Small Business Research and Enterprise

By: Ilaria Iovieno (Associate) and Jessie Tse (Immigration Paralegal), Fragomen

Introduction 

Three years post-Brexit and the impact on the UK’s ability to recruit foreign talent continues.  According to Home Office data, there were 113,555 overseas work visa applications in 2019, before Brexit. This number increased to 314,064 in 2022 after the introduction of a simplified Points Based System. With the UK no longer in the EU, all foreign nationals (except Irish nationals) need a visa to work in the UK. As a result, more businesses need a sponsor licence to recruit and retain overseas talent and continue to be competitive via one of the two main sponsored work routes. 

Skilled Worker Visa 

The Skilled Worker visa allows foreign workers to come to the UK for a skilled job with a Home Office approved employer. To qualify for a Skilled Worker visa, the applicant must have been offered a job by an employer that holds a licence to sponsor migrant workers. As part of their application, applicants need to satisfy the English language requirement. As the current Immigration Rules stand, they must be paid the higher of £26,200 per year, or the going rate for their job category, as specified by the Home Office. All this information will be confirmed in a Certificate of Sponsorship issued to the workers by the prospective employer. 

Workers then submit an online application form and attend a biometric appointment at their local visa application centre. The standard processing time is three weeks for overseas applicants and eight weeks for applications from the UK. Expedited service is available for extra cost under certain circumstances.

Many businesses tend to opt for the Skilled Worker visa because it can be extended indefinitely for up to five years at a time or converted after five years to Indefinite Leave to Remain (ILR), also known as settlement. It is important to note that not all visa types lead to ILR. 

The Skilled Worker route can be useful to employers looking to hire talent from overseas or retain certain employees already in the UK. For example, a business may identify a candidate who is already in the UK and holds a Student or Graduate visa and wishes to retain them on a long-term basis, or a current employee may need to be sponsored to continue their role following a change of personal circumstances or job.  

Global Business Mobility (Senior or Specialist) Visa  

This route allows businesses to transfer employees temporarily from overseas to the UK. To be eligible for this visa, applicants must have been employed by the business’ overseas entity for at least 12 months and be paid a salary package equivalent to at least £45,800 per year. If applicants are high earners with an annual salary of £73,900 or above, then the 12 months’ experience requirement is waived but they must be employed by the overseas entity at the time of application. The process is the same as for Skilled Worker visas; however, applicants do not need to meet the English language requirement. Unlike Skilled Worker permission, this route does not lead to settlement and visas are capped at five years (or nine years for high earners).  

Visa fees

The UK benefits from an immigration system with relatively fast processing times, digital technology and a typically smooth process. All of this comes at a price, with UK visas being some of the most expensive in the world. Generally, a small company will pay  government fees of £6,600 for sponsoring a five-year work visa. Once the higher Immigration Health Surcharge should come into effect on 6 February 2024, sponsorship fees will increase to around £8,600. For a family of four, the total government fees would amount to around £26,000.

Applying for a sponsor licence  

Employers are required to obtain a sponsor licence to issue Certificates of Sponsorship and hire or retain foreign talent. Sponsor licences are valid for four years, after which it must be renewed.  Employers must follow a strict application process to become licensed sponsors and be able to commit to its sponsorship duties.  

Most operating businesses should be eligible for a sponsor licence which is obtained through an online application, supported by specific corporate documents (such as evidence of PAYE and VAT registration, a copy of a lease or title register, corporate bank statements and employer’s liability certificate). Applications are processed within eight weeks, with priority processing options available. The government fee for a sponsor licence application is £536 for small companies (larger companies would incur a higher fee).

A key part of the application process is identifying an appropriate UK-based employee to act as the Authorising Officer among the most senior workers responsible for recruitment. Once the sponsor licence is in place, the Authorising Officer is ultimately responsible for its management and compliance. It is important that this employee is well-versed in the various compliance obligations and that the business implements appropriate processes to support adherence. The Home Office may sanction a business or consider downgrading their licence depending on the type of breaches.

Looking ahead

The UK immigration landscape is constantly evolving, given it is strongly tied to government policy and the economy. The Home Secretary recently announced some changes set to take effect in spring 2024, which include a huge increase to the minimum salary threshold for Skilled Worker visas from £26,200 to £38,700 per year. While this will not apply to those who hold Skilled Worker visas before its implementation, it may affect immigration trends going forward, as a higher number of foreign workers may no longer be eligible for sponsorship. The real impact remains to be seen, particularly for those sectors that rely on workers from overseas, such as construction, healthcare and manufacturing, but whose salaries are typically lower than the revised threshold. There will be exceptions though, with ongoing reviews of the system to ensure it is adapted to business and economic needs.

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