Immigration and Employment issues in the UK's new Immigration System

The end of the resident labour market test: good news for employers?

8 October 2020

The resident labour market test will be abolished when the UK’s new immigration system starts on 1 January 2021.
 

For employers who rely on skilled foreign workers, this will mean greater freedom to employ who you want from anywhere in the world, but the visa costs will be high and the automatic rejection of any applicants who need a visa simply because of the cost could result in discrimination claims. 

This blog and our last blog on the right to work check grace period are part of our series on immigration and employment issues in the new UK immigration system.

How the resident labour market test is supposed to work

At the moment, a UK employer who wants to sponsor someone for a Tier 2 (General) visa – the main type – usually has to carry out a resident labour market test (RLMT).

This involves advertising the job in a special way for 28 days to see if there are any suitable settled workers available to fill the vacancy. Roughly speaking, a settled worker is a British or European Economic Area national, or someone who has indefinite leave to remain in the UK.

If any suitable settled workers apply (who meet the minimum requirements of the job) then you have to offer the job to them, rather than the non-EEA national you want to sponsor, even if the person you want to sponsor is the better candidate.

 

 How the RLMT really works

The RLMT is a charade.

In some cases the employer has been struggling for weeks or months to fill the vacancy using advertisements, social media, recruitment agencies and every other possible method. When at last they find a suitable candidate who happens to be a non-EEA national they have to advertise the job all over again on DWP’s Find a Job website and another website in the knowledge that they will have to sift through yet more applications from people who are not qualified for the job.

In other cases the employer is determined to sponsor their preferred candidate even though they could probably find a suitable settled worker to do the job (although maybe not as well) so they tailor the job advertisements to fit their candidate. This is not allowed but it is almost impossible for the Home Office to prevent because only the employer knows what the real minimum job requirements are. 

The RLMT is a laborious process. There are fiddly rules about the information which must be contained in the advertisements. Posting the advertisements and taking screenshots in the right way takes time. Assessing the applications and documenting the reasons for rejecting unsuccessful candidates take even longer.

The RLMT probably succeeds in its goal of discouraging employers from recruiting non-EEA nationals. This is one of the reasons why the Home Office has kept the RLMT going for so long, even though it knows that employers can manipulate the process.

 

Why the RLMT is being abolished at last

Details of the new immigration system are contained in the Home Office’s further details statement which it published in July 2020. For a summary see our guide to the new immigration system.

Keeping the RLMT under the new system would have been a disaster. At the moment employers are free to recruit from the European Economic Area, which has a population of over 500 million. The end of the Brexit transition period means that this pool is shrinking to Britain and Ireland, which have a combined population of around 70 million.

Having to arrange a visa to employ someone from the EU will be bad enough for employers. Adding the bureaucracy and absurdity of the RLMT would have compounded this.

 

Using visa and sponsorship costs to reduce economic migration

When the RLMT is abolished the Home Office will rely on the high cost of visas and sponsorship as one of its main tools to discourage employers from employing foreign workers.

This is the explicit aim of the Immigration Skills Charge, which was introduced in April 2017 at the rate of £1,000 for each year of a Tier 2 visa (£364 for small sponsors). In theory the money raised by the Immigration Skills Charge is supposed to fund training for UK residents. In practice it has been used to offset cuts in funding which used to come from other sources.

Sponsoring foreign workers is already expensive. It will become even more expensive when the Immigration Health Surcharge is increased later this year. The government fees for a five-year, non-shortage occupation Skilled Worker visa sponsored by a standard sponsor (as opposed to a small sponsor) will come to the best part of £10,000. Some of these costs can be paid by the visa applicant but not the Immigration Skills Charge – that has to be paid by the employer and cannot be passed on.

It is likely that high sponsorship costs are already a deterrent to many employers, although nobody knows for sure how much of a deterrent it is or how exactly this works. The Home Office has never tried to evaluate the impact of the Immigration Skills Charge.

Under the new system the same fees will apply to both EU and non-EU citizens, which will come as a shock to employers who rely on recruiting from the EU and do not pay any sponsorship costs at the moment.

 

New freedom to recruit foreign nationals

Under the new immigration system there will be four main requirements for a Skilled Worker visa:

  1. The applicant must have a job offer from a licensed sponsor.
  2. The job must be at a certain skill level.
  3. The salary must be at a certain level.
  4. The applicant must satisfy an English language requirement.

If those requirements are satisfied and the employer is willing to cover the cost of sponsorship – in particular the Immigration Skills Charge, which they cannot pass on – the employer will be free to recruit almost anyone they want, regardless of the person’s immigration status or nationality.

For many employers and foreign nationals this flexibility will be welcome – apart from EEA citizens, who will now need a visa to work here. Employers will no longer need to worry about their entitlement to recruit the best (non-EEA) candidate for the job if there may be suitable candidates here meeting the minimum job requirements.

 

Avoiding race discrimination

The Equality Act 2010 prohibits race discrimination, including on the basis of nationality.

With high visa and sponsorship costs designed to discourage employers from employing foreign workers, post Brexit under the new immigration system some employers will be tempted to introduce a recruitment policy of only accepting applications from those who do not need a visa.

However, whereas previously the RLMT – properly applied – mandated the recruitment of any suitably qualified UK/EEA applicants, even if better candidates might be available elsewhere, in the case of skilled workers it will now be more important than ever to consider all job applicants equally, regardless of their nationality or immigration status.

This is because, on the face of it, a policy of rejecting all applicants who do not have the right to work in the UK is a form of indirect race discrimination. Under the new immigration system, British and Irish citizens will all have the right to work in the UK. In contrast, only a small proportion of other nationals will have an immigration status which allows them to work, such as indefinite leave to remain, a partner visa, or pre-settled status under the EU Settlement Scheme. A policy of rejecting any applicants who do not already have the right to work in the UK will, on average, put candidates who are not British or Irish citizens at a disadvantage.

Unlike direct discrimination, indirect discrimination is allowed if it is objectively justified – that is, if it is in place to satisfy a real business need and is a proportionate means of achieving it. Simply wanting to save money (for instance the cost of a sponsor licence or the Immigration Skills Charge) is not sufficient to justify indirect discrimination. Under the “cost-plus” rule, some further valid justification beyond simply costs is required.

Of course, right to work checks before commencement of employment will remain as important as ever, but as the EHRC Code makes clear, they should be carried out in the final stages of the selection process, not at the outset.

 

What you need to do

  • Tell your recruiting team that the RLMT for skilled jobs is going to be abolished and that under the new immigration system you will be able to make offers to the best candidates regardless of their immigration status.
  • Review your recruitment policy. Make sure that it does not include a requirement for applicants already to have the right to work in the UK unless you have an objective justification for this (for example inability to obtain visas for unskilled jobs).
  • If you do not have a sponsor licence, consider applying for one now. If the best candidate for a skilled job needs a Skilled Worker visa you may need to apply for one anyway.  
  • Budget for the increased visa costs which you will incur when you recruit candidates from the EU under the new immigration system.
  • Read our guide to the new immigration system and contact our Immigration team or Employment team if you have any questions.

Further information 

If you would like any further information or advice about the issues explored in this blog, please contact  Andreas White or another member of  our Immigration team or Employment team.

 

about the authors

Kim covers all areas of business immigration. He has extensive experience of advising companies in the finance, media and technology sectors.  He has a particular interest in European free movement law and in the implications of Brexit for EU citizens living in the UK, and for their employers.

Andreas is a partner in our employment team.  He has substantial litigation experience, with a particular focus on complex and high value employment and partnership disputes. Andreas has a particular interest in international and cross border employment law. He is a former president of the labour law commission of AIJA.  

Özlem is very experienced in giving training talks on topical employment law issues and, as a member of the Employment Lawyers' Association (ELA), has participated in preparing ELA’s response to Government consultations on various issues.

 

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