Introduction

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, although a white paper published in December 2018 makes the government’s plans clearer.

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.

Explore our stance on Brexit and future immigration policy in more detail, along with actions for government and recommendations for employers.

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 Regulated Qualifications Framework (RQF) 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. This looks likely to be lowered to RQF Level 3 (in Scotland, Scottish Credit and Qualifications Framework Level 6) in the government’s proposed post-Brexit immigration system from January 2021.

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 from outside the EA, 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. However, these restrictions look set to be eased in the proposed post-Brexit immigration system in January 2021. In particular, the government look likely to remove the Resident Labour Market Test (RLMT), remove the migration cap and lower both the minimum skill and salary thresholds.

Following the UK’s departure from the European Union on 31 January 2020, a transitional period during which negotiations will decide the future UK/EU trading relationship will end on 31 December 2020. In this period, existing employment law regulations, as well as existing enforcement arrangements, continue to apply.

In February 2020, the government published a policy statement outlining the new UK points-based immigration system that will be introduced when free movement of EU workers ends on 31 December 2020. Under the new system, all applicants, both EU and non-EU, will both need a job offer from an approved sponsor at the required skill level and demonstrate that they can speak English. Applicants will also need to have 70 points from the following list to be eligible to apply. Some of these characteristics are tradeable.

  • Offer of job by approved sponsor – 20 points.
  • Job at appropriate skill level – 20 points.
  • Speaks English at required level – 10 points.
  • Salary of £20,480 (minimum) - £23,039 – 0 points.
  • Salary of £23,040 - £25,999 – 10 points.
  • Salary of £26, 000 or more – 20 points.
  • Job in a shortage occupation – 20 points.
  • Education qualification: PhD in a subject relevant to the job – 10 points.
  • Education qualification: PhD in a STEM subject relevant to the job – 20 points.

The policy statement adopts many of the recommendations put forward by the Migration Advisory Committee (MAC) in January 2020, including:

  • Lowering the minimum salary threshold from £30,000 to £25,600.
  • Lowering the salary threshold for new entrants (30% lower than the rate for experienced workers), skill shortage occupations (£20,480) and workers with PhDs relevant to the job (£20,480).
  • Bringing the skill threshold down from Regulated Qualifications Framework (RQF) Level 6 to Level 3 (in Scotland, Scottish Credit and Qualifications Framework Level 6).
  • Suspending the cap on the number of migrant workers that can come to the UK.
  • Removing the Resident Labour Market Test (RLMT).
  • No regional immigration policy or salary threshold.

Additionally, the government ruled out the proposal for a one-year temporary visa for low-skilled workers. Some of the demand for low-skilled labour supply can be partly met through skilled dependents of skilled migrants. It’s also hoped that the UK and EU will agree to a Youth Mobility Scheme 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 would allow 18-30 year old EU citizens to come and live and work in the UK for a period of up to two years in the UK without a job offer. 

Under the new system, employers will be subject to more bureaucracy and a range of costs in recruiting all non-UK citizens from overseas. These seem likely to include a sponsorship licence, visas (which could extend to dependants of the skilled migrant) and the Immigration Skills Charge for each worker. 

Additionally, all non-UK citizens will be subject to an Immigration Health Surcharge of £400 per year, which their employer may also feel compelled to pay. 

We’re still waiting detail from the government on how it can help ease the administrative and cost burden on employers. Some ideas include using umbrella organisations to act as sponsors for specific sectors of the economy, where it may be appropriate and a transactional arrangement for those who do not need a licence or have a small number of vacancies to fill. (See more on sponsorship below.)

In the meantime, during the transitional period ending on 31 December 2020:

  • Free movement will continue.

  • EU citizens, including those that already have permanent residence, 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 EU Settlement Scheme opened formally on 30 March 2019 and applications are free of charge. EU citizens will have until June 2021 to register.

  • EU citizens who arrive during the transitional period will have three months to register for 'pre-settled stauts'. 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.

Explore our Brexit hub to find out about the latest developments, and for advice on managing and supporting your migrant workforce.

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 RQF 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.

Shortage occupations

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 RQF 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 RQF Level 6 or above, and certain creative occupations, do not have to comply with the Level 6+ requirement but must be skilled at RQF Level 4.

Migration Advisory Committee’s Tier 2 review 2016

The MAC's Tier 2 consultation 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. This charge looks set to be extended to EEA workers once the new immigration system is introduced in 2021.

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.

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.

Compliance

A significant number of compliance checks are being made by Home Office inspectors every year in order to verify 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.

All sponsoring employers therefore need to copy, certify and properly store all relevant documents.

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 currently £300 per year for students and £400 per year for all other applicants. The fee is also payable for dependant applicants. The fee must be paid before making an application.

The IHS looks set to be extended to all migrants coming to the UK. Unlike the Immigration Skills Charge, the cost of the IHS is incurred by the migrant. However, many employers may decide to cover the cost of the charge.

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.

Contacts

GOV.UK - UK visa sponsorship for employers

GOV.UK - Sponsorship: codes of practice for skilled workers

GOV.UK - Immigration rules: statement of changes

GOV.UK - Check if someone can work in the UK (interactive online tool)

GOV.UK - Employers: illegal working penalties

Books and reports

ANDERSON, B. (2015) Us and them?: the dangerous politics of immigration control. Oxford: Oxford University Press.

Journal articles

CHURCHILL, F. (2020) Employers welcome call to lower post-Brexit visa salary threshold. People Management (online). 29 January.

COLES, O. (2019) Should the UK adopt a points-based immigration system? People Management (online). 20 November.

DAVIES, G. (2018) Rising recruitment difficulties underline need for balanced immigration system. CIPD Voice. Issue 16, 29 November.

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

Gerwyn Davies: Senior 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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