Angharad Aspinall explores the challenges that the new points-based immigration system (which is coming into force on 1 January 2021) will bring for the hospitality industry, and what needs to happen moving forward for this sector to thrive in post-Brexit Britain.
The largest hurdle the sector will face is the potential labour shortage that could arise due to the conditions within the new points-based immigration system. With an emphasis on a new skilled worker route, applicants coming to the UK to work must be paid at least £25,600 a year and the role must be skilled at A-level equivalent, or above.
Hardest hit will be the many European nationals who have been able to work freely under the principle of free movement in the sector without needing a visa.
A large proportion of jobs across the hospitality sector are considered ‘low-skilled’ and pay less than £25,600 – meaning, many applicants will not meet the eligibility required to get a visa under the new skilled worker route.
The Home Office has yet to announce how the application process will change under the new system, but as it stands now, a licensed sponsorship application involves a fee of either £536 or £1,476, depending on the size of the business and an application process with a requirement to send specific supporting documents. Businesses must be satisfied they are suitable to become sponsors, for example that they have appropriate HR systems in place. If approved, the businesses will then be able to sponsor a worker to fill a genuine vacancy if they meet the eligibility criteria. Eligible candidates are then issued a certificate from the business (costing the business £199 per certificate) and the worker must then apply for their own visa.
On top of the application fee, the business looking to sponsor an employee must pay an immigration skills charge per sponsored worker and the amount will depend on how long they want to sponsor the worker for – up to £1000 per year per worker. Additional details have yet to be released by the Home Office.
The financial and administrative challenges associated with a sponsorship application can bring many challenges and often severe penalties for employers who are found to be non-compliant. This is likely to lead to many employers electing not to hire foreign workers, which would only increase labour shortages. Recruitment agencies have already reported that due to the recent uncertainty surrounding Brexit and the new immigration system, businesses are electing not to hire foreign nationals.
One option is to lower the wage and skills threshold. Currently, the wage threshold can be reduced to £20,480 a year for migrants who have specific characteristics, like a PHD relevant to the role they are hired into. However, jobs in the hospitality sector do not generally require such qualifications. Lowering the salary and skills threshold will allow for a greater influx of migrants to work in the hospitality sector in the UK. But, based on policy statements, this is unlikely to happen as the Government remains intent on only allowing high skills workers in the UK.
Another option could be the creation of a separate visa route for low skilled, temporary and seasonal workers. The criteria for this visa should be broader and the visa lengths variable to cover spikes and lulls in the hospitality industry. For example, the busy Christmas period. This would give hospitality employers the flexibility to hire workers as and when they are needed. Seasonal visas do exist, although the government has said it will not introduce a ‘low-skilled’ visa route.
The Government could also place jobs in this sector on the shortage occupation list. This is a list of job roles within the UK for which the Government believes there is a labour shortage. Although this list is usually reserved for skilled/highly skilled jobs the government might have to consider placing hospitality on the shortage list, in a lower skilled category, to combat the potential labour shortage which could arise from the new immigration system. The benefit of a role being on the shortage occupation list is that migrants will be able to apply for a visa even if the job does not meet the wage threshold of £25,600 a year (but it must still be higher than £20,480 a year).
Although not a solution to the problem, the government has recently announced a new ‘graduate’ visa route which will be available for the 2020/2021 intake of students. This visa will be open to all students who have successfully completed an undergraduate course of study in the UK. The visa will allow eligible students to work or look for work in any career or position of their choice for up to two years after completing their studies (or three years if they have completed a PhD).
In theory, this means that students could circumnavigate the salary threshold and work in the hospitality sector. This will not completely solve the labour shortages but could help fill the void that has been left by the abolition of the free movement of people.
If you have any question about how the new immigration system will operate, and what your responsibilities will be if you decide to become a sponsor post-Brexit, please don’t hesitate to get in touch. You can also join us on 3rd November for the free webinar we’re hosting on the topic.