Skilled workers under the Points Based System (Tier 2) Statement of Intent

Tier 2 replaces the existing work permit scheme (including Training and Work Experience Scheme “TWES” permits) and, post November 2008, will be the means by which UK employers are enabled to recruit individuals from outside the EEA where a resident worker cannot fill a particular job.

Once application, Two Elements

Whereas the current regime involves two separate applications (one for the work permit, and another to have the passport stamped either in the UK or at a Diplomatic Post), Tier 2 will entail just one application of which there are two elements:

1. Employers must be licensed to act as a sponsor by UKBA, in order to issue “certificates of sponsorship”, before any migrants can come to the UK. The sponsor is responsible for assessing the factual basis on which it issues the “certificate of sponsorship” and holding data to show their decision to issue was compliant. As a condition of keeping the license, sponsors must alert UKBA if employees do not comply with their immigration conditions e.g. do not turn up for their job. Please refer to our Law Now on licensing for more details of a sponsor’s responsibilities.
2. Every new migrant and their dependants will need to make an entry clearance visa application prior to travelling to the UK, where they must provide documents and the “certificate of sponsorship” to show they meet the points assessment/threshold detailed below (whereas currently on-visa nationals coming for six months or less to work do not require entry clearance).

Where the migrant is already in the UK, either in another immigration category such as work permit holder or under a Tier 2 visa which is due to expire, they will need to make a further leave to remain application under Tier 2 where again they must provide documents and a “certificate of sponsorship” to show meets the points assessment/threshold detailed below.

Please note that the issue of the “certificate of sponsorship” from the employer sponsor is not sufficient to guarantee the migrant’s admission to the UK or extension of stay in the UK under Tier 2. The migrant must meet the points threshold, as well as other mandatory checks of language ability, ability to maintain themselves financially, and criminal/immigration history in order to be approved. Should a migrant’s Tier 2 entry clearance visa/extension application be refused, there will be no right of appeal (although there will be a limited administrative review process). This “one strike and you are out” approach differs from the historic practice of Work Permits (UK) to request further information if needed before approving work permit applications. As a result, it is essential that any Tier 2 application fulfils all the documentary and mandatory requirements of the scheme in order to ensure approval.

Key Measures

Tier 2 is structured around a number of key measures, which are looked at in detail below. The Government is presenting these measures as new. On our analysis, whilst some measures are genuinely new and may represent a significant departure of practice for employers, others simply replicate the current work permit scheme.

Once licensed as sponsors, employers will be able to bring migrants to the UK where:

• there is a shortage occupation as defined by the MAC;
• the job has been advertised to the resident labour market before migrant is employed.; or
• the application qualifies as an intra-company transfer.

Migration Advisory Committee and Shortage Occupations

The Migration Advisory Committee (“MAC”), a body set up as part of the PBS reforms to monitor the economic effects of migration and to advise Government, will be responsible for identifying skills shortages in the UK. Where a role is defined by the MAC as a “shortage occupation”, the employer sponsor will not need to show that it has advertised the position and can issue a “certificate of sponsorship” for the migrant (although s/he will still need to meet the other parts of the points assessment as set out below). Under the current work permit system, a shortage occupation list is generated by UKBA, but this the MAC is an independent. It remains to be seen how responsive this body will be to the needs of different industry sectors. For more information, please refer to http://www.ukba.homeoffice.gov.uk/aboutus/workingwithus/indbodies/mac/.

Resident labour market test

Where a non EEA-worker is hired from outside the company/group into a non-shortage occupations, the “resident labour market test” will apply in order to ensure employer sponsors have adequately advertised the role to the resident labour force (as it does with the current work permit arrangements). However, whereas a variety of advertising/recruitment media have historically been accepted for work permit purposes, under Tier 2 all advertising must take place either:

• at JobCentre Plus; or
• in accordance with a “sector specific Code of Practice”.

As Jobcentre Plus is an unrealistic option for many employers, we awaiting the Codes of Practice for further detail to assess whether current employer recruitment practices will be acceptable under the Tier 2 regime. Whichever media is considered appropriate by the Codes, the post itself must have been advertised for a two week period (unless the prospective earnings are £40,000 plus in which case one week is appropriate). Employers will need to confirm that they have met the resident labour market test when issuing “certificates of sponsorship” and therefore must have means of recording the advertisement that they will rely upon should the case be audited by UKBA.

The only exception to the need to meet the resident labour market test is where an employee is already employed under the Tier 1 post study work visa (currently International Graduate Scheme “IGS”) and applies to switch to Tier 2 for long term employment with the sponsor. Where the migrant has performed the role for at least 6 months, the employer will not need to meet the resident labour market test in order to issue a “certificate of sponsorship”. This does not represent a significant departure for the conditions under which employees can currently be brought under a work permit.

Intra-company Transfer

The intra company transfer provisions of Tier 2 mirror the current work permit arrangements, in that the assignee must have 6 months experience at the company overseas, and the assignment must take place within the UK sponsoring company’s corporate group (although the Statement of Intent description of acceptable corporate relationships is neither clear nor detailed).

Skill level and Appropriate Rate

The current work permit regime expects any role (but not necessarily the migrant himself) to be at “graduate level”. Under Tier 2, the skill level of the role itself has been dropped to NVQ level 3, so a wider variety of posts should qualify. The UKBA will publish a list of occupations that are at NVQ level 3 or above, to minimise confusion for employers.

In addition to meeting a skill level threshold, the role must be paid (whether in direct salary or with allowances) at the “appropriate rate” in order that it does not undercut the resident labour force. Employers can refer to the Annual Survey or Hours and Earnings from the Office of National Statistics “ONS” or https://www.jobs4u.gov.uk. to ensure salaries are appropriate.

These criteria will need to be assessed by the employer as sponsor, prior to issuing the “certificate of sponsorship”, and would be subject to review should UKBA choose to audit the case.

English language assessment

Whereas the current work permit scheme simply assumes the employer has assessed whether the migrant has the requisite language skills to perform a role, the PBS reforms seek to ensure that all migrants have an appropriate English language ability. As part of the entry clearance application, those applying with a “certificate of sponsorship” based on a shortage occupation or the resident labour market test, will need to provide evidence of their ability to speak English to Council of Europe A-1 level. In particular, they will need to provide:

• a passport for majority English speaking country (Please note that this list includes Antigua and Barbados, Australia, the Bahamas, Barbados, Belize, Canada, Dominica, Grenada, Guyana, Jamaica, New Zealand, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines, Trinidad and Tobago, and the USA. However, it does NOT include South Africa or any of the other African nations that speak English); or
• a degree certificate for course taught in English (Please note that Canadian degrees do not meet this requirement, due to number of French-speaking Universities); or
• a test certificate for English language course at level A1 or above (which means holder has the ability to understand and use everyday expressions, basic phrases, and to introduce themselves and to ask basic questions).

Please note that those entering as intra-company transferees, will NOT have to evidence English language ability as part of the Tier 2 entry clearance application – a major concession that has been won by employers. Intra-company transferees need only satisfy the English language requirement after three years, should they require a Tier 2 extension of stay. This gives employers the opportunity to offer language training and/or testing in the UK, where necessary, rather than prior to relocation.

Maintenance requirement

Tier 2 has introduced a mandatory maintenance requirement as part of the entry clearance application, to ensure that the migrant will be able to support himself for the first month prior to payment of salary. The figure has been set at £800 per applicant, with an additional amount (2/3rds £800) for each dependant family member. We are awaiting guidance on how long or where this money must have been held prior to the application. Previously the requirement to “maintain and accommodate yourself without recourse to public funds” was stated in the immigration rules, and bank statements often requested, but this mandatory requirement means that the migrant must be able to provide original bank statements evidencing this fixed sum in order to apply. Employers may well have to support migrants with loans in order to meet this requirement and ensure that there are adequate claw back provisions if the migrant decides not to proceed or leave employment before repayment has been made.

Points Assessment

The Tier 2 applicant must amass an overall pass rate of 70 points from:

• the actual test on a certificate of sponsorship (looking principally at qualifications and earnings);
• the maintenance requirement; and
• English language requirement.

Where the role is a shortage occupation, 50 points are awarded automatically, plus 10 for meeting English requirement and 10 for meeting maintenance requirement (both of which are mandatory). This means qualifications and salary need not be considered.

Where there is an advertised hire or an ICT, 30 points are awarded automatically, plus 10 for meeting English requirement and 10 for meeting maintenance requirement (both of which are mandatory). Therefore, the migrant needs an additional 20 points for qualifications and earnings. If an applicant has a PHD, s/he will need earnings of £17,000 minimum. If s/he has a Bachelor’s degree, s/he will need earnings of £20,000 minimum, if the applicant has NVQ3, s/he will need earnings of £22,000, if person has no degree, then need earnings of £20,000.

For example, looking at this matrix employers will encounter problems with:

• Advertised graduate hire with bachelors being paid less the £20,000; or
• ICT with no degree being paid less than £24,000.

Extensions

Under Tier 2, leave will be granted for an initial three year period, and then a further two year extension to take the migrant to the five year mark to qualify for indefinite leave to remain (ILR). Under the existing system, work permits can be gained at the outset for a full five-year period, therefore this introduces an additional burden for employers.

At the extension stage the migrant will require a fresh “certificate of sponsorship” from the employer to confirm that the role still meets the skill and “appropriate rate” salary level, and that migrant meets the points assessment. The Government has taken care to specify that “the number of points which are awarded for these attributes and the pass mark may change”, in order to avoid the charge that any migrant has a “legitimate expectation” of qualifying for an extension simply by virtue of entering in this category in the first place. However, the statement does make clear that a further resident labour market test or maintenance test will NOT be necessary on extension. Those who have previously met the English language criteria will not need to reprove their qualifications, but the English language requirement will kick in for intra-company transfers (who were exempted on initial entry from this test – see above)

Change of Employment

Where a migrant needs an extension of leave due to a change of employment, s/he will not need to re-prove qualifications or maintenance as above. However, the Tier 2 system does expect that the resident labour market test be met. This is a significant change from the existing work permit scheme, whereby those with work permits can move to the same role at a different employer (e.g. Analyst at one Bank moves to competitor), without the need to show the role has been advertised.

What this means for your Business?

• Loss of ability for non-visa nationals entering UK for 6 months only to enter on basis of work permit alone – under Tier 2, every migrant must go through an application at the Embassy for an entry clearance visa.
• For large employers Tier 2 will cover their existing work permit employees and anyone working with them on the Training and Work Experience Scheme. It will not cover overseas domestic workers in private household, of which many assignees bring nannies and other domestic staff to the UK.
• Recruitment practices may have to change in line with sector specific Codes of Practice (still to be published)
• Graduate programmes – will start with Tier 1 post-study visa, and then be able to switch to Tier 2 after 6 months (without need to meet the resident labour market test).
• Change of employment applications will be more complex – need to show role has been advertised, even if someone already has a work permit/Tier 2 permission for another employer sponsor.
• Costs per migrant will increase if required beyond three years, due to introduction of 3-year initial leave grant plus extension thereafter.

What actions should you take?

• Wait to make sponsor licensing application as certain points due to be clarified by Head of Sponsor Licensing programme in June 2008. Preparations can nevertheless be made by referring to our Law Now on licensing.
• Consider who will be responsible for storing information on resident labour market test to prove issues of Certificate of Sponsorship was appropriate, and whether training required to take on this responsibility.
• For outside hires, educate recruiters regarding English language requirement where not from English speaking country or where degree not taught in English – if the migrant will need to sit a test, this should be done sooner rather than later in order to avoid delays.
• Consider how to assist hires from outside UK to meet the maintenance requirement – what will be procedure to transfer money to their bank account, if they are not in sufficient personal funds to meet £800 maintenance requirement. This will need to be considered at start of assignment, in order to avoid delays.

Please click here to read the full Government statement.