Learn about recruiting overseas workers, the categories of foreign nationals able to enter and work in the UK, and the legal framework involved
A points-based system has been in place in the UK since 2008 to govern economic migration from outside the European Economic Area (EEA). Since the UK's Brexit vote, it's unclear what the UK’s future immigration policy will be for EEA nationals.
This factsheet for CIPD members focuses on the various routes under Tier 2 of the points-based system with which employers are primarily concerned, but also mentions options under Tier 5. It outlines the sponsorship system, compliance and legal liability, and provides links to government information and advice for employers.
Our research shows that some employers hire EU nationals because they cannot attract local applicants. This is despite the best efforts of many to attract and retain staff by exploring all recruitment channels, raising pay and investing in the skills of their workforce. However, it’s also true that more employers could do more to attract more people from the domestic workforce, especially among low-wage employers. Our survey data shows that around one in seven employers hire EU nationals because they have lower pay and employment conditions expectations.
As a result, we believe that the government should adopt a policy that recognises the contribution that EU nationals make across all skills levels and the responsibilities of employers. The current points-based system for non-EU workers could be adapted to include all non-UK nationals and made quicker, easier and more affordable for users, but also made favourable for EU nationals. In addition, the system should include a labour shortage occupation list so that employers with genuine need of low-skilled EU migrant labour are not penalised, while requiring those that do not fall into this category to make adequate steps to recruit UK nationals from the domestic workforce. We hope that the government amends the shortage occupation list for non-EU workers to include skills shortages at lower skill levels than graduate-level occupations; especially for sectors such as social care. An announcement on this is expected in autumn 2018.
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Background to the immigration framework
This factsheet for CIPD members condenses hundreds of pages of detailed law and guidance and is not intended to be a substitute for advice in individual cases. It expands on our more general factsheet on employing overseas workers in the UK.
The points-based system (PBS) introduced in 2008 for economic migration to the UK from outside the European Economic Area (EEA) was designed to reflect a candidate’s value to the UK labour market. It changed employers' duties and liabilities when employing migrants from outside the EEA.
Tier 2 of the PBS is the primary route for economic migration from outside the EEA. It is for skilled workers who have an offer of employment in the UK in an occupation typically classed as skilled to National Qualifications Level 6 or above, which equates to graduate-level occupations. It’s used by employers who need to fill a vacancy where no suitable residents are available.
Against the backdrop of the UK Government’s objective to bring net migration down to the tens of thousands, Tier 2 has been reformed since April 2011 to control numbers of migrants, to tighten against abuse and to improve selectivity. In particular, the Tier 2 visa route salary and skills thresholds have been gradually increased to ensure that sponsored workers do not undermine the job prospects of resident workers.
Meanwhile, it's unclear what the UK’s future immigration policy will be for economic migration to the UK from within the EU since the UK's vote to leave.
Employing EU migrants
In June 2016, the UK voted to leave the EU. Since the vote and in a white paper published in 2017 which committed to ‘control numbers and encourage the brightest and best to come to this country’, the UK Government has indicated that it plans to end free movement of labour for non-UK nationals from the EEA. The Government asked the Migration Advisory Committee to report on the impact on the UK labour market of the UK’s exit from the UK and how the UK’s immigration system should be aligned with a modern industrial strategy - read our comment on the report. This will be followed by a Home Office consultation paper that will set out its proposals for future EU immigration policy from 2021. The CIPD is aiming to influence government policy with recommendations that work across all sectors based on our Facing the future: tackling post-Brexit labour and skills shortages report.
The Government has, however, provided some clarity about the immigration policy arrangements during the proposed transitional period from March 2019 to December 2020 and the status of EU citizens. The key developments include:
- Free movement will continue.
- EU citizens, including those that already have permanent residence, will have to apply for settled status by demonstrating that they have lived in the UK for a continuous period of five years or more. The process will be made simple via a registration that allows uploading of documents online. It will take around 15 minutes and will be equivalent to the cost of a UK passport. The registration process will begin in 2019, but EU citizens will have until June 2021 to register.
- EU citizens who arrive during the transitional period will have three months to register. They can apply for settled status once they have completed a continuous period of five years or more in the UK.
- Settled status will give EU citizens the same rights and conditions as those currently enjoyed by EU citizens.
We welcome the EU Settlement Scheme employer toolkit published by the government to equip employers with the right tools and information to support EU citizens and their families in using the scheme.
Our Legal guide to managing a migrant workforce gives practical steps to help employers manage and support their migrant workforce through Brexit. There're more resources and comments in our Brexit hub.
The government has announced that a Youth Mobility Scheme will be introduced for EU citizens from 2021. Modelled on the existing Youth Mobility Scheme (see Tier 5 below) which is open to predominantly Commonwealth countries, the scheme effectively allows for free movement of labour for 18-30 year olds for a period of up to two years in the UK.
Employing non-EU migrants
In 2006 the UK Government introduced a points-based system (PBS) for economic migration.
The PBS covers most people from outside the EU who require permission to work or study in the UK. It does not cover short-term visitors, family reunification, EEA nationals or UK ancestry routes. There are a few other categories, such as representatives of overseas businesses, which are also outside the scope of the PBS.
The PBS is underpinned by a five tier framework, but employers are primarily concerned with the Tier 2 route, through which employers recruit non-EU skilled workers because they cannot find people with the right skills and experience from the resident labour market. The Migration Advisory Committee (MAC) is a non-departmental public body that is tasked with providing transparent, independent and evidenced-based advice to the UK Government on migration issues. The questions the Committee addresses are determined by the Government. Its key responsibilities are to:
- advise the Government on specific sectors and sections of the labour market where skill shortages exist - in Tier 2, it regularly reviews the shortage occupation list
- recommend adjustments to the PBS to reflect labour market changes
- ensure adherence to the PBS’s stated aims
- advise the Government on the implementation of immigration policy.
Different routes under Tier 2
Applicants can enter the UK via several routes, but the two key routes for employers are Tier 2 General which typically relies on a Resident Labour Market Test or the shortage occupation list, and Tier 2 Intra-company transfers.
1. Tier 2 General
Resident Labour Market Test (RMLT)
The principle underlying the RLMT in Tier 2 General is that the employer has attempted, but has been unable, to find a resident worker (that is, a British or European national) to do the job. In order to demonstrate this, the employer is required to advertise the relevant vacancy through Job Centre Plus (if the salary is less than £72,500 in which case other job websites can be used) and at least one other medium for 28 calendar days. This can be done in two ways:
- advertising the vacancy for a single continuous period of 28 days
- advertising the vacancy in two stages, where each stage lasts no fewer than 7 calendar days.
The Government’s guidance for sponsors says that advertisements must include the job title, main duties and responsibilities of the job, location, an indication of the remuneration, the skills and experience required and a closing date (unless the recruitment is part of a rolling programme, for example the ‘milk round’ for graduates).
The minimum skill level for the RLMT is NQF Level 6 and the Codes of Practice state which jobs meet this minimum level. Exemptions from the RLMT apply for:
- roles which command market remuneration above a stated level - currently £159,600
- designated shortage occupations (see below)
- extensions within the same occupation for the same sponsor
- post-study work – switching applications from Tier 4 Student, or Tier 1 Graduate Entrepreneur.
Tier 2 (General) is subject to a minimum pay threshold. It’s likely that these salary thresholds will be increased following the MAC’s current consultation exercise about salary thresholds for non-EEA migrants. There’ one exception to this - the current Section Q (Human health and social work activities) Code of Practice discusses nurses and midwives who are undergoing a period of learning or supervised practice to gain Nursing and Midwifery Council registration and who may be sponsored under Tier 2 provided they meet the full points’ requirements.
Employers can also apply to bring in workers from outside the EEA without going through the RLMT if the occupation is on the Tier 2 shortage occupation list, which is regularly reviewed and updated by the MAC.
2. Tier 2 Intra-company transfers - ICT
The majority of Tier 2 visas are granted to intra-company transfer migrants. These are reserved for employees of international employers who are being transferred to the UK to a skilled post by a related UK entity named on the license on a short or long-term basis. The sponsor must demonstrate common ownership between itself and the overseas employer of the candidate. The individual applicant must typically demonstrate evidence of employment with the overseas employer for at least 12 preceding months for most transferees (three months for graduate trainees). Tier 2 ICT is further divided into two sub-categories:
Long Term Staff - established employees (minimum 12 months’ employment immediately before to their application unless they earn at least £73,900 in which case this experience requirement is waived) to apply specific knowledge required by, but not locally available to, a UK role. The visa is known as Long Term ICT and holders must command a salary no less than £41,500 or the rate specified in the relevant Codes of Practice, whichever is higher. Long-term transferees can typically stay for up to five years. Those earning more than £120,000 may stay for up to nine years.
Graduate Trainee - a sub-category allowing overseas employers to transfer recent graduate recruits to a UK branch, provided the purpose is for their training for up to 12 months, and no resident worker is displaced. A minimum three months’ prior employment is required. Employers can only sponsor 20 migrants under this sub-category per financial year. The minimum salary level is £23,000 or the rate specified in the relevant Codes of Practice, whichever is higher.
The skill level requirements apply as to Tier 2 General. However, the points allocation is calibrated so that the English language and RLMT requirements are waived. Tier 2 ICT is no longer a route to settlement (Indefinite Leave to Remain). There is a 12 month ’cooling off‘ period after the expiry of Tier 2 ICT permission (unless the migrant earns in excess of £120,000 and wants to return as a Tier 2 ICT migrant) and restrictions on moving to other sponsors.
The entry level requirement for Tier 2 is currently National Qualifications Framework (NQF) Level 6+, which broadly corresponds to bachelor’s degree level. Points are awarded for attributes, Salary, Maintenance and English Language. Occupations and jobs on the shortage occupation list but not skilled at NQF Level 6+, and certain creative occupations, do not have to comply with the Level 6+ requirement but must be skilled at NQF Level 4+.
Migration Advisory Committee’s Tier 2 review 2016
The latest consultation by the MAC on Tier 2 led to further recommendations including: raising salary thresholds, introducing a skills surcharge on firms that employ non-EEA migrants and tightening the criteria for using the ICT scheme. The Government has adopted many of these, but has sought to make exemptions for many public sector roles that would otherwise have been affected by the £30, 000 salary threshold for new entrants from outside the EEA.
From 6 April 2017, organisations sponsoring non-EEA skilled workers under Tier 2 have had to pay a £1,000 immigration skills charge (£364 for smaller organisations and charities) per sponsored worker. Workers in PhD-level occupations, those switching from Tier 4 student visas, graduate trainees on ICT visas and those Tier 2 migrants with a work period of less than six months are exempt.
Tier 5: Youth mobility and temporary workers
The Tier 5 route allows people to work in the UK for a limited period and covers volunteers, youth mobility schemes, etc. Tier 5 consolidates the principles of pre-existing various schemes, such as the working holidaymaker programme, into a single but sub-divided tier. The main provisions are:
- Youth Mobility Scheme - This effectively replaced the Commonwealth working holidaymaker scheme and is intended to enable young people to travel to the UK for mainly non-economic reasons. As with the working holidaymaker scheme, the intention is that work is of a temporary nature in order to fund the experience. Sponsors are the national governments of participating countries rather than individual employers or sponsors. The number of participating governments is lower than under the working holidaymaker arrangements, and some non-Commonwealth countries are now represented. Each country is subject to an annual number limit – Japan was first to reach the limit in the initial year of operation. Nationals of participating countries are allowed to come to the UK for up to two years. There are reciprocal arrangements for UK nationals.
- Temporary workers - The sponsor in this sub-category will not necessarily be an employer; it could, for example, be an overarching organisation in the arts.
- Creative and sporting jobs - Where a ’Special Purpose Vehicle’ may be the sponsor.
- Charity workers - The charity will be the sponsor and the work must be unpaid.
- Religious workers - (to be distinguished from Ministers of Religion under Tier 2). This is for temporary migration only, allowing religious workers to spend a temporary period within the UK branch of their community. The sponsoring institution must be registered, accepted or exempt as a UK charity, or an ecclesiastical corporation established for charitable purposes.
- Government authorised exchanges – Approved schemes for industry sectors.
- International agreements.
Employers outside government, charitable, sporting and specialist sectors rarely meet the criteria to be Tier 5 sponsors and must rely on Tier 2 or on a ‘third party’ sponsor in order, for example, to facilitate internships for non-EEA nationals.
Sponsoring non-EU migrants
Certificates of sponsorship
Sponsoring employers must be licensed to assign ‘Certificates of Sponsorship’ (CoS) asserting that prescribed conditions are met, justifying the appointment of a particular non-EEA employee. The candidate must then apply for an entry clearance visa at a British Diplomatic Post before they can relocate to the UK or, if already in the UK, for a residence permit confirming the new conditions.
At the same time, migrants must have a valid job offer and a CoS from a licensed employer’s permitted allocation. A restricted CoS (RCos) is one which cannot be issued from the sponsor’s annual allocation - it requires approval from UK Visas and Immigration (UKVI) (part of the Home Office) - in addition to the Tier 2 points criteria being met.
The UKVI uses Codes of Practice to detail further conditions that must be met by migrants and their sponsors for applications under Tier 2.
Employers need to appoint someone within their business to manage the sponsorship process when applying for a license. See Useful contacts for links to GOV.UK with more on sponsorship, including the fees payable.
The visa application
If the prospective employee qualifies for and is assigned a CoS or RCoS, they can apply for their Tier 2 visa. The application is normally processed within 15 working days when applying from overseas or 8 to 12 weeks in the UK but faster priority services are available.
Rating of sponsors
The UKVI rates sponsors ‘A’ or ‘B’ according to their track record in sponsoring migrants and adhering to UK immigration laws. Successful applicants of sponsorship will be admitted to the sponsorship register and graded ‘A’. See Useful contacts for links to GOV.UK with more on rating.
A significant number of compliance checks are being made by Home Office inspectors every year in order to verify that:
- that the information given in the sponsor licensing application is accurate and complete
- the sponsor is able to offer employment
- the sponsor is genuine and trading
- there is no reason to believe that the sponsor represents a threat to immigration control
- the sponsor is able and committed to compliance with its sponsorship duties.
Right to work guidance has been produced to help employers. It’s a sponsor’s duty to inform the UKVI of any significant change in its ownership or structure, such as TUPE transfers.
Immigration Health Surcharge
In April 2015, the Government introduced a mandatory Immigration Health Surcharge (IHS) for all non-EU migrants coming to the UK for more than six months or extending their leave in the UK. The IHS does not need to be paid if applying for Indefinite Leave to Remain. The charge is £150 per person per year for students and £200 per person per year for all other applicants. The fee is also payable for dependant applicants. The fee must be paid before making an application.
Enforcement and legal liability
UKVI has proposed the introduction of new measures on illegal working such as pre-boarding electronic checks on entry and departure, and plans for identity cards for foreign nationals resident for more than three months, have all been identified as means to crack down on illegal immigration.
There has also been a significant increase in immigration-related workplace investigations and inspections. Policy has shifted towards accelerated removals and mandatory detention for failed cases, although this area of enforcement is vulnerable to challenge in the courts.
There are significant penalties for employers who employee people illegally.
Useful contacts and further reading
Sponsorship and Employers helpline: tel: +44 (0) 300 123 4699
(provides guidance and advice on the prevention of illegal working)
Books and reports
ANDERSON, B. (2015) Us and them?: the dangerous politics of immigration control. Oxford: Oxford University Press.
BEECH, J. (2017) Don’t let Brexit erode your EU workforce. PM Daily. 14 December.
BURT, E. (2018) Employers face ‘wake-up call’ as UK drops out of EU workers’ top six countries. PM Daily. 5 January.
CALNAN, M. (2017) Employers urged to welcome new rules on EU workers. PM Daily. 11 December.
RAZEEN, N. (2015) The perils for employers who employ illegal workers. Tolley's Employment Law Newsletter. Vol 20, No 6, April. pp46-47
CIPD members can use our online journals to find articles from over 300 journal titles relevant to HR.
Members and People Management subscribers can see articles on the People Management website.
This factsheet was last updated by Gerwyn Davies.
Gerwyn Davies: Labour Market Adviser
Gerwyn is the CIPD’s Public Policy Adviser for a wide range of labour market issues. With lead responsibility for welfare reform, migration and zero-hour contracts at the CIPD, Gerwyn has led and shaped the policy debate and achieved substantial national media coverage through various publications. These include Zero-hours contracts: myth and reality (2013) and The growth of EU labour: assessing the impact on the UK labour market (2014).
In addition Gerwyn authors the CIPD's high profile and influential quarterly Labour Market Outlook. Gerwyn is an experienced labour market commentator, making regular appearances in the national media and on other public platforms, including several appearances before the House of Commons Work and Pensions select committee.
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