What routes are available to tech companies and start-ups when planning to recruit foreign talent? With changes in the offing – the new Immigration Bill and the results of the Migrant Advisory Committee report into Tier 2 of the Points Based System - will life be getting harder or easier?

Since the clear failure of the Government to meet its own 2010 pledge to reduce net migration to tens of thousands there has been a stepping up in the rhetoric of creating a 'hostile environment for illegal immigrants'.

One industry specifically that should be keeping a firm eye on the recent and upcoming changes to the Tier 1, Tier 2 and Tier 4 visa routes is the Technology sector. With a turnover of £153Bn one would hope that the Home Office would be treading carefully to ensure that they don’t stifle a key growth area of the UK economy. However, the tech sector is also one of the most prolific users of the current Tier 2 scheme, and in particular the Tier 2 Intra Company Transfer route.

Tier 2

The Tier 2 route of the Points-Based System is available to skilled migrants with a job offer from a UK company holding a Tier 2 Sponsor Licence, and is the visa route most commonly-used by companies in the UK. It covers both new recruits (under Tier 2 General) and employees transferring from overseas entities linked to a UK company by common ownership (under Tier 2 ICT).

The route is restricted to skilled roles set out in the Government’s Standard Occupation Code document, and there are six codes clearly focused on the tech industry:

  • IT specialist managers
  • IT business analysts
  • Architects and systems designers
  • Programmers and software development professionals
  • Web design and development professionals, and
  • Information technology and telecommunications

With 20,700 visas available each year for skilled migrants with a UK job offer, and currently an unlimited number available for employees transferring from overseas entities linked to UK companies by common ownership, the Tier 2 visa category has been widely used by the tech industry. In the year to March 2015 all the top three most common roles sponsored under Tier 2 ICT are IT-focused, while within Tier 2 General IT roles are in 3rd and 9th position.

However tech companies should be aware that the Home Office has taken a number of steps recently that re making sponsorship of migrants under this category increasingly challenging, and there are future changes in the making. Key issues at the moment include:

  • Introduction of a subjective element to visa and sponsorship processes
  • Increasingly lengthy processing times for Sponsor Licence applications
  • The annual limit for Certificates of Sponsorship being reached.

Sponsor Licence Applications

Any company wishing to employ a skilled migrant worker under the Tier 2 scheme must apply for a Tier 2 Sponsor Licence or a Sponsor Licence Renewal where one already exists but is due to expire. Previously this largely consisted of demonstrating that the company was legally operating in the UK, and that it was aware of, and capable of meeting, its sponsor duties. Companies could apply for a Sponsor Licence at any point, ensuring that they would be ready to sponsor an individual as and when needed. In April 2015 the Home Office introduced a new ‘Genuineness’ requirement for companies applying for Sponsor licences, mirroring the Genuineness tests introduced for Tier 1, 2 and 4 visas.

Companies must demonstrate that they plan to recruit or transfer an individual to a ‘genuine’ position that fits within their company structure in terms of salary, skills and role. This has introduced a significant level of subjectivity in the assessment of a Sponsor Licence applications and Sponsor Licence renewals, removing the surety that was the foundation-stone of the Points Based System. It has also lengthened the time, in most cases, that licence applications take to be processed. And finally it has meant that companies must have a specific role in mind, and in many cases to have undertaken a Resident Labour Market Test (RLMT) and have an identified candidate before applying. The identified candidate may then have to ‘wait around’ for two to three months whilst a licence application is processed, a Certificate of Sponsorship requested and a visa application approved. However, if a suitable resident candidate becomes apparent via the RLMT, the organisation is obliged to employ that person over the foreign national identified originally.

Certificate of Sponsorship allocation limit

Since April 2011 there has been an annual limit set on the number of Certificates of Sponsorship (CoS) available in this category, currently 1,650 a month. Until June of this year supply had always exceeded demand and companies could work on the default assumption that any application they made would be granted, provided they had met the requirements of the Tier 2 scheme in terms of job type, salary, and RLMT requirements. In June 2015 the limit was reached and all applications for positions with a salary below £46,000 were rejected. The limit was reached again in July, August and September, although the number of applications rejected was significantly smaller.

Upcoming changes

The Home Office has tasked the Migration Advisory Committee (MAC) with a broad review of the Tier 2 visa category, with the aim of addressing ‘concerns about the rising number of migrants in that route’. In particular the MAC has been asked to consider:

  • amendments to the Shortage Occupation List and the introduction of a limit on the length of time that a job or occupation could remain on the list;
  • The introduction of a skills levy for the Tier 2 General route, with funds raised supporting apprenticeships and skills development within the UK;
  • The case for tightening the Intra-Company Transfer route, including a possible cap on numbers.

Shortage Occupation List

Inclusion of a role on the Shortage Occupation List (SOL) brings a number of significant benefits to companies planning to recruit internationally, in particular in terms of both surety and a shortened timeframe. Any role on the SOL will be put at the head of the queue when applying for a Restricted Certificate of Sponsorship, almost certainly guaranteeing that one will be awarded, and a Resident Labour Market Test does not need to be carried out in order to fill a role on this list. In addition, Sponsor Licence applications and Sponsor Licence renewals for companies seeking to fill a shortage occupation role are frequently fast-tracked. At the moment the only IT roles on the SOL involve 2D/3D computer animation for the film, television or video games sectors. The tech sector has been lobbying hard to include a number of roles on the list, and the MAC’s report in February 2015 recommended the inclusion of the roles of Product Manager, Data Scientist, Senior Developer and Cyber Security Specialist, limited to experienced workers only.

However, some welcome news for the technology sector came with the Statement of Changes of 28 October 2015. Effective 19 November 2015 four jobs in the digital technology sector are being added to the Shortage Occupation List, following a partial review of the SOL published by the Migration Advisory Committee. The additions are:

  • Product Manager
  • Data Scientist
  • Senior Developer
  • Cyber Security Analyst

The additions relate specifically to jobs based in small and medium-sized qualifying companies (between 20 – 250 employees) requiring five or more years’ relevant experience and demonstrable experience of having led a team.

Tier 4 to Tier 2 Switch

Those currently studying Tech-based course at colleges will soon no longer be able to switch to a Tier 2 visa whilst in the country.  The intended change was released earlier in the year by the Home Office, when they stated that they will be “banning college students from being able to switch visas to Tier 2 or Tier 5 in the UK, and require them to apply from outside the UK”, the change will come into effect from November 2015.

University graduates will still be able to switch in-country provided that they:

  • Have successfully completed and passed a recognised UK bachelor’s or master’s degree, Postgraduate Certificate in Education or Professional Graduate Diploma of Education, or have completed a minimum of one year study towards a UK PhD during their current, continuous period of leave; and
  • Studied at a UK institution that is a UK recognised or listed body, or an education provider which holds a Tier 4 sponsor licence; and
  • They apply from inside the UK whilst they still have valid leave under Tier 4.

Tier 1 (Exceptional Talent Scheme) – Tech National Visa Scheme

The former Tier 1 (General) scheme, which was open to highly-skilled migrants to apply in their own right, closed to new applicants from April 2011. It was replaced, in part, by the Tier 1 (Exceptional Talent) route for individuals who are leaders, or emerging leaders, in one of a number of fields including digital technology. In April 2014 a Government-funded quango, Tech City UK, was granted power to endorse visas for up to 200 skilled tech workers from outside the EU.

The scheme has previously attracted criticism for setting the bar too high and was certainly a major change. Around ten thousand people annually entered the UK under Tier 1 (General), where a recent Freedom of Information Request revealed that only seven out of the possible two-hundred visas in the year leading up to April 2015 were granted.

There are, however, positive changes due to the scheme imminently, intended to allow startups in high growth to have better access to talent and the opportunity to make applications quicker so that business demands can be met. From 12 November 2015 combined applications can be submitted, with groups of up to five being able to apply at once for consideration, so in theory entire successful teams can be lured away from competitors. Perhaps more significant, the bar has been lowered to encompass the recognition of individuals with “exceptional promise”, this visa category is intended to target specific gaps in highly specialized skills areas and could possibly be a means of closing a company’s skills gap. A specific scale-up fast-track route will be introduced to help growing companies to get the talent they need to scale quickly. And finally, there will also be a fast-track application procedure for digital businesses in the ‘Northern Powerhouse’ - Hull, Leeds, Liverpool, Manchester, Newcastle, Sheffield and Sunderland.

Conclusion

The upcoming changes will have an impact on how the Tech sectors’ grows over the next year, and specifically it will influence the sector’s ability to secure and attract overseas talent. 

With regards to the recent Tier 1 push, it is likely have an impact on the bigger companies that have the finances to invest in such a visa application and pay the salary that would attract an eligible applicants. It should be noted that the pending Tier 2 changes will have a bigger impact on the industry and companies as a whole in the UK, particularly the smaller start-ups with limited finances. As put by Guy Levin (Executive Director of startup campaign group Coadec) “It’s important to remember that the Tier 1 Route is tiny compared to Tier 2, which is under review at the moment and likely to be squeezed further. So while this is a positive step today, the bigger decision is yet to come.”