The Government's annual immigration cap for sponsoring non-EEA skilled workers under the Tier 2 (General) category was reached in June 2015.

Tier 2 sponsors have been on notice since last year that the cap was nearing its limit. Reaching the cap has meant that many companies have been unable to hire talented individuals, who would otherwise have helped fill the skills shortage.

The annual cap was introduced in 2011 and has been limited to 20,700 allocations per year since, running from April to April. This limits the amount of non-EEA nationals working in the UK under the Tier 2 (General) category and applies to restricted certificates of sponsorships (RCoS), ie to those who are applying from overseas with an annual salary of less than £155,300 per annum or PBS dependants under the Tier 4 category who apply in country to switch into Tier 2.

The allocation is split over the 12 month period. Tier 2 sponsors have to make a request on the Sponsors Management System (SMS) on or prior to the fifth day of the month. Requests are then decided by UKVI on the eleventh day of the month based on the points scored for criteria such as shortage occupation and skill and salary levels.

In June, 1,658 RCoS were available to Tier 2 sponsors (eight allocations were carried over from the previous month) but the number of applications submitted by UK sponsors exceeded that amount. As a consequence, many applications which would previously have been approved, were rejected by UKVI, leaving sponsors with unfilled job vacancies.

The UKVI has confirmed that any application which scored less than 50 points was rejected. This means that unless the role on offer was at PhD level or on the shortage occupation list, all applications where salary levels were less than £46,000 were refused.

Given the fact that salaries are put into bands and the UKVI can only approve all or none of the applications within a set band, approximately 400 RCoS have been carried over to July’s panel (total 2,049).

Whilst there are additional RCoS available for the month of July, demand for RCoS is still likely to be high, particularly as sponsors who have vacancies to fill will want to re-apply. It is therefore possible that the July cap could also be reached.

In addition, if demand for RCoS continues to rise there is a risk that the number of points needed to secure a RCoS will increase. Therefore, RCoS for roles within the next salary band (£46,000 - £74,999.99) could be refused because demand exceeds supply.

If this continues to be the case, many companies will find this challenging, especially smaller sponsors and start-ups. Companies outside London which are already finding it difficult to compete with salaries based on London weighting will be further affected.

It is clear that as the UK economy has strengthened, the cap, which was originally set in 2011, is no longer ‘fit for purpose’. Penningtons Manches will continue to lobby the Government on behalf of its clients and keep you updated on developments.