Today’s government announcement marks a big change in how firms will be able to hire overseas workers (including from the EU) from 1 January 2021. The CBI has long campaigned for the new immigration system to be open and controlled – valuing people’s contribution beyond their salary while retaining public confidence. Several features of the new system demonstrate that business’ voice has been heard.
What will the new system be?
- All employers seeking to hire from overseas must become a licensed ‘sponsor’. This requires employers to meet legal responsibilities set out by the Home Office
- All overseas workers must have
- A job offer
- A-level equivalent skills or above (RQF level 3+)
- Speak English at a required level
- Overseas workers that earn over £25,600 and above the median salary for their sector (occupational threshold) will automatically qualify for a visa
- Overseas workers that earn a minimum of £20,480 or less than the occupational threshold could be eligible for a visa if they have sufficient top-up ‘points’. Points will be awarded for:
- Jobs in a shortage occupation (decided by the Migration Advisory Committee)
- Overseas workers with a PhD relevant to the job.
The system does not include a temporary visa route, or a visa route for freelancers or the self-employed. Seasonal agricultural workers are only eligible to come to the UK on an expanded pilot scheme, capped at 40,000 places per year.
You can read the government’s full policy paper outlining the new system here.
Which sectors will be most affected?
While the new system is likely to meet the needs of more employers than earlier government plans, it will still pose challenges for accessing labour and for sectors with freelance roles.
- No temporary visa route means the CBI still has concerns about employers ability to hire labour to fill shortages. This will impact sectors like care (care workers ineligible), construction (general labourers ineligible), hospitality (waiters/waitresses, housekeepers, cleaners all ineligible), food and drink manufacturing (factory workers for food stuffs ineligible), and logistics (LGV drivers and warehouse operatives both ineligible)
- No dedicated route for freelancers or the self-employed will have a big impact on sectors which currently have a high proportion of EU nations with this type of contract, like construction and the creative industries.
The government has said that urgent reforms to the process employers must go through to get work visas in the future will not be ready from day one. This, alongside expensive charges, mean SMEs are especially likely to find the system difficult to access.
- No immediate reform of the administrative licensed ‘sponsorship’ process means employers will have to adapt to a bureaucratic and complex process, similar to the existing non-EU system, before any potential future reforms
- No scrapping of expensive charges means that employers will still have to pay the £1,000 per year, per worker Immigration Skills Charge. Overseas workers will also still have to pay the £400 per year Immigration Health Surcharge (including family members). Keeping charges and visa fees at current levels means an SME hiring five EEA workers for five years could face an additional cost of £43,167.
How has the CBI influenced post-Brexit immigration?
Through public interventions, evidence-submissions and private lobbying, the CBI has secured several policy wins which mean the new immigration system will be more flexible, fair and responsive to the economy than it would have been under earlier government plans.
- Reduced the salary threshold so that £20,480 is now possible – the government originally set the salary threshold at £30,000, which would have excluded 60% of medium skilled jobs being eligible for overseas workers. Under the new system overseas workers are eligible for a visa if they earn above the minimum salary threshold of £20,480 (and meet criteria for top-up ‘points’). They are guaranteed a visa if they earn over £25,600
- Secured commitment to a genuine points-based route in the future – while it won’t be ready from day one, an individual will have the right to work in the UK based solely on their individual characteristics (like qualifications, age, work experience), rather than the job they are coming to do. This is a ‘genuine’ points-based route, similar to Australia, and will enable more flexibility in the new system
- Gained assurance that free movement continues for a further six months – although the new immigration system technically comes into force on 1 Jan 2021, the government have confirmed that the checks employers must carry out when hiring EU nationals won’t change until 30 June 2021 (to align with deadline for the EU Settlement Scheme). Employers will still be able to hire EU nationals based solely on their passport/ID card for an extra six months (over which period EU nationals still have visa free travel to the UK)
- Secured an extension to the post-study work visa – students can now stay and apply for work in the UK for up to two years after their University course ends (up from six months). This is especially important for businesses that hire graduates, and the Higher Education sector.
What happens now?
The CBI will continue to campaign on members’ behalf to ensure the new system is operationally effective and share relevant insight and intelligence.
- Ensuring the new system works from day one – the CBI is aware that businesses will not be able to access overseas workers through the new system if it is not operational from 1 January 2021. We will continue to ask for reassurance from the Home Office that the new system will be delivered on time, and continue to campaign for urgent reform to the employer sponsorship process
- Sharing guidance – the government will start engagement and outreach on the roll out of the new system from next month. The CBI will keep members updated of relevant guidance and updates on My CBI. The CBI is planning to produce its own guidance and briefing events for members on how to prepare for and navigate the new system later in the year.
Our private lobbying and public campaigning over the next few months will be informed by our members’ experience. We want to hear your views on:
- How you think the new system will impact your business
- Whether you think your business has time to adapt to the new system.
To share your views, or if you have any questions on the new system, please get in touch.