Pressure on Tier 2 quotas now a long-term trend

1 Jun 18

UNITED KINGDOM

IMPACT – MEDIUM

U.K. employers should plan for increased challenges in recruiting high-skilled workers from outside the EU, after official Home Office figures recorded a consecutive six-month pattern of Tier 2 (General) visa quotas being met. Hundreds of employer applications have been refused over the last half year based on the quota provisions that were originally set in 2010 and, until December 2017, provided ample visas to meet employer demand. It now appears that quotas will be routinely exceeded and employers should consider the situation as a long-term trend and not just a system glitch.

Some of the contributing factors to the skills shortages are a tight labor market and the “Brexodus” of talent from the U.K. as European Union migrants opt to leave the U.K. ahead of Brexit, as well as systemic problems in the way the U.K. trains its labor force. The government is facing pressure from specific sectors to ease Tier 2 quota restrictions, in particular to lift the quotas on doctors from outside the EU (who are essential to the operation of the National Health Service and account for one third of all Restricted Certificates of Sponsorship, or RCOs, issued). However, Prime Minister Theresa May recently rejected this proposal, and it is unclear whether the government will spend resources to make piecemeal adjustments to the system, given that the entire U.K. immigration system will be overhauled shortly due to Brexit. Further, the Conservative Party’s political commitment to reducing net migration to the tens of thousands remains firmly in place, despite opposition from the business community, suggesting that quotas, however unpalatable, are here to stay.

Here’s a summary of the current Tier 2 (General) RCoS system and how businesses can adapt to this tougher immigration environment:

Tier 2 quotas

Where U.K. employers can show there is no suitable resident worker to fill a role, they may apply for an RCoS. The number of RCoS available nationally to all U.K. employers is capped at 20,700 per year. This overall quota is distributed unequally to provide greater availability for high-demand months and lower availability in other months. During the peak months of April through September, the Tier 2 quota is 2,200 per month; then, during October through February, it is lowered to 1,500 per month and in March it drops to 1,000.

Points system

Employer applications may be submitted up until the fifth of any month, and will be considered by the Home Office by the 11th of the month. Priority will be given to applications based on a points system which prioritizes shortage occupations, then certain Ph.D. level roles and then applies points on a sliding scale based on salaries, with lower salaries earning fewer points and higher salaries being awarded more points. Applications with the highest number of points are allocated first from the monthly pot. While the exact qualifying points are an unknown quantity each month, there is a clear trend of the qualifying salary level raising higher and higher, with roles offering lower salaries falling outside the quota. In April, the points threshold was approximately 46, and applicants, where their prospective employer has conducted a resident labor market test, had to meet a threshold salary of above £50,000, while in May the points threshold was 51 points, so roles paying less than £55,000 were rejected, effectively disqualifying hundreds of applications at the “low” end of the skilled worker pay range (despite otherwise being considered lucrative professional positions).

Refiling the next month

A large number of applications have been rejected over the past six months due to high demand and exacerbated by the logjam caused by unsuccessful applications being resubmitted the next month. The number of applications submitted has consistently been double the monthly quota allotment. Where an application is rejected, employers may refile the following month and each subsequent month. In the recent trend, a spillover effect means refiled applications quickly fill the available quotas for the next month, adding to the pressure. Refiling is only possible where the resident labor market test is still valid (typically within six months of the job advertisement being posted). This is less problematic for employers with rolling recruitment programs, but theoretically after five applications for an RCoS, an employer would have to start at the beginning and readvertise the role to confirm that no suitable resident worker is available. The points system arguably incentivizes companies to offer higher salaries to improve their chances of obtaining a Tier 2 RCoS, but salaries obviously must be within the advertised range and in line with company protocol to avoid any discrimination issues.

Planning ahead

The high demand in the Tier 2 category is likely to continue for several months, if not indefinitely. The trend began in December 2017 and carried into the new fiscal year as the higher quotas in April and May were not sufficient to account for the backlog from previous months. Multinational companies are likely to have felt the impact already, with employers who recruit less frequently being more likely to get caught by the increasingly restrictive quota.

Employers must learn to operate in this new environment by:

  • Viewing salary as the deciding factor when quotas are filled.
  • Expecting fewer roles to qualify for an RCoS due to salary thresholds.
  • Anticipating delays in obtaining Tier 2 RCoS for other roles on middling salaries.
  • Seeking alternative immigration routes to ease pressure.
  • Opting not to pursue an RCoS in all circumstances.

Alternative options

Not all migrants are subject to the RCoS quota. EEA nationals and their family members, individuals qualifying for dependent spousal visas, intracompany transferees with at least one year of experience within the corporate group (unless exemptions apply), Tier 2 high earners and Tier 4 students graduating in the U.K. all fall outside the cap. It is important that employers explore all alternative visas or exemptions from the cap and engage in strategic planning, such as ensuring that the Tier 5 temporary work and Tier 2 (ICT) options are used where possible to allow employees to start work while resubmitting their applications, and looking at temporary work locations in another overseas office while waiting for U.K. quota availability. Although employers and migrants value Tier 2 (General) status because it leads to permanent residence, this benefit must be weighed against the increasingly restricted quota system. It is also now imperative that a credible risk assessment based on salary is made before any resident labor market test is conducted and the role is advertised, and certainly before contingent offers are made, rather than expecting quota availability to improve. BAL has extensive experience in helping employers strategize and can advise on compliant solutions on a case-by-case basis.

This alert has been provided by the BAL Global Practice group in the United Kingdom. For additional information, please contact uk@balglobal.com.

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