New cap to cause headaches for UK employers?

On Monday 28th June 2010, the Home Secretary Theresa May announced that, under the new coalition government, a cap will be placed on the number of non-EEA economic migrants admitted to the UK to live and work.  The categories primarily affected will be Tier 1 (General) and Tier 2 (General) of the Points Based System.

What Changes are being Made?

The first annual cap is due to be implemented on 1st April 2011.  However, to prevent a surge of applications, interim monthly caps will take effect from 19th July 2010.  Rules have been laid before Parliament to bring in the changes to Tier 1 (General) by 19th July.  

Changes include:

• Limiting the number of Tier 1 (General) applications.  The limit will not apply to those who already have leave as a Highly Skilled Migrant or under Tier 1 (General) but as of 19th July will apply to fresh Tier 1 (General) applications made from abroad.  The interim limit for Tier 1 (General) visa approvals has been set at 5,400.
• Increasing the points requirement of the Tier 1 (General) scheme from 95 to 100 points.  The increased points requirement will not apply to those individuals who currently have, or last had, leave as a Tier 1 (General) migrant, Highly Skilled Migrant, Writer, Composer or Artist or as a Self-employed Lawyer.  However, all fresh applications made on or after 19 July, including those who wish to switch in-country to Tier 1 (General) from Tier 1 Post Study Work or from Tier 2, will need to meet the higher points requirement, though they will not be subject to the interim limit on numbers of applications.
• Limiting the number of Tier 2 (General) Certificates of Sponsorship that can be issued by sponsors, with the aim of reducing the number of new Tier 2 (General) migrants by 1,300.  Tier 2 Intra-Company Transfer applications are not affected by these interim changes.

How will this affect Employers and Individual Applicants?

The UK Border Agency (UKBA) has indicated that as of 19th July there will be a monthly limit on both Tier 1 (General) and Tier 2 (General) applications, though it has not yet said at what level the monthly cap in each category will be set.  Applications will be processed in date order of when they are received.  Once the limit for the month in question has been reached, any outstanding applications will be held over until the following month for consideration in that next month’s quota.  This could mean considerable delays in applications being decided.

The limits and changes do not apply to the Tier 1 (Post Study Work), Tier 1 (Entrepreneur) and Tier 1 (Investor) categories.  Similarly, Tier 2 (Sportsperson) and (Ministers of Religion) categories will not be subject to caps.  Tier 4 (Student) and Tier 5 (Temporary Worker) are also unaffected by the changes.

If you are an employer who already holds a Tier 2 sponsor licence, you will probably have received by email a letter from the Regional Director of UKBA’s North East Region stating that the UKBA expects any employer who used more than 2 Tier 2 (General) CoSs between 19 July 2009 and 1 April 2010 to use fewer Tier 2 (General) CoSs during the period 19 July 2010 and 1 April 2011.  The letter also states that the UKBA will write to each sponsor within the next few weeks to advise how their CoS allocation will be affected.  Please contact a member of the Business Immigration Team at Wright Hassall as soon as you receive notification from the UKBA of any change in your CoS allocation or even confirmation that it is to remain the same.

Consultation on 1st April 2011 Changes

UKBA Consultation

The UKBA has published a consultation paper setting out a number of proposals for how a cap might be operated for both Tier 1 and Tier 2.  The paper can be found here.  Proposals include a “first come first served” system or a “pool” system or even an “auction” of CoSs.  The consultation paper also covers issues such as whether additional points should be awarded for having skilled dependants or private health insurance.  Questions are also asked about the Tier 1 Entrepreneur and Investor categories as well as shortage occupations.

There are 13 questions in all.  Question 8 asks whether Intra Company Transfers should be included in annual limits.  We assume that all of our clients will say no, particularly as this category no longer leads to settlement in the UK.  Question 9 asks whether dependants should be counted in the overall annual limit.  Again, we would suggest a no answer as this would be likely to reduce even further the number of overseas assignees a company may recruit.  There is also a proposal to merge the shortage occupation list and Resident Labour Market Test.  This could make it much harder for some of our clients to recruit well qualified overseas candidates.

Clients are strongly advised to read this consultation paper and to respond to it.  There is a specified form for sending responses to the UKBA and this can be found here.  The Wright Hassall Business Immigration Team will be happy to discuss issues with you and to help you co-ordinate a response.  Responses to the UKBA consultation paper must be received by 17 September 2010 and may be sent direct to limitsconsultation@homeoffice.gsi.gov.uk.

Migration Advisory Committee Consultation

At the same time, the Government has commissioned the Migration Advisory Committee (MAC) to consult and provide advice on the level at which the annual limit on migration should be set.  The MAC consultation document can be found here.

We suggest that clients read carefully through this document also and respond to the 10 questions raised.  Responses to the MAC consultation document must be received by 7 September 2010 and may be sent to MAC@homeoffice.gsi.gov.uk.  Again, our team will be happy to assist you in compiling any responses.

The Government intends to announce its final decision on the level of the limit by the end of 2010.

How can I get involved in further lobbying?

The proposed changes in the UKBA consultation paper will undoubtedly have a significant impact on an employer being able to conduct its business efficiently.  How is an employer expected to know when it may need the services of an overseas national?  How can the recruitment process be run effectively if a quota has already been reached or an application for a CoS may have to roll over for one month or longer with no guarantee that the CoS will be approved?  Employers have already undertaken major reviews of their HR systems and paid the UKBA significant sums of money to obtain a sponsor licence and an allocation of CoSs – only to be told that they can no longer use them?  If, as an employer, you are concerned that the above changes could adversely affect your business, we would urge you to take part in the consultation exercises and also to lobby your local MP.

This article was first published in Business Immigration eBulletin July 2010