It is often said that the world is a small place. It is also often said that the United Kingdom (UK) is a service economy and no longer is it known for having strong manufacturing sectors. Consequently, many businesses in the UK struggle to recruit suitable workers and hence have to look beyond the UK's shores to secure the appropriate talents. Arguably, Brexit has not helped the situation because no longer do European Union (EU) nationals have the right to free movement to the UK. All of a sudden, EU nationals also require visas to live and work in the UK just like any other overseas nationals. We are constantly hearing of the challenges which the National Health Service (NHS) is experiencing what with the lack of doctors and nurses. Many other sectors including hospitality and catering are struggling.
If a business is looking to recruit foreign workers, then it needs to be in possession of a Home Office Sponsor Licence. The application is document heavy and very much front loaded. The Home Office position is very much that being in possession of a sponsor licence is a privilege and not a right. It needs to be borne in mind however that the ability to employ foreign workers also attracts many responsibilities and obligations on sponsor licence holders. They have to ensure that they have robust HR systems in place, undertake appropriate right to work checks, and ensure that they are abreast of Home Office rule changes (of which there are many). For businesses which fall foul of the regulations, the consequences can be very serious indeed. For those with a sponsor licence, they can find that their licence is revoked or downgraded in which case not only will they be under the radar of the Home Office but their sponsorship ability will also be reduced. The Home Office also have the power to issue civil penalties against businesses which are deemed to have employed workers unlawfully. The Government announced last year that employer fines for illegal working were to be increased from £15,000 to £45,000 for a first breach where an employee is found to be working without a valid visa or working in breach of their visa conditions. For subsequent breaches, the Home Office have now tripled the fine from £20,000 to £30,000 per employee and the increased fine applied to breaches occurring after 13 February 2024. Furthermore, employers are required to pay either a minimum salary of £26,200 or the salary noted in the occupation code, whichever is higher. From 4th April 2024, the salary threshold for new sponsor applicants is increasing from the current level of £26,200 to £38,700 gross per year.
Currently, the Home Office operate a shortage occupation list and any job on the shortage occupation list allows employers to pay a lower salary, subject to meeting the requirements of the rules. However, the Home Office have announced that from 14 March 2024, the shortage occupation list will be replaced with a new immigration salary list and this will remove the 20% going rate discount to the minimum salary for those roles contained within the shortage occupation list. Furthermore, currently, employers are allowed to pay a lower salary to new entrants i.e. recent graduates and candidates who are under the age of 26 at the time of application. At the time of preparing this article, the UK Government has not confirmed if the new entrant salary thresholds will continue to apply.
It also needs to be borne in mind that sponsoring foreign workers is an expensive business. For each sponsored worker, an employer needs to assign a Certificate of Sponsorship (CoS). This attracts a fee of £239.00. However, this is only the start of the journey. When assigning a CoS, an employer is also required to pay an Immigration Skills Charge and this can be up to £1,000.00 per year for large businesses. A visa fee also needs to be paid and this can be up to £1,500.00 if sponsorship is sought for 5 years. In addition, the Home Office also requires a contribution towards the UK's NHS. This is by way of an Immigration Health Surcharge. From 6 February 2024, broadly the rates increased from £624.00 per year to £1,035.00 per year and the lower rates for students and applicants under the age of 18 increased from £470.00 per year to £776.00 per year. The cost therefore can be quite significant.
It is not however all bad news. Once a licence has been granted by the Home Office, it is valid for a period of 4 years. However, the Home Office have now removed the need to renew a licence and it is extending eligible licence expiry dates by 10 years.
Immigration is no doubt, a fast changing area of law. Whilst there are many challenges for businesses, there are also many opportunities which flow from sponsoring foreign workers into the UK. However, bearing in mind the many changes on the horizon including from 4 April 2024, employers would do well consider the impact that the changes will have on their recruitment plans and especially in some sectors where salaries are traditionally lower, they may wish to consider bringing forward hiring practices for roles which potentially may not meet the increased salary threshold of £38,700.00. Sponsorship can be for a period of up to 5 years. Thereafter, a candidate can apply for indefinite leave to remain provided all of the requirements of the Immigration Rules are met. Employers may wish to sponsor candidates for the maximum duration possible and in this way, they can be safe in the knowledge that any changes which the Government bring into effect, will not retrospectively affect existing sponsored workers.
The reality is that what with the shortage of skills in the UK, employers will need to continue sponsoring workers into the UK despite the challenges which may be inherent in the immigration system.
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