By Jackie Penlington, below, Managing Associate at Stevens & Bolton LLP
The reality of recruiting overseas talent and transferring UK employees overseas post-Brexit has begun to bite, and in the current economic climate many businesses are struggling to grow and sustain themselves. Employers in the UK no longer have free access to the European talent pool and, as a result, recruiting European nationals now generally means having to sponsor them in the UK role with all of the red tape and costs that this involves. To help remedy the situation the Government recently launched a new immigration category – the Scale-up route – promising it as a solution that “makes it quicker and easier for fast-growing businesses to bring highly skilled individuals”. But, in reality. how useful is the new Scale-Up category likely to be?
What are the business criteria?
The business must first apply for a Scale-up sponsor licence. Those that already hold a Skilled Worker or Global Business Mobility: Senior or Specialist Worker sponsor licence will need to apply to add the Scale-up element to their existing sponsor licence. The Scale-up sponsor licence will be granted for a one-off period of four years and cannot be extended.
In order to qualify as a fast-growing business and be eligible to sponsor a worker under the Scale-up route, a business must have an annualised growth of at least 20% in either employment, or total sales in the three-year period immediately before the business is approved by the Home Office to sponsor Scale-up workers – it also needs to have had at least 10 employees at the start of the same three-year period. However, it is anticipated that only a small number of businesses will actually meet these requirements.
How do individual workers qualify?
For an individual to qualify under the Scale-up route, they must meet all of the following criteria:
- have a job offer from a business that holds a Scale-up sponsor licence for a highly skilled role (at least RQF Level 6– i.e., graduate level role or above) which is on the list of roles eligible for a Scale-up visa;
- be paid at least the minimum salary requirement – the employer must pay the higher of £33,000 per year, £10.10 per hour or the specific ‘going rate’ for the relevant job role (which varies from role to role and can be checked on the skilled occupation list);
- satisfy the English language requirement – if the individual is not a national from a majority-speaking English country list this will generally mean taking and passing an approved English language test;
- meet the financial requirement – this is met automatically if the individual has already been living lawfully in the UK for the last 12 months. Otherwise, the scale-up business can certify this on the individual’s behalf or the individual must provide bank statements showing they have funds of at least £1,270; and provide a clear TB test certificate (if required).
What are the conditions of leave?
If successful, UK Visas & Immigration will grant an initial 2-year Scale-up visa. However, unlike the standard sponsorship route, the individual only has to remain sponsored by their Scale-up sponsor for the first 6 months. After 6 months, they may leave their sponsored role (with no requirement to notify UK Visas & Immigration) and remain in the UK and may work for another employer. Before the expiry of their two-year Scale-up visa, the individual must submit an extension application for a further three years as an unsponsored worker.
To qualify for this extension, a Scale-up worker must be able to demonstrate PAYE earnings in the UK of at least £33,000 per annum. Overseas income, self-employed earnings and savings would not satisfy this requirement.
The good news is that this new Scale-up category does lead to Indefinite Leave to Remain in the UK (i.e., permanent residency or settlement). Individuals can also amalgamate time already spent under certain work routes (e.g., Skilled Worker) to count towards the 5-year residency period required for Indefinite Leave to Remain.
How helpful is the Scale-up route for UK business?
The Scale-Up route provides another option for certain UK businesses looking to source overseas talent. One advantage of this route is the reduced cost compared to the standard sponsorship route (Skilled Worker or Senior/Specialist Worker) as there is no Immigration Skills Charge payable. The fact that the individuals need only be sponsored for 6 months could also reduce some of the sponsorship burden for businesses.
However, there are still costs involved – the immigration fees alone for the initial 2-year visa amount to just under £2,000. Given that individuals sponsored are only tied to their Scale-up sponsor for the first 6 months there are understandably concerns around employee retention. Will employers choose to go through the administrative burden and costs of applying for a Scale-up sponsor licence and sponsoring an individual if the sponsored worker can move on so quickly?
Businesses also need to keep a close eye on any Scale-up worker’s salary so that the individual is able to meet the salary threshold for the extension application. Any period of unpaid leave (other than for statutory reasons) may impact the individual’s ability to extend their immigration leave. From the individual’s perspective, the requirement to be paid at least £33,000 per annum through PAYE also means that self-employment is not a realistic option.
This new immigration category also offers no help to businesses recruiting for lower skilled roles. There is no specific immigration route for lower skilled roles – a gap which affects certain sectors, such as hospitality, retail and construction, more than others. This is a deliberate policy decision from UK Government but has left many businesses with skills shortages. Some restaurants are already closing or offering reduced opening times purely because they don’t have enough staff to operate.
Whilst the Scale-up visa is a good idea in principle, the strict criteria and bureaucracy involved means it’s unlikely to help many businesses in practice. With UK businesses struggling on many fronts at the moment, the UK immigration system is often more of a hindrance than any help to them. If the Government is serious about staving off an economic recession, they need to reflect and consider proactive immigration measures to help UK businesses recruit the staff they need.