The cost of sponsoring workers under UK visa routes is higher than ever before. Minimum salary thresholds and other costs can be a significant obstacle to recruiting international talent, prompting businesses to ask whether they can restrict applications from candidates who would need sponsorship. In this article, we look at how businesses should think about the race discrimination risks associated with doing so.
This is part of a series on how to manage the employment law issues associated with hiring and managing migrant workers. For more information on the tensions between employment law and immigration law, including links to our other content, see here.
One key pillar of UK employment law is protection from discrimination. This includes discrimination in relation to race and nationality. However, immigration law is, by its nature, race discriminatory. It creates a two-tier hierarchy of job applicants and employees, divided along nationality lines. British and Irish nationals have an automatic right to work in the UK. They can start any job with nothing other than an assessment of their professional credentials. But other nationals, usually, need something extra.
To hire a person who does not already hold some form of status that enables them to work in the UK, an employer will usually have to sponsor them under a work immigration route. The most commonly used option is the Skilled Worker route, which can be attractive in comparison to some other options because it can lead to settlement after a minimum of five years.
To sponsor a worker under the Skilled Worker route, a business must first apply for and hold a sponsor licence. This requires the business to fulfil various compliance obligations imposed by the Home Office. Then, once the licence is in place, the candidate needs to apply for their visa. This involves satisfying eligibility criteria – including being paid a minimum salary – and paying application fees to the Home Office.
In the last few years, there have been substantial rises in the salary thresholds required for sponsoring workers (especially under the Skilled Worker route), plus significant rises in application fees and other immigration-related costs. These factors have prompted employers to ask what, if anything, they can do when it comes to managing recruitment for a particular role where sponsorship may either be unavailable or commercially unattractive.
The FAQs in this article explore the employment law challenges that employers may encounter in implementing recruitment policies that are influenced by sponsorship considerations.
FAQ 1: Can we decline applications from all candidates who would need sponsorship?
The answer to this question is not straightforward. There is case law authority (which is binding on employment tribunals) which states that this may constitute indirect race discrimination. However, the case is over 15 years old, and the point has not been tested in the context of the current sponsorship regime.
Indirect race discrimination
British and Irish nationals automatically have the right to work in the UK. Candidates of other nationalities will (often) need sponsorship under a work route before they can work. So, an automatic rejection policy based on right to work status is, on its face, indirectly race discriminatory. This is because it technically applies to all applicants, but in practice has a particularly detrimental effect on a particular group of applicants, namely non-British/Irish nationals.
Indirect race discrimination can be objectively justified, if it is a proportionate means of achieving a legitimate aim. This means that an indirectly discriminatory policy could, potentially, be lawful if the employer has a good reason for it, and there are no other, less discriminatory, ways of achieving the same aim.
An employer implementing an automatic rejection policy should be aware of the risk that a spurned job applicant may lodge a discrimination claim with an employment tribunal. The question of whether the employer's policy is lawful will then depend on whether the employer can justify that policy in a tribunal. The employer will have to convince the tribunal that it had good reasons for implementing the policy. This is likely to depend on the specific context.
A key consideration for many employers is the prohibitive cost of sponsorship, but would the high cost of sponsorship be a good enough reason to operate this kind of policy?
Costs-based justification arguments may fail...
The leading case in this area is Osborne Clarke v Purohit, in which the Employment Appeal Tribunal held that a policy of not accepting applications from non-EEA nationals was discriminatory. This decision is from 2009, which means it long pre-dates the current immigration system. Nevertheless, the judgment remains binding on first-instance employment tribunals.
The case concerned a law firm's policy of excluding candidates from trainee solicitor roles if they did not already have the right to work. The firm thought that, because it was a training role, a work permit application was unlikely to succeed.
In finding against the firm, the Employment Appeal Tribunal said that the firm's policy amounted to unlawful indirect race discrimination which could not be justified.
The Employment Appeal Tribunal rejected the firm's cost-based arguments, especially considering the firm's ample resources. Instead, the firm should have conducted the recruitment process on merit 'as normal' and should only have thought about sponsorship questions towards the end of the process.
Both the Home Office's Code of Practice on Avoiding discrimination while preventing illegal working and the Equality and Human Rights Commission's Equality Act 2010 Employment Statutory Code of Practice reinforce the central takeaway message in the Osborne Clarke case. The Home Office code states explicitly that employers should "ensure job selections are made on the basis of suitability for the post". That said, both the judgment and the Home Office code also state that there is no obligation to sponsor someone.
...but is the case law ripe for a rethink?
Although the Osborne Clarke case remains binding on tribunals, the immigration system of today is more complex, costly and transparent than it once was. An employer may have more success if these arguments were presented now.
However, to our knowledge, the point is untested. Tribunals are also not, generally, sympathetic towards pure 'cost-based' objective justification arguments.
Rather than operating a blanket policy of no sponsorship, we have seen some employers take a view that a rejection policy may be justified for roles that are ineligible for sponsorship under the Skilled Worker visa route. This is explored in more detail in FAQ 2 below.
An employer would be well advised to think through this issue in detail, with careful consideration given to the reasons behind its policy. In addition to the risks associated with litigating the matter in the tribunal, there is the optical and reputational risk of running a policy that may be discriminatory. We recommend that legal advice is sought at an early stage.
FAQ 2: We are recruiting for a role that wouldn't meet the Skilled Worker salary threshold. Can we say that sponsorship is unavailable for this role?
Justifying indirect race discrimination may be possible where the salary threshold for the role being recruited for is an absolute bar to the applicant being able to work in the UK. The point has not – as far as we know – been tested in the tribunals. The central takeaway message of Osborne Clarke is that recruitment decisions should not be influenced by sponsorship considerations (see FAQ 1 above).
However, some employers are taking the view that their prospects of successfully defending their policy in front of a tribunal may be higher in cases where the salary threshold is an absolute bar to sponsorship. Their argument would be that this situation is different. Unlike in Osborne Clarke, they are not speculating on whether a permit might be granted – their policy reflects what is permissible under the immigration rules.
Although the current general salary threshold for the Skilled Worker route is £38,700 per year, the salary level that would be an absolute bar to sponsorship could be lower than this figure. It could even be as low as £25,000 per year in some cases. The 'absolute bar' figure will depend on some (or all) of the following factors being relevant to the role or candidate in question:
- The occupation code and the associated 'going rate' for the role;
- Whether the occupation attracts any discounts to the applicable salary thresholds e.g. if the role requires a PhD, is on the Immigration Salary List, or is in a listed health or education occupation to which public sector pay scales apply;
- The standard contracted hours for the role, and whether these vary from the standard hours used by the Home Office in its calculations; and
- The personal circumstances of a potential applicant, including if they meet the definition of being a 'new entrant' or if transitional salary arrangements apply to them.
The applicable rates would therefore need to be determined on a case-by-case basis.
FAQ 3: We are recruiting for a role that would meet the sponsorship salary thresholds. Can we say that sponsorship is unavailable for this role?
If the employer could sponsor for the role (because it meets the relevant salary thresholds) but it is choosing not to, it would be riskier to reject candidates because they need sponsorship. Whether an employer would have any joy in front of an employment tribunal will depend on the reasons behind the policy. This will be a fact-sensitive question for the tribunal.
While pure cost will, generally, not form the basis of a good objective justification defence, economic factors that relate to cost may do so (often referred to as a 'costs plus' defence). In this context, cost coupled with the administrative burden of sponsorship may justify a policy that is indirectly discriminatory, so long as the employer is acting proportionately. This would depend on the facts.
The administrative burden will vary between employers and the resources they have available to manage recruitment processes. Notably, in the Osborne Clark case (see FAQ 1 above), the EAT was not sympathetic to a well-resourced employer trying to justify its policy. Such an argument may well be perceived by a tribunal as an attempt to argue a cost-based defence via the back door.
These arguments are (as far as we know) untested in the tribunals. We recommend legal advice is sought to explore the question in more detail.
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.
