visa |
Tier 2 General migrants currently require 70 points as follows:
|
Tier 2 General migrants will still need 70 points: - some of which will be tradeable (as underlined below)
|
This added flexibility will be welcomed and additional points for shortage occupations may help address some shortages (with the shortage occupation list to remain under review). Further tradeable attributes are expected to be built into the system over time. It is assumed these changes will apply to Tier 2 General only (not intra-company transfers). |
|
Skill thresholds for Tier 2 sponsorship |
RQF 6 - i.e. degree level |
RQF 3 i.e. broadly equivalent to completion of secondary education |
Whilst this relaxation will be welcomed, this does not include lower skilled work as noted above, which is a significant issue for affected sectors. Further, the minimum salary requirements could rule out many roles, even if they would now qualify on a skills basis. |
|
Immigration skills charge |
Currently payable in respect of most sponsored migrants: £1,000 p/a (lower charge applies to small/charitable sponsors) |
This will remain payable. |
The proposals do not signify an increase in these charges, despite previous indications to the contrary. |
|
Immigration health surcharge |
Currently payable by sponsored migrants at point of visa application: £400 p/a (lower charge applies to students) |
This will remain payable. |
The plans do not yet provide for any new non-sponsored routes for those without a job offer in the UK. However, options around this are expected to be explored later this year. In the absence of anything specific, this will leave those EEA nationals entering the UK on a self-employed/freelance basis with very limited options.
The plans include expansion of the trial seasonal agricultural workers' scheme, which is to increase from 2,500 to 10,000 visas per year, but this is unlikely to be sufficient comfort for a sector that currently brings in between 60,000 and 70,000 workers annually.
The government has not yet announced any changes to the right to work checks employers are required to complete. However, given the changes for EEA migrants coming in 2021, we expect the position on this to be amended.
What employers should do now
Imminent recruitment needs
If you know you need EEA nationals in particular roles in the UK which, come 2021, will require sponsorship or indeed may not be eligible for a UK visa at all, there are strong arguments for expediting that recruitment. Those in the UK by 31 December 2020 will be eligible to apply to remain under the EU Settlement Scheme and avoid these changes biting.
For those who cannot be expedited and will require Tier 2 sponsorship, employers should begin considering the eligibility of such roles, and individuals, for sponsorship under the new requirements. Some may be able to apply in advance as of autumn this year.
Reliance on lower-skilled EEA nationals
Under the new system, lower-skilled EEA nationals will not qualify for sponsored visas. Accordingly, employers should:
- complete a Brexit impact assessment if they have not already done so, to consider the impact the impending end of free movement will have on your existing and future workforce;
- communicate with their existing affected workers and encourage and support them to apply under the EU Settlement Scheme to remain – those in the UK by 31 December 2020 have until 30 June 2021 to apply and, therefore, secure their right to remain;
- review their recruitment and retention practices – can you source the workers you need from the settled UK labour market? Time is now very tight to come up with contingency plans to ensure operations continue smoothly.
Reliance on EEA nationals in roles skilled enough for sponsorship
The PBS will apply to EEA nationals in roles skilled enough for sponsorship individuals from 2021. If you have until now avoided the PBS regime, you may well find yourself needing to obtain a sponsor licence to recruit the talent you need come 2021. We expect there to be a surge in licence applications in the coming months, which may naturally impact upon processing times. We recommend if not licensed already, employers act on that now so they are in a good position to hire the talent they need from 2021.
Similarly, for those already licensed, reliance on that sponsor licence is likely to increase from 2021 given the broader pool of migrants subject to the PBS. Licensed sponsors are subject to extensive compliance obligations – now is the time to conduct an audit and health check to ensure all is in order, practices and procedures are sufficiently robust and teams are appropriately trained on applicable requirements.
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