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The new post-Brexit sponsorship system

Posted on 8 February 2021

On 31 December 2020, the free movement of workers from the EU to the UK came to an end. This means that EU nationals wishing to commence living and working in the UK from 1 January 2021 are no longer able to do so without a visa which permits the work in question.

To take account of the loss of workers from the EU, in December 2020 the Government made changes to the existing Tier 2 work sponsorship system in a bid to make it more flexible and wider-reaching. Most crucially, the skill level for sponsored workers has been lowered from degree level to school leaver level and the onerous and time-consuming Resident Labour Market Test, which dictated that companies advertise for at least a 28-day period in two locations and keep strict records of the advertising process, has been relaxed. However, despite these seemingly positive changes, the lower skill level may still mean that some industries such as retail, hospitality and leisure will be unable to sponsor required workers.

Under the new system, the Tier 2 (General) visa category has been replaced by the Skilled Worker visa category and the Tier 2 (Intra Company Transfer) visa category was replaced by the Intra Company Transfer ("ICT") visa category. Companies which already hold a Tier 2 Sponsor Licence do not need to take any action as their sponsor licences will automatically convert to the new system and so now action is required to transfer your licence to the new system.

Although the terminology and some qualifying criteria for each visa type changed, the mechanism for sponsorship still requires a Certificate of Sponsorship ("CoS") to be assigned to the migrant worker before the migrant workers makes an application for a Skilled Worker or ICT visa.  As with the Tier 2 system, under the new sponsorship regime there are two types of sponsored worker:

1) Skilled Worker
The requirements for a Skilled Worker visa are as follows:

  • Genuine role: The role must be genuine and evidence of this must be retained by the company. This can include evidence of your recruitment for the role and so even though the Resident Labour Market Test has been removed, it is still important to keep evidence of your recruitment campaigns;
  • Skill level: The role must be deemed by the Home Office to be an A-level role or above (Regulated Qualifications Framework (RQF) level 3);
  • Minimum salary requirement: The minimum salary requirement of £25,600 per annum (or the "going rate" for the role, whichever is higher) must be met. In limited circumstances it may be possible for the minimum salary to be lower but no lower than £20,480 per annum;
  • English language requirement: This can either be met if the migrant has a degree recognised by the Home Office as having been taught in English, the migrant is a national of an English speaking country, the migrant has passed an English language test at an approved test provider showing a knowledge of English equivalent to level B1 or above of the Council of Europe's Common European Framework for Language Learning or the migrant has a GCSE, A-level or Scottish Higher in English language or literature.
  • Applicants who hold a Skilled Worker visa can apply for indefinite leave to remain ("ILR") after five years in the UK in this visa category (this can be combined with time spent in the UK as a Tier 2 (General) visa holder as well as some other limited visa categories). To qualify for ILR, the Skilled Worker must not be absent from the UK for more than 180 days in any 12-month period during the qualifying period for ILR. For any visa granted to a dependant partner of a Skilled Worker visa holder on or after 11 January 2018 which will form part of the dependant partner's five-year qualifying period for ILR, the dependant partner must also not be absent from the UK for more than 180 days in any 12-month period from the start of the visa granted on or after 11 January 2018 until the ILR application is submitted. The absences of dependent children will not be counted as part of an application for ILR.

2) Intra Company Transfer

The ICT visa route is for existing employees of entities outside of the UK which are connected to the company in the UK by way of common ownership or control whose specialist skills are required by the company in the UK. The purpose of the ICT visa route is to accommodate temporary moves by key personnel, enabling multi-national companies to move their workers between subsidiary branches.

Ordinarily, the migrant worker will need to have worked for the entity overseas for at least 12 months prior to making the application.  

To apply for this visa, the role in the UK must be deemed by the Home Office to be at least a degree level (RQF level 6) role and the minimum salary is £41,500 per annum (or the "going rate" for the role, whichever is higher).

As with the Tier 2 (ICT) visa category, the ICT visa route does not lead to ILR. ICT visa holders can spend a cumulative period of five years in the UK in any six-year period as an ICT visa holder, unless they earn over £73,900 in which case they can stay for a maximum of nine years in any ten-year period in this visa category. However, unlike the Tier 2 (ICT) visa category, the new system will allow ICT visa holders to switch into the Skilled Worker visa category, either with their current sponsors or for a new sponsor.  Once in the Skilled Worker visa category, the employee will be able to start accumulating time towards an ILR application.

As soon as you have assigned the CoS then the applicant's application for leave to enter or remain in the UK visa application can be submitted. It is not always possible for an applicant to switch from another visa route into the Skilled Worker visa category from within the UK, and therefore in some circumstances the migrant worker may need to make the application from their country of origin. Applicants can continue to bring their spouse and children (under the age of 18) to the UK as their dependants, but will need to demonstrate that they have sufficient funds to maintain and accommodate their family in the UK.

EU nationals in the UK before 1 January 2021

EU nationals who were living in the UK on or before 31 December 2020 continue to have a right to work without the need for a work permit, but they will need to apply to the Home Office under the EU Settlement Scheme for Settled Status (permanent residency), if they have been here for at least five years, or Pre-Settled Status if they have been here for less than five years.  Pre-Settled Status will be granted for a period of five years and so those who are granted Pre-Settled Status will have a time limit on how long they can remain in the UK.

The deadline for making the application under the EU Settlement Scheme is 30 June 2021 and failure to make the application in time will lead to the EU national being illegally in the UK without a right to work, regardless of how long they have been in the UK or if they hold documentation issued under EU Regulations.

What companies need to do:

  1. Apply for a Sponsor Licence: Companies that need to hire from outside of the UK will need a sponsor licence granted by the Home Office to sponsor workers in the UK. As such, if you do not already have a sponsor licence, apply for one to ensure you are ready to sponsor workers if required.
  2. Recruitment campaigns: Ensure you are keeping good records of all recruitment campaigns including copies of advertisements or instructions to recruitment agencies or headhunters. Under the new system, the Home Office will look at recruitment in general as well as recruitment for the role of the sponsored worker and therefore it will be important to demonstrate consistent recruitment practices.
  3. Protect your business: EU nationals who are eligible to apply for status under the EU Settlement Scheme must do so by 30 June 2021. Failure to apply will result in the EU nationals being illegally in the UK with no right to work. This places a risk on employers who can be fined up to £20,000 per illegal worker. It is therefore important to mitigate against such risk by conduction a full audit of your workers in the UK to identify employees who will need to obtain Pre-Settled or Settled Status under the EU Settlement Scheme before 30 June 2021.
  4. Help your current EU workforce: The end of free movement is an emotive subject for many and especially so for EU nationals in the UK before 31 December 2020 who are now facing a time limit on how long they can remain legally in the UK. While employers cannot discriminate against EU nationals and demand that their EU-national workers make applications under the EU Settlement Scheme, you can communicate the requirement to your workforce so that they are aware of the deadline and the implication failure to apply brings.
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