On 28 June the coalition government announced temporary measures towards limiting the number of non-EEA highly skilled and skilled workers entering and remaining in the UK. The new Home Secretary Teresa May said that the cap was at least one way of reducing net migration levels back to the tens of thousands last seen in the early 1990's.

What is being introduced?

Temporary caps will be introduced on 19 July 2010 and will apply to Tier 1 (General) applications made outside of the UK and to Tier 2. Applications submitted prior to 19 July 2010 will be dealt with under the current rules.

In addition, from 19 July 2010 the qualifying attributes points' threshold for Tier 1 (General) applications will be raised by 5 points from 75 points to 80. This change affects all applications for Tier 1 (General) made in or outside the UK, with the exception of applications made by individuals who are applying within the UK and have (or last had) leave as a Tier 1 (General) Migrant, Writer, Composer or Artist or Self-Employed Lawyer.

The changes to Tier 1 (General) will be implemented through amendments to the Immigration Rules. The changes to Tier 2 will be rolled out through limiting the number of certificates of sponsorship that Tier 2 sponsors are authorized to issue.

Tier 1 (Entrepreneur), (Businessperson), (Post Study Work), Tier 4 and Tier 5 are not affected.

It has been reported that with over 2 million resident workers unable to secure employment in the UK, caps on immigration will aid people back into work in the UK with employers having no choice but to offer work to British/EEA workers.

Tier 2 sponsors are already required to advertise all new vacancies with Job Centre Plus and at least one other medium for a minimum of four weeks and can only issue a certificate of sponsorship under Tier 2 (General) if a suitable resident worker cannot be found. In this situation, should employers be further restricted from employing skilled migrants who will benefit the business and the economy due to an arbitrary cap? Should UK businesses continue to suffer due to an inability to source suitably qualified and experienced employees, thus slowing the recovery of the economy and taking the country out of recession?

UK employers already have onerous obligations and compliance duties under the Points Based System. In order to comply with the requirements of the system, sponsors must fulfill sponsorship obligations, provide a justification for the number of certificates of sponsorship they are authorized to issue and meet the resident labour market test where applicable.

Tier 1 (Post Study Work) migrants will also feel the impact of the increased Tier 1 (General) points threshold ant Tier 2 cap, with few likely to be able to use Tier 1 (Post Study Work) as a bridge to Tier 1 (General) due to insufficient earnings and less opportunity to secure sponsored employment under Tier 2.

Whilst any immigration policy must take into account social and economic impacts, a policy aimed at reducing net migration at levels contains the inbuilt assumption that the overall social and economic impacts of increased net migration are negative. This assumption requires careful analysis, particularly in the case of evaluating the impact of skilled and highly skilled workers.

Furthermore, the introduction of a cap to Tier 2 of the points based system cannot be anything other than a blunt instrument for business since it imposes an arbitrary limit on access to skilled resources irrespective of the strength of individual business cases. Other often cited countries such as Australia and Canada only cap programmes where permanent residence is granted at the outset and have additional (uncapped) work permit programmes where usage is driven by business demand.

Amongst the options being considered alongside the cap, is a proposal that employers wanting to hire non-EU workers should pick up their private health care bill to avoid placing a "burden" on the NHS.

Companies seeking to hire from outside the EU may also be forced to offer apprenticeships to British workers.

Action required

A public consultation has been launched and submissions will be accepted until 17 September 2010. The consultation is aimed at seeking views from businesses ahead of defining and implementing permanent caps, which are scheduled to be introduced by 1 April 2011.

The Government has also asked the Migration Advisory Committee to undertake a separate consultation and to advise regarding what level the permanent caps should be set at for the first 12 months of operation, taking into account social and economic impacts.

Interested parties should take this opportunity to express their concerns by approaching the relevant government departments and presenting their business case or lobbying the UK Border Agency and Migration Advisory Committee as part of a group to express their views. It is vital that employers engage by taking proactive action early to prevent hindrance to their global mobility plans in the future.

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