This article from Neil Jennings of Lewis Silkin LLP explores the debate surrounding the effect of migration on employment and skills in the UK. 

Public perception and political debate about immigration might be more deep-rooted than money alone, but the fact is clear: if you are not from the European Economic Area (EEA) and are coming to work in the UK, it is more expensive than ever.  The Home Office is also tightening its compliance grip, particularly on industry sectors that traditionally pay less.  Companies face unannounced compliance audits and stand to lose their sponsor licences and sponsored workers should paperwork not be up to scratch.   

Immigration has had a dramatic impact on the UK labour market over the last decade.  Higher levels of immigration in the UK have been accompanied by a plethora of changes in immigration policy by successive governments and increasing debate about the effect of migration on employment and skills in the UK. 

As a result of the latest raft of changes in relation to highly skilled migrants from outside the EEA, employers in the UK currently struggling to fill skills shortages are facing an increasingly hostile immigration environment. 

Show the Home Office the money!                                     

For companies who sponsor Tier 2 migrants (highly skilled employees), increased salary requirements, rising application fees, and other additional costs such as the Immigration Health Surcharge (IHS) mean that sponsors might now think twice before making the job offer.  Larger companies offering high salaries are much more likely to be able to afford sponsorship.  The Home Office is pricing migrant talent out of the reach of smaller companies. 

The IHS fee is perhaps the most noticeable financial levy that the Government has introduced.  This amounts to £200 per year per applicant.  The whole amount is payable in one lump sum before the visa application has been granted.  Since 6 April 2016, this has extended to Australia and New Zealand nationals – see here.  In addition to this, applicants also need to pay to have their degree certificates verified by UK NARIC for the purposes of meeting the English language requirements.  Previously, this was a simple and free online verification check. 

In context, a highly skilled worker from outside the EEA coming to work for 5 years with a partner and two children will cost close to £9,000.  This does not include additional extras, such as priority processing fees.  It is unlikely that applicants will have this money saved to use for visa applications.  Employers usually foot the bill.   

Home Office statistics show that, despite the above measures, the number of highly skilled migrants (who are also eligible to pay the IHS) increased by around 14% between December 2014 and December 2015 – see here for further details.  The majority of this increase can be attributed to the four largest sponsoring sectors, including Information and Communication, Professional Activities and Financial and Insurance Activities.  The take-home message from this is that the bigger industry sectors pay higher salaries to highly skilled and trained individuals, and are willing and able to invest more in bringing in people with the right skills for the job from outside the UK.  On the flip side, many companies that operate in the hospitality and leisure sector will struggle to justify the increased spend on hiring from outside the EEA. 

With the possibility of an ‘Immigration Skills Charge’ in the near future, and minimum salary requirements increasing also, it looks set to be increasingly difficult for migrants and employers to show the Home Office the money. 

Primus inter pares – first among equals

Financial exposure is not the only reason that sponsors have begun to tread more carefully when hiring non-EEA migrants.  More recently, the Home Office has made it implicitly clear that certain industry sectors are firmly in its cross-hairs when it comes to compliance with sponsor duties. 

All sponsors must absolutely comply with their duties.  This is one of the conditions of making an application to be placed on the register of sponsors.  However, even though sponsor compliance applies equally across the board, the application of scrutiny appears to be focused more on industry sectors which typically pay lower salaries to their employees.  One of the more recent changes makes it a mandatory ground to revoke a sponsor licence if the Home Office thinks the job role performed by a sponsored migrant is not genuine.  This includes artificially inflated job descriptions where the sponsor informs the Home Office that the migrant will perform a certain role and certain tasks, but the individual’s actual day to day role falls short of Home Office expectations. 

George Orwell captured it well in his 1945 novel Animal Farm – “All animals are equal, but some animals are more equal than others.”  Perhaps some sponsors are more equal than others. 

What is to come? 

Over recent years, migration has been one of the biggest drivers of workplace change.  It remains to be seen how the Government will respond to the Migration Advisory Committee’s report into highly skilled migrants.  The Immigration Skills Charge was one recommendation, in addition to increased salary requirements.  Even though certain industry sectors are at more risk, it still remains possible that other sectors will be targeted.  Immigration Minister James Brokenshire has indicated in parliament that some recommendations will be phased in – see here for more details. 

Cumulatively, recent changes and associated costs will have a significant impact on the ability of employers to recruit non-EEA workers to fill highly skilled vacancies and may well influence their recruitment behaviour.  Employers who can absorb the additional costs will continue to be in a better position to sponsor highly skilled migrants.  But additional fees such as the Immigration Skills Surcharge might be the straw that breaks the camel’s back and the reason that some non-EEA nationals cannot obtain sponsorship. 

Attracting and retaining the right talent is critical to business success and economic growth.  Future changes may well prompt renewed focus on how best to balance the need to invest in the UK workforce and up-skill existing employees against attracting skilled migrants from an increasingly global talent pool.

By Neil Jennings, Lewis Silkin LLP


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