Sponsorship under Scale-up route
Advantages of Scale-up route for sponsors
Disadvantages of Scale-up route for sponsors
Rationale for Scale-up visa structure
Issues for non-sponsoring employers
Comment


The new Scale-up route launched on 22 August 2022. Unusual features of the route include that sponsorship is available only to hyper-growth businesses and that after the first six months, Scale-up visas cease to be sponsored. The latter aspect means that employers of "unsponsored" Scale-up visa holders will benefit from understanding the requirements for maintaining status under the route (for further information please see "Government introduces High Potential Individual and Scale-up immigration routes").

Sponsorship under Scale-up route

According to the ScaleUp Institute's analysis of data compiled by the Office for National Statistics, in 2019 (the most recent year for which data is available), there were 33,445 scale-up businesses in the United Kingdom.

Although the current number of scale-up businesses may have dropped due to adverse trading conditions during the pandemic, there is a significant pool of eligible employers that may choose to become a Scale-up sponsor.

A sponsor licence under the Scale-up route is only available to scale-up businesses with an annualised turnover or staffing growth of at least 20% for the last three years before application. They also must have had at least ten employees at the start of the three-year period. Further details of the sponsorship process and criteria, including supporting documentation, will be made available at launch.

Advantages of Scale-up route for sponsors

Some advantages of using the Scale-up route from the sponsor's perspective include that there is:

  • no immigration skills charge (ISC), which represents a saving of £5,000 over a five-year period in comparison to Skilled Worker or Senior or Specialist Worker;
  • fast-tracked processing of applications; and
  • reduced migrant administration after the first six months.

Disadvantages of Scale-up route for sponsors

Some potential disadvantages of the route include the following:

  • a Scale-up sponsor will continue to have sponsor licence obligations during the life of the licence, even it is not actively sponsoring workers;
  • a Scale-up visa holder is not 'tied' to the sponsor after the initial six months, which may reduce employee retention;
  • the employer must pay Scale-up visa holders under pay as you earn (PAYE) on a monthly basis (no other pattern) for them to qualify for extension and settlement – this position seems to be unduly restrictive and may be reviewed by the Home Office at a later date;
  • the minimum salary threshold for the Scale-up route is £33,000, which is higher than for Skilled Worker; and
  • there is potential for a Scale-up visa holder to be ineligible to extend and/or settle under the route if they do not comply with the salary requirements of it – see further commentary below.

Rationale for Scale-up visa structure

The Scale-up route has been structured to aim to provide a cheaper, faster and less administratively burdensome option for scale-up businesses. It also aims to ameliorate three of the most serious historical issues that arose with previous schemes for highly skilled workers, such as the Highly Skilled Migrant Programme and Tier 1 General.

First, unsponsored entry into the UK labour market comes with the risk that a migrant may encounter "unemployment scarring" if they have a period of unemployment after arrival. If this happens, they may find it increasingly hard to find a job or may only be able to secure a comparatively less well-paid job, rendering them ineligible to meet any earnings criteria for extension or settlement in their route. The Scale-up route requires a job offer for at least six months, which reduces the possibility of unemployment scarring.

Second, the salary requirement of £33,000 under the Scale-up visa route aims to minimise the risk that visa holders in this category will occupy lower-skilled positions in the labour market. It is possible that some workers could still end up working for lower-skilled and lower-paid jobs for multiple employers, and this is something the Home Office will be monitoring.

Last, the previous schemes were subject to the risk of visa holders fraudulently reporting self-employed earnings in order to meet earnings criteria for extension and settlement. This is addressed under the Scale-up route through the requirement for qualifying earnings to be via PAYE only.

If this route proves to be successful, it may pave the way for more liberal sponsored to unsponsored schemes to emerge.

Issues for non-sponsoring employers

Once a Scale-up worker has been employed by their sponsor for at least six months, they may work for any employer in any occupation without the need for further sponsorship.

Employing a Scale-up visa holder may at first appear straightforward to non-sponsoring employers; however, an extension or settlement application in this category may be refused if an individual's PAYE earnings (from all sources of employment) are insufficient. This may include if their earnings are impacted by periods of unpaid absence for reasons other than the following statutory leaves:

  • maternity leave;
  • paternity leave;
  • parental or shared parental leave;
  • adoption leave; or
  • sick leave.

Comment

Employers will need to decide whether, and how closely, to advise and/or monitor their employees' earnings and absences to ensure they will qualify for an extension and indefinite leave to remain. Although compliance will be a responsibility for the individual, the refusal of an extension or settlement application will have an impact on their ability to continue working for their employer. In this event, an employer may need to consider sponsoring the employee under an alternative route such as Skilled Worker, potentially at short notice. If sponsorship is not possible, the employment may need to end if the person cannot secure immigration permission in an appropriate route.

For further information on this topic please contact Andrew Osborne, Supinder Singh Sian, Li Xiang or Naomi Hanrahan-Soar at Lewis Silkin by telephone (+44 20 7074 8000‚Äč) or email ([email protected], [email protected]m, [email protected] or [email protected]). The Lewis Silkin website can be accessed at www.lewissilkin.com.