Points-based immigration system: Implications for UK businesses

The government of UK a recently launched a points-based immigration system which will come into effect from January 2021.

 The key features of the new system are:

• Highly skilled workers, skilled workers and students wanting to come to the UK must follow the points-based system
• A job offer is mandatory for skilled workers
• UK employers now require a sponsor license to hire skilled workers from outside the country
• Salary threshold will now be 26,000 pounds per year, reduced from 30,000 pounds required earlier
• 70 points are the minimum score required to be eligible for a visa
• Low-skilled immigrants will not be granted visas
• UK employers can no longer employ low skilled immigrants

The points-based system will bring the following changes to the Tier 2 visa category in the UK:

• The current annual cap for this visa category will be removed
• The skills threshold will be lowered
• The resident labor market test will be removed

The changes proposed in the points-based system are likely to affect employers in the UK in different ways. It will be dependent on the sectors that they operate in, the skill level of their employees and their requirement of migrant workers from outside the UK.

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Implications for UK employers:

UK employers without a sponsor license will now have to apply for it if they wish to hire EU citizens from outside the country from January next year. This is certain to increase the number of applications for a sponsor license and the regulation will create difficulties for UK employers wishing to hire such workers from outside the country.

These employers must start the application process for a sponsor license immediately to hire talent after January 2021. The application process is likely to be longer with an extension of the processing time.

Employers in the UK should study their talent pipeline to determine their requirement of skilled workers from outside the UK. Factors such as their reliance on such workers, their plan to hire such workers from within the country should be considered. They should act quickly in the next ten months and think of future plans to recruit and retain their workforce to be well prepared for the changes in the immigration rules and its implications.

The ban on low-skilled workers will hit businesses in the country who have relied on such migrant workers in the past. They will now have a ten-month window to move away from their reliance on migrant workers for low-skilled jobs and find local talent to replace them. This can be a challenge considering the UK has an unemployment rate of 3.8% (February 2020).

Sectors such as retail, food, healthcare, and construction in the UK which rely heavily on low-skilled migrant workers are likely to face a challenge. They need to look for other ways to source such type of workers from within the country.

This is likely to create a demand for migrants in the UK with a Youth Mobility scheme visa, Spouse visa, Tier 4 visa, and Tier 2 dependent visa.

However, for employers, workforce planning is likely to become complicated and expensive. The other option for them is to invest if possible, in technology or automation that will decrease their reliance on low-skilled workers. They may also have to face the challenge of increased wages as the market for such workers will become competitive.

Despite the limitations and drawbacks of the new immigration system, employers in the UK must be prepared to meet the changes that will come into force after January 2021. They should make their contingency plans in order to get a head start once the rules come into force next year.