The Government has announced its plans for the new immigration system that is due to be implemented from January 2021.

There will be winners and losers in the new system. Employers relying heavily on European workers will generally lose out whilst employers who already use the Tier 2 sponsorship route to sponsor skilled non-European nationals are likely to benefit from the proposed changes.

Key changes

  • Free movement provisions for European nationals and their family members will end on 31 December 2020. From January 2021, European nationals arriving for the first time to live and work here will be treated in exactly the same way as non-European nationals. In most cases, this means that European nationals arriving after 31 December 2020 will need a job offer and will need to be sponsored by a UK company under the Tier 2 sponsorship regime in order to work in the UK.
  • The Tier 2 sponsorship regime currently only allows employers to sponsor non-EEA nationals to undertake highly skilled, professional or managerial roles. From January 2021, this skills threshold will be lowered so that UK employers will also be able to sponsor non-UK nationals to undertake medium-skilled roles.
  • Under the current Tier 2 sponsorship regime, individuals must generally earn at least £30,000 per year or above to qualify. Under the new system, this general threshold will fall to £25,600 per year. There will also be some potential ‘trade-offs’ against this minimum salary threshold – for example, if the role is on the official shortage occupation list or the individual holds a PhD in a STEM subject relevant to the role the salary threshold for that individual could be as low as £20,480 per year instead.
  • Currently there is a requirement, in many cases, to advertise the vacant role to the resident population and employers may only sponsor a non-EEA national if no one suitable from the UK population applies. This process is known as the ‘Resident labour market test’ and it is a very prescriptive process with onerous requirements. To the relief of employers and immigration lawyers alike, this Resident labour market test will be abolished under the new immigration system.
  • There will be no provision for low-skilled workers. Employers which rely heavily on lower-skilled European workers are likely to struggle to fill roles from next year onwards.

The only specific concession made so far in relation to low skilled labour is to expand the pilot scheme for seasonal workers (from 2,500 to 10,000 agricultural workers).It remains to be seen whether further carve-outs will be agreed for other sectors, such as social care and construction.

  • It is likely that a new category will be introduced for highly skilled individuals without a job offer – to run alongside the current Global Talent category. This will enable highly skilled individuals to work in the UK without sponsorship and to claim points through various categories such as age, qualifications and work experience. There would be a cap on the number of people able to enter the UK under this route ad it remains to be seen whether this route will be helpful alternative to sponsorship or not.

Practical considerations

It’s worth noting that even where employers are able to sponsor European nationals under the Tier 2 regime in the future, there will be significant costs involved for employers. The cost of sponsoring individuals under the Tier 2 sponsorship regime can amount to £8,000 per sponsored migrant plus additional fees for any dependants and legal fees. These costs should be budgeted for early on but could be off-putting to many smaller/medium-sized businesses in particular.

Businesses should consider now whether they need to apply for a Tier 2 sponsor licence to be in a position to sponsor European and non-European nationals going forward. Those businesses which already hold a Tier 2 sponsor licence should ensure they are complying with the onerous reporting and recording obligations under the sponsorship system. Failure to comply with these obligations risks the Home Office revoking or suspending the sponsor licence and jeopardising the company’s ability to sponsor individuals under Tier 2.

Employers also need to be wary of the risk of discriminating against European nationals. Up until 31 December 2020 EEA and Swiss nationals will still have the right to enter the UK for work on the basis of their current European passport. It has also been confirmed by the Government that employers can continue to rely on simply checking the individual’s EEA passport to satisfy the right to work check up until 30 June 2021.