The impact is likely to be hardest in sectors which regularly attract international candidates, including software and computer technology, engineering and nursing.
What is the cap?
To apply for a Tier 2 visa, commonly known as a work permit, an individual needs a UK business, which holds a sponsor licence, to obtain and assign a Certificate of Sponsorship (CoS) to them. In 2011 the Home Office introduced an annual limit on the number of Certificates it would issue to businesses to sponsor new employees during each financial year.
The annual limit is 20,700 and previously 1,750 Certificates were available each month. This year, due to increasing demand, the monthly allocation for April had been increased, thereby decreasing the limit to 1,650 Certificates for each of the remaining 11 months.
What happens when the cap is reached?
Previously, when the number of requests has been lower than the number of available Certificates and the unused allocation was rolled forward to the next month. However, when the number of requests exceeds the number of Certificates, the Home Office decides applications on the basis of defined criteria. For example, jobs which are considered shortage occupations or skilled to PhD level are given priority and consideration is given to the salary the company is willing to pay the employee.
Normally, any job with an annual salary of £20,500 would be eligible for a Certificate of Sponsorship. However in June the minimum salary required was £42,000, unless the role was a shortage occupation or skilled to a PhD level.
What will this mean long term?
The UK Government has already asked the Migration Advisory Committee (MAC) to review how the Tier 2 visa system works but that is with a view to reducing the number of migrants using this visa and to encourage companies to hire UK workers.
In several sectors, such as software and computer technology, this is not straightforward as companies have indicated there is a shortage of the skills they need in the UK workforce. This is already reflected to some extent by the Shortage Occupation List which gives priority to certain roles and makes it easier to recruit non EU nationals.
The Shortage Occupation List currently includes the roles of systems engineers, software developers and games designers but these roles are restricted to the visual effects, film, TV or computer games industries. The MAC previously suggested adding several roles including, product manager and developer roles, from the digital technology sector to the Shortage Occupation List and there is likely to be demand for this to happen sooner rather than later.
A further important issue that businesses will need to consider is the salary of existing sponsored workers. While these employees are not affected by the immigration cap, from 2017 they will need to be earning £35,000 a year in order to remain in the UK.
What options are there for businesses?
Businesses which were unsuccessful in June will need to reapply for more Certificates in the coming months However, there is no guarantee they will be successful due the increasing demand for Restricted Certificates. It is likely that there will be increased pressure on the immigration cap for at least the next 2 - 3 months and this may make it difficult to hire skilled workers.
Businesses will therefore wish to make sure they are selecting the correct job category, or if the particular job they are recruiting for is considered a shortage occupation, as they may be able to increase the chances of receiving a certificate of sponsorship success. They may also be forced to consider increasing salaries in order to maximise the chances of getting a CoS and retaining staff at the end of their visas.
They should also be aware that not every Tier 2 visa is subject to the annual cap. Recruitment of graduating students from UK universities is currently unrestricted and there is also no limit on the number of temporary transfers multi-national companies can make from abroad. These categories may allow UK businesses to continue to fill skill shortages with non EEA nationals without having to apply for a restricted CoS.
Businesses should also consider checking whether a candidate is eligible for another type of visa. In the past we have identified cases where a company did not need to use the Tier 2 system as the applicant's personal circumstances allowed them to apply under a different route, including as the family member of an EEA national or on the basis of UK ancestry.
Over the coming months we can expect to see a number of proposals which will affect the future of skilled migration in the UK. Businesses will need to consider their recruitment strategies and should seek advice on how to make the most out of the existing Tier 2 sponsorship system.