Business development · 9 November 2020

What does the new immigration system mean for your business?

The new immigration system explained
The new immigration system explained.

Brexit is expected to have a considerable impact on all UK businesses and on firms across Europe that have links to the UK.

Business immigration experts from leading law firm, Walker Morris, Suzanne Treen and Shabana Muneer, discuss the key considerations for businesses in the sector ahead of the new points-based immigration system coming into play from 1 January 2021.

The construction sector represents 10% of total UK employment and is a key driver of jobs and economic growth, however, it is facing challenges as the country edges closer to the new immigration system coming into play. The sector has one of the highest proportion of migrant workers within its labour force, although the share of migrant workers varies across regions with an ONS report finding 8% of the UK and 28% of the London construction workforce are EU nationals. It is therefore imperative for businesses in the sector to prepare for the changes now to minimise the impact on their workforces.

According to the Construction Industry Brexit Manifesto, the Government must view construction as a strategic industry as, without it, Ministers will be unable to meet their plans for the delivery of ambitious infrastructure projects. The Government’s decision to implement immigration changes from January 2021 has resulted in criticism from groups like the National Federation of Builders (NFB), which has insisted firms will need “at least two years to adapt to any new immigration system” so it is important that businesses act now to adapt as quickly as possible to the new rules.

Though the changes are already impacting heavily on the industry, the Government maintains that the new system will be more streamlined and accompanied by simplified rules and guidance for businesses looking to recruit workers from the EU however, that may be of little comfort for sectors such as the construction industry which, historically, have been accustomed to recruiting from the EU without any restrictions.

What’s new?

The Immigration and Social Security Co-ordination (EU Withdrawal) Bill, which will form the legal basis of the new system, has yet to become law but the aim of the guidance is to prepare employers and applicants alike for the upcoming changes. The guidance confirms free movement for EU nationals will end at 11pm on 31 December and changes will take effect. Key points to note include:

  • EU migrants arriving in the UK from 1 January 2021 will be subject to the new immigration system.
  • The existing Tier 2 (General) route will be replaced by a new Skilled Worker route. Tier 2 (Intra-Company Transfer) will remain in place with some adjustments.
  • Existing sponsors will automatically be granted a new Skilled Worker licence or Intra-Company Transfer licence and will not need to make a further application.
  • Existing Tier 2 (General) migrants who need to make a new application following the closure of that route will do so under the Skilled Worker route.

Many low paid jobs that require a high level of skill are not covered by the new system, and employers will not have access to the same number of workers as they have under freedom of movement, so they are being encouraged by the Government to invest in homegrown talent and technology.

According to the Home Builders Association, the housing supply in the UK has grown 74% from 2013 to 2017 and is expected to grow further over the next few years.

The Construction Skills Network estimates that a further 168,500 new jobs will be created in the industry between 2019 and 2023. Many organisations such as the Construction Industry Training Board have already begun developing strategies to address post-Brexit challenges and created training programmes to attract people to the industry.

A key difference between the Tier 2 (General) and the Skilled Worker routes, and one that will be welcomed by the sectors, is the lowering of the required skills level from degree level (RQF 6) to A-level equivalent (RQF 3), bringing a number of previously excluded roles within the scope of sponsorship. In the construction industry, this includes builders, carpenters, welders, plumbers, and electricians.

The salary threshold for Skilled Workers will be lowered from £30,000 to £25,600 per annum, with new entrants able to enter on a lower salary than their more experienced counterparts, provided it does not dip below the lower floor of £20,480 per annum.

While there are still certain mandatory criteria for Skilled Workers which will earn an applicant a fixed number of points, the new system introduces tradeable points for certain attributes such as salary, relevant PhD qualifications and shortage occupation roles.

The annual cap under the current Tier 2 (General) route will be suspended and employers will no longer have to carry out the Resident Labour Market Test, which, coupled with lower salary and skill thresholds, should make it easier to recruit migrant workers to skilled roles than it currently is. However, the extension of the points-based system to EU workers is still a huge shift from the current regime, under which there are presently no skills and salary restrictions on recruitment from the EU.

Crucially, the new regime will also require migrants to satisfy minimum English Language requirements to be eligible for sponsorship, which may prove to be a practical obstacle to the recruitment of some EU migrants in the future.

Watch this space

As you might expect, the implementation of the points-based system will be phased, and the Government’s guidance document is likely to be the first of many providing details of the Home Office’s wider plans up to 2025. As part of the implementation of the UK’s fully realised points-based immigration system, the requirements for the main work and study visa categories are expected to be written into the Immigration Rules and published later in 2020, along with more detailed guidance for applicants.

The Home Office retains the ability to widen the number of attributes for which tradeable points may be obtained, and they may seek to do so in response to the country’s economic needs and pressures and the needs and challenges faced by specific sectors.

An unsponsored graduate route will be launched in summer 2021, giving international students the opportunity to stay in the UK to work or look for work after they graduate and an unsponsored route for highly skilled workers is expected to be introduced under the points-based system in 2022. This will allow a small number of the most highly skilled workers to enter the UK without a job offer in place.

What now?

If your business already has a sponsor licence under Tier 2 (General) or Tier 2 (Intra-Company Transfer), no new application is required, although you should familiarise yourself with the changes to the rules which may in some cases mean sponsorship is now possible for roles that were previously excluded. You should also check whether you have a sufficient certificate of sponsorship allocation to deal with the potential increased demand from January 2021.

Now is also a good time to make sure the existing licence is up to date, is held by the correct sponsoring entity, contains correct key personnel details etc, and that all Home Office notification requirements have been met.

If your business doesn’t currently have a sponsor licence but may need to recruit from the EU or beyond from January 2021, the Government is actively encouraging licence applications to be made now. As we get closer to the end of the year, more organisations are likely to be submitting applications which is likely to result in increased processing times, and potential delays to recruitment plans.

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ABOUT THE EXPERT

Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.

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