On 30 June, the UK Government published its Independent Review into labour shortages in the food chain supply.
The report highlighted that there had been a significant decline in employment in both the agriculture and manufacturing sectors. However, in my experience, I've seen businesses struggling with skill shortages across all aspects and levels of the food and drink industry.
Given the difficulty recruiting within the domestic market, I have seen an increase in the number of enquiries from businesses looking to bring in staff from abroad. In many cases, this means looking into sponsoring workers as other visa routes may not be available. However, the immigration process can be complex and appear burdensome for businesses without experience of it, which puts many off the idea of sponsoring workers to come to the UK.
How does sponsorship work?
Not every business can bring someone from abroad to fill a vacancy, no matter what difficulties they have had finding local workers. Before a business can support an individual's visa application, it has to apply to the Home Office to get a sponsor licence. The business has to satisfy the Home Office that it has adequate processes in place to monitor sponsored workers and comply with a set of obligations imposed by the Home Office. Businesses with sponsor licences effectively act as part of the immigration enforcement system: they ensure that foreign workers are paid at a level which does not undercut domestic workers, and that only people who are suitably qualified for the role come to the UK.
Not every role qualifies for sponsorship, and one of the first steps take with any enquiry is to make sure that the business intends to sponsor someone to fill a suitably skilled job. Previously a job had to be skilled to degree level, but now the level of skill required is equivalent to a Scottish Higher or A-Level exam. This presents businesses with a much wider range of roles that can be filled by workers from outside the UK. In the past six months, I've had enquiries from businesses looking to recruit hospitality staff, chefs, production managers and senior managers and directors. A sponsor licence can be used at most levels of a business, although more junior or manual roles are less likely to be suitable.
Once a business has a sponsor licence, there is no limit on the number of people they can bring to the UK. There are different processes involved for sponsoring people from outside the UK and people who are in the UK with existing visas. It is important to make sure recruitment staff understand the different processes and record keeping responsibilities to ensure that they comply with their obligations to the Home Office.
There is also a cost to sponsoring work visa applications. Every time the business sponsors a visa application, they will need to pay a Certificate of Sponsorship fee of £199 and an Immigration Skills Charge. The Immigration Skills Charge varies depending on the size of the company and the length of the visa, but for a medium or large company to support a three year visa it is necessary make an initial payment of £3,000. It is also possible that this fee will be increasing in late 2023, or early 2024, as part of the UK Government's measures to address net migration.
Once the company issues the Certificate of Sponsorship, an individual will make their visa application. This may require them to pass an English language test, and the application itself will involve further fees. These fees will increase in late 2023, and by the end of the year it is likely a three year visa will cost in the region of £4,000. In an increasingly competitive market for talent, some businesses are undertaking to meet this cost to recruit key talent, and I encourage businesses to consider the costs of sponsorship at the outset as it can quickly become expensive. For example, a medium-sized business that needs to apply for a sponsor licence and then wants to sponsor a skilled member of staff for three years, and support the visa applications for the employee's two dependents, could find the Home Office fees running to more than £15,000 by the time the fee increases come into force. In addition, the standard process can take a minimum of three to four months, although expedited applications are possible (but the Home Office charge more for these).
What particular issues affect the Food and Drink industry?
When I have dealt with applications for sponsor licences from food and drink businesses, I have found that they are often asked for additional information by the Home Office. Every sponsor application requires set documents to be submitted, but the Home Office can always ask for additional information. They have done so regularly where a company is small, or in a sector such as food and drink which has not traditionally used the Skilled Worker visa route. These requests can be frustrating, as they can slow the licence process and delay recruitment, but we have been able to pre-empt some of these requests by providing information up front. This can include details of previous recruitment exercises, copies of key policies and procedures and details of how the business operates the 'right to work' check.
A further issue seems to be an increased risk of Home Office audits once a licence is in place. The Home Office is able to visit a business without notice to check they are keeping the correct records, and to make sure that a sponsored worker is doing the job they were sponsored to do. This is particularly an issue in the food and drink sector, as many production roles need to be checked to make sure they are not considered to be low skilled. One of my clients was once visited by the Home Office as they wanted to understand what a distiller would be doing on a day to day basis, and to make sure that the job had been correctly identified as a production manager. These sort of visits can be stressful for a business and the employee concerned, but a business can take steps to prepare for them and avoid any unnecessary stress.
What other considerations are there?
I once sat in a Parliamentary Committee where statements were made to the effect that a sponsor licence was a quick process and could be completed in less than 30 minutes. While the online form might look simple, any business which applies for a sponsor licence without detailed consideration is risking trouble. In my experience, before a business applies for a licence they need to consider all of the following:
1. Who will be responsible for compliance internally?
To operate a sponsor licence effectively, a business needs a detail orientated person to oversee the process. It needs to be someone with sufficient seniority to satisfy the Home Office they are suitable, but as the role is time consuming it needs to be someone who has the time to take on the role. I once dealt with a case where a business had appointed the Chief Executive to oversee the sponsor licence, but he was so busy with other priorities that he missed a crucial email from the Home Office. This resulted in the loss of their sponsor licence until we could persuade the Home Office to reinstate it. A business needs to consider who will take on the role of liaising with the Home Office and whether the key responsibilities need to be split between different people.
2. Do current systems help the business meet their compliance obligations or do changes need to be made?
Some of the compliance obligations require different records to be kept than most businesses normally keep, and considering changes at the start of the process can be key in ensuring compliance.
3. Does the business want to cover the full cost of the process, or only the obligatory costs for the company?
Offering to meet the expensive visa costs can be a great tool when trying to recruit key staff but, as we have seen above, it can quickly add up. I have a client that regularly uses their sponsor licence, and over the course of a year they spend over £250,000 in Home Office fees. Businesses that only use the licence once or twice will never come close to these figures but, at £4,000 per applicant, consideration does need to be given as to how a business protects itself against costs. The nightmare scenario, and an increasingly common one in the current recruitment market, is that a business spends several months and many thousands of pounds to hire an employee and they don't work out or they leave for a competitor before the end of the visa. There are ways to protect a business from this, such as clawback arrangements which allow the recovery of costs from an employee if they resign within a set period of time, but these need specialist employment advice to ensure they are enforceable.
Overall, the Skilled Worker visa route is a potential solution to the recruitment issues in the sector at the present time. However, it is not one that should be pursued without first giving proper consideration of the costs and obligations. Failure to do this can lead businesses to incur high costs and run the risk of losing their licence, and by extension any sponsored staff, in the future.
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