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Should you apply for a Sponsor Licence now?

Employers currently need a Sponsor Licence in order to recruit skilled workers from outside of the EU. We also know, from the Government’s White Paper, that from January 2021 employers will need a Sponsor Licence to recruit EU nationals too.

With calls from some quarters for employers to obtain a Sponsor Licence now in order to secure future EU recruits, we look at the circumstances when a Licence is needed, both now and in the future.

What is a Sponsor Licence?

A Sponsor Licence gives the employer the authority to sponsor non-EU citizens and is valid for four years (for the time being, EU nationals can come to the UK under free movement).

The Tier 2 category is generally for skilled workers with long-term job offers, whilst Tier 5 is for skilled temporary workers. The most common category of sponsorship, and the focus of this article, is skilled workers under the Tier 2 General category.

Tier 2 General is usually for jobs classified at degree level or above, unless the job is on the Shortage Occupation List (SOL). There are ‘appropriate rates of pay’ associated with each job classification, with different levels depending on whether the migrant is classed as an Experienced Worker or a New Entrant. However, in addition to the appropriate rate of pay, there are also general minimum salary thresholds which apply across the board: £30,000 for an Experienced Worker or £20,800 for a New Entrant. The employer must pay whichever is the higher of the appropriate rate of pay or the general minimum salary threshold.

For example, the appropriate rate of pay for an experienced web designer is £24,000, however, this figure is superseded by the general minimum income threshold of £30,000. Therefore, an experienced web designer position must be paid at least £30,000 to be capable of sponsorship.

Under Tier 2 General, an employer must show that a job can’t be filled by a ‘settled worker’ (a UK/EU national or someone with a permanent right to live in the UK) and this is done by carrying out a Resident Labour Market Test.

At present there is a monthly cap on the number of available positions which can be sponsored under Tier 2 General.

The employer will also usually have to pay an Immigration Skills Charge per sponsored migrant (currently £1,000 per year).

What is happening from 2021?

From January 2021 there will be no preferential treatment for EU citizens over migrants from outside the EU, so EU citizens will need to be sponsored just like non-EU citizens are at present. There will likely be certain liberalising measures, such as the abolition of the requirement to have a Resident Labour Market Test, the abolition of the monthly cap, and the lowering of the minimum skill level for jobs from RQF Level 6 to Level 3.

However, the general minimum income threshold looks set to be retained. The Prime Minister purportedly favours the £30,000 level, although the precise level is open to consultation.

The Immigration Skills Charge also looks set to be retained, so hiring a French national could cost an employer £5,000 for a five year contract in the future.

So should I get a Licence now?

There are voices in some quarters suggesting employers should pre-emptively apply for a Sponsor Licence, in order to protect an employer’s ability to hire EU nationals in light of a potential no-deal scenario.

However, this seems questionable. Even in a no-deal scenario, EU citizens can still come to the UK, albeit no longer under free movement. Instead, EU nationals wishing to stay in the UK for longer than three months can apply for a new form of leave: European Temporary Leave to Remain (ELTR). ELTR allows EU citizens to stay in the UK for up to 36 months, with no path to settlement.

Individuals on ELTR will therefore have a three year period during which they can seek to ‘switch’ into an alternative immigration category which allows sponsorship. In addition, as noted previously, EU citizens will be switching into a more liberalised system from 2021.

Therefore, it seems premature to suggest that employers should seek a Licence now in order to safeguard the post-Brexit recruitment of EU nationals as employers could incur unnecessary time and expense. Furthermore, if an employer can’t demonstrate an immediate need for a Licence then it increases the chances of a Sponsor Licence Application being rejected.

Of course, employers who have a specific non-EU migrant in mind that they wish to recruit may be compelled to go down the Sponsor Licence route.

However with the direction of travel suggesting increased sponsorship in the future, there is a separate question around whether employers should apply for a Licence now, even if they have no immediate need to sponsor an employee, in order to avoid falling victim to any future spike in applications, and any protracted delay in decision-making that could follow.

At present the Home Office is turning Tier 2 Applications around in about four weeks. Whilst the Home Office has a remarkable knack of creating major backlogs in its own decision-making, these delays tend to be in the world of personal immigration (and asylum in particular) and so applying pre-emptively for a Licence now still seems premature.


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