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Recruiting foreign skilled workers: The cap doesnt fit

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The government imposed cap on sponsorship of overseas workers exceeded the limit in June 2015, leaving UK employers reliant on foreign workers unable to fill vacancies.

The annual cap for sponsoring non-EEA skilled workers to come to the UK was introduced on 6 April 2011. Under the scheme, a Certificate of Sponsorship (CoS) is required for salaries of less than 155,300 with the exception of certain UK graduates and those on a list of recognised shortage occupations. The annual cap is currently 20,700, split into monthly allocations. It was not until this year that the cap was ever reached, in both March and June, with the number requested far exceeding the allocation. 

The difficulties look set to continue. It is likely that the cap will be exceeded again in July, meaning that only those roles meeting a very high salary threshold (possibly only those with a salary of 75,000 or more) will succeed in securing a CoS. This can be highly damaging for SMEs who rely on overseas skilled labour particularly those with younger workers who are generally on lower salaries. Also affected will be nurses and engineers. Delays in commencement of employment could be fatal to the success of smaller businesses. 

On 9 June 2015, recruiter Manpower reported that the UK’s economic prospects are under threat due to a lack of a skilled workforce. Manpower concluded that with a shortage of skilled trades, IT and engineering skills, employers looking to increase hiring in the coming quarter, skills shortages threaten to hamper business growth plans. These concerns have been echoed by leading business experts including Simon Walker, director-general of the Institute of Directors and Madeleine Sumption, director of the Migration Observatory at Oxford University.

SMEs may need to put on their thinking caps and perhaps look to alternative immigration routes when Tier 2 is not possible. The “Exceptional Talent” category is often overlooked but is worthwhile for world leaders or potential world leaders in particular fields such as arts, technology and sciences. Attractive for non-UK companies establishing a branch or subsidiary in the UK is the “Representatives of Overseas Business” category which, unlike the entrepreneur (for setting up or joining a UK business) category, does not require investment of 200,000. Each category has its own nuances and not all will be suitable, but it is worthwhile bearing in mind that there are alternatives.

Despite the need for increased skilled migration, the government has reaffirmed its commitment to reduce it in new proposals. If these are implemented, SMEs will be the hardest hit. 

Read more about hiring overseas workers:

On 10 June 2015 the government announced that the Migration Advisory Committee (MAC) has been asked to consider measures to reduce the demand for migrant labour. Included among the focus of the report is consideration of a “skills levy” on visas to fund UK apprenticeships and raising salary thresholds to prevent firms using foreign workers to undercut wages. The MAC is likely to publish its report by the end of the year but has been asked by the government to fast-track proposals to increase the salary levels under Tier 2 which could come into force this autumn. 

Employers will need to stay abreast of the proposals to ensure they continue to meet requirements, or apply before any changes take effect. Businesses are also urged to provide responses to the MAC consultation setting out the arguments against any further restrictions so that their voices will be heard and the MAC can produce an informed and balanced report.

In addition to the MAC consultation, the government has publicised more proposals to:

  • Create three million more apprenticeships to improve the training of British workers
  • Reduce the number of skilled workers recruited from overseas
  • Limit the length of time that professions can appear on the list of shortage occupations
  • Make it illegal for employment agencies to recruit solely from abroad without advertising jobs in Britain and in English first

The aim of these changes is to reduce net migration. But the statistics tell a different story. The Office for National Statistics released figures which show a net increase in migration in the year 2014 by over 50 per cent to 318,000, of which 197,000 were from outside the EU. Non-EU skilled workers made up less than 13 per cent of this number. Any further restrictions are only going to have a minimal effect on net migration figures but will certainly have a damaging and destabilising effect on businesses, preventing them from recruiting the skilled labour they need from overseas.

Kathryn Bradbury is partner and head of immigration at Payne Hicks Beach.



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