United KingdomJune 11, 2015

This month, for the first time, TIER 2 General restricted Certificate of Sponsorship (CoS) applications have been denied due to a lack of available CoS. Unless listed as a Shortage Occupation or PhD level in the Codes of Practice, applications for positions with a salary below £46,000 have been rejected and will need to be re-submitted next month.

We can only expect Prime Minister David Cameron to use this news to support his plans for proposing a tough immigration bill, which will have the long term goal to “only bring in workers from outside Europe where we have genuine skills shortages or require highly specialist experts,” as he said in a speech on May 21, 2015, announcing government plans to control immigration.

System of Allocating Restricted TIER 2 General Certificates of Sponsorship

As many companies sponsoring foreign employees often utilize the Tier 2 (Intra-Company Transfer) stream, it is important first to understand the allocation system for restricted TIER 2 General CoS stream before analyzing how this development will potentially affect employers.

Points Based System
The allocation of restricted TIER 2 General CoS is a Points Based System. Points are awarded for the type of position and for the salary, as follows:

Type of position:

· Position is on the list of Shortage Occupations: 75 points;
· Position is at PhD level as included in the Codes of Practice, and a Resident Labor Market Test has been carried out (or the position is exempt from performing the RLMT ): 50 points;
· Position is neither of the above, but a RLMT has been carried out (or the position is exempt from the RLMT): 30 points.

Salary:

· Points for salary are awarded according to the applicable salary bracket, starting at £20,800-£20,999.99 (2 points), up to £100,000-£155,299.99* (30 points).
· In order to qualify for a restricted Certificate of Sponsorship points need to be received for both criteria.

* Positions with a salary of £155,300 or higher qualify for an unrestricted Certificate of Sponsorship and therefore do not fall under the system as here described.

Quota
Currently, restricted CoS are limited to a total of 20,700 per year, which are released in 12 portions over the year starting in the month of April. This year 2,550 positions were released in April, and the remaining positions will be released equally over the months of May 2015 – March 2016.

Any CoS not allocated in a given month will be carried over and become available in the next month in addition to that month’s allocation. However, after all qualifying applications have been approved at the end of the year cycle, any remaining CoS in March will not carry over to April (the first month of the next allocation year).

In case of an oversubscription (more CoS applications filed than there are CoS available), application approval is solely based on the number of points scored with preference given to the applications with the highest scores. Furthermore, CoS are assigned per group of applications with the same score. This means that if the next score group to be considered contains more applications than there are CoS still available, then the whole group of applications, as well as any applications with lower scores, will be rejected and the remaining available CoS will carry over to the next month. This only exception to this rule is when the whole group would exceed the monthly allocation limit by 100 or fewer CoS.

What’s Changed?

The monthly allocation limit has never been reached in the previous years; on the contrary, often there were fewer applications than CoS available in a given month thereby increasing the number of available CoS in the next month. Thus, apart from needing to meet the minimum salary requirement of £20,800 (or minimum salary as defined in the Codes of Practice, whichever is higher), the salary for the position was never a deciding factor in the adjudication of applications.

However, there were so many applications this month that the UK officials needed to consider the salary-based points for applications that were not at the PhD level and not filling a Shortage Occupation. This ultimately resulted in the refusal of applications with a salary below £46,000.

Based on the aforementioned rules regarding oversubscription we can conclude that there were at least 101 applications with salaries in the next lower bracket, and the total amount of rejected applications can therefore be expected to be at least in the hundreds (if not more). Very likely most of the rejected applications will be resubmitted next month (July 5th at the latest), potentially with increased salaries to raise the chances of success for the next round. Although there will be additional CoS available in the coming month due to the carry over, it is still expected that this this month’s oversubscription and large number of rejected applications will have a ripple effect on approvals for at least the coming months, but potentially throughout the year.

ACTION ITEMS FOR EMPLOYERS

Employers should be aware that the height of the salary for a proposed position is, for the first time, likely to become an important factor when applying for restricted CoS in the coming months, if not throughout the rest of the allocation year (up to March 2016). As a result of the oversubscription this month, chances have dramatically increased for applications in the lower salary brackets to be rejected in the coming months as well. Increasing the proposed salary to fall into a higher bracket may increase the chances to be granted a CoS in next rounds, and could therefore be worth considering. However, on a larger scale this could also have the undesirable effect of inflating required salaries for future applications.

Please note that while applications can be re-submitted any number of times if rejected, there are no guarantees at the moment for applications with lower salaries to be eventually approved. Employers will need to take into account the potential delays in employment start dates for these types of applications.

Although not much is known yet about the concrete plans that the new government will be proposing, it is not unreasonable to expect that the allocation system for restricted Tier 2 General applications will be reviewed and may undergo some negative changes (from an employer’s perspective) in the near future.

Please do not hesitate to contact your Pro-Link GLOBAL Immigration Specialist to discuss how this month’s allocation cycle may affect your plans for hiring foreign nationals on a restricted TIER 2 General CoS.

Pro-Link GLOBAL will continue to monitor the situation and will provide updates when they become available.

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Caveat Lector | Warning to Reader

This is provided as informational only and does not substitute for actual legal advice based on the specific circumstances of a matter. Readers are reminded that Immigration laws are fluid and can change a moment’s notice without any warning. Please reach out to your local Pro-Link GLOBAL specialist should you require any additional clarification. This alert was prepared by Pro-Link GLOBAL’s Knowledge Management team. Pro-Link GLOBAL worked with our PLG | ISP UNITED KINGDOM Office “Smith Stone Walters” to provide you this update.

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