UK: Cap On Economic Migration - 4 Months On

Last Updated: 22 September 2011
Article by Kathryn Dooks


On 6 April 2011, the Government introduced a cap on the number of non-EEA migrants who could come to work in the UK under Tiers 1 and 2 of the points based immigration system.

At the time, many employers feared that this would lead to a large skills shortage and make the recruitment of skilled workers (particularly in the IT sector) much more difficult for them.

However, given the anecdotal evidence from the UK Border Agency about the take-up of the "restricted" certificates of sponsorship for Tier 2 visas, these concerns may have been overstated.

How the cap works

The Points Based System was originally introduced in 2008 and consolidated over 80 different routes to work and study in the UK into five "tiers". Tiers 1 and 2 are the most relevant for employers.

Tier 2

Tier 2 applies to migrants with a specific job offer from an employer who is licensed by the UK Border Agency. The employer uses an electronic "Sponsor Management System" to apply for a certificate of sponsorship for the individual employee, which the employee then uses to obtain a visa.

From April 2011, the government imposed a cap of 20,700 "restricted" certificates of sponsorship for Tier 2 for the year 2011/2012. The limit does not apply to (inter alia):

  • in-country applications by those already in the UK;
  • Tier 2 applicants who are filling a vacancy with a salary of more than £150,000; and
  • Tier 2 (Intra company transfer) applicants.

Tier 1

Tier 1 used to be a helpful category for job seekers or for employers wishing to avoid the formalities of Tier 2. No job offer is required (the individual can use the visa to come to the UK to look for work and can work for a number of employers whilst they are here) and the employer does not need to be licensed with the UK Border Agency.

However, the scope of Tier 1 was significantly reduced in April 2011, so that it now applies only to entrepreneurs, investors and "persons of exceptional talent" (i.e. people who are recognised or have the potential to be recognised as leaders in the fields of science and the arts).

Whilst there is no cap on the number of entrepreneurs and investors, there is a cap of 1000 places for "persons of exceptional talent".

Take-up of "restricted" places

In the four months since the cap was introduced, the government made available 8,700 restricted Tier 2 certificates of sponsorship, but only approximately 3,500 had been allocated by July, with the remainder being rolled over for use in future months.

The Tier 1 "persons of exceptional talent" category only came into force on 9 August 2011 and at present there are no figures available regarding the take-up of these visas.

Reasons for the low take-up

The small take-up of the Tier 2 restricted certificates may be because of:

  • the extra administrative burden and time delay imposed by applying via the monthly ballot;
  • the current economic situation; or
  • employers (especially multi-national employers) using innovative ways around the system.

Intra company transfer route

If the flexibility of their business allows them, employers may be asking employees to work for the group elsewhere in the world first, so that the employee can later be brought to the UK using the intra-company transfer route once they have a year's service (which avoids the cap and is a much simpler application process).

Whilst this may be a practical short-term solution, in the longer-term it may cause difficulties if the individual wishes to remain in the UK, as the government has recently removed the right for Tier 2 (Intra company transfer) visa holders to apply for indefinite leave to remain. In effect this means that they can only spend up to 5 years in the UK, unless they are able to switch onto another type of visa.

Business visitor visas

Likewise, employers may be trying to avoid permanently basing their employees in the UK and may instead be using business visitor visas for frequent trips to the UK. Again, this is only a short-term solution as business visitor visas do not allow an individual to "work". Immigration officers soon become wary of individuals with lots of UK entry and exit stamps in their passports and will start to question whether the individual is in fact living and working in the UK. If the individual is refused entry, this may affect their ability to return to the UK for a period of time.

If employers are taking this latter option, this is surely a shot in the foot for the government in lost income tax revenues and personal spending, which would otherwise have assisted growth in the economy.

Issues for the future

Lower cap next year?

The difficulty is that, in light of the government's aim to reduce net migration to "tens of thousands" (rather than the current rate of c. 100,000 per annum), if the low up-take of restricted Tier 2 certificates continues, the government is likely to reduce the cap further next year in order to achieve its aim, which may genuinely cause difficulties for employers if the economy recovers or if the "innovative solutions" suggested above fall short.

It may well be a question of "use it, or lose it".

Removal of settlement rights

In addition, the government is currently consulting on the restriction or removal of the right to apply for settlement for all Tier 1 and Tier 2 visa holders and/or restricting leave to a maximum of five years. The government has asked the Migration Advisory Committee to report on the economic effects of this and it is due to report in September. This is another measure which would seriously harm UK businesses' competitive edge in the search for global talent.

Easier application process in future?

Nonetheless, there is some good news - if employers are being put off applying for restricted Tier 2 certificates because of the extra administrative burden and time involved in the monthly ballot, they will be relieved to hear that from 1 October 2011, they will be able to submit applications for restricted certificates online using the Sponsor Management System (although the monthly ballot will still apply).

Exceptional consideration

Another useful point to note is that there is scope to apply for exceptional consideration for a Tier 2 restricted certificate, outside the monthly allocation process. Applications will be decided on their individual merits but the reasons must be "particularly compelling". The UK Border Agency's guidance notes give the following two examples:

  • where delays caused by the UK Border Agency resulted in a newly licensed sponsor needing a certificate for a migrant who is due to start work before the next monthly allocation; or
  • where a consultant surgeon has been recruited and needs to start work immediately because they have patients listed for life-saving surgery before the next monthly allocation process.

In May 2011, 18 certificates were allocated using this method, which might well suggest that in practice the UK Border Agency is taking a more relaxed approach than is indicated by their guidance notes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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