Reaching the Tier 2 cap – A Temporary Headache or Here to stay?

Many employers hoping to add to their UK work force from overseas have hit a brick wall due to Home Office allocation caps. Companies assisting potential applicants in applying for work visas to the UK rely upon the Home Office granting a Restricted Certificate of Sponsorship (RCoS). Usually this is a simple process once the UK employer has completed their recruitment process, advertised for a minimum of 28 days and ensured there are no suitable settled workers available. However over the last 3 months, we have seen the RCoS cap hit for only the second time since its inception 6 years ago. Read more in Fragomen alerts.

The Situation

Other than what could be presumed was an anomaly in June 2015, there has always been a sufficient number of RCoS’ available to meet the number of requests. However for the first time we have seen three consecutive months where demand has outstripped supply, causing lengthy backlogs to work permit applications and relocations delays or cancellations.

The Data

December 2017, which provided for 1,512 RCoS allocations, saw only the second oversubscribed RCoS month in six years. January then had just 1,409 RCoS available and February, around 1,500, so it came as little surprise that the cap was reached again, for the third consecutive month. This was also partly due to a change in practice in 2016 whereby allocations were front loaded in the year to take account of higher demand over the summer months. The problem has been compounded by the number of people re-applying for their RCoS in January and February, who had been unsuccessful in the December allocation, as well as new applications.

When the cap is hit, the Home Office allocate the RCoS’ based predominately on the salary paid, which in turn equates to a certain amount of points. The more points a request has, the better the chances of success if the cap is exceeded. With the December minimum salary being £55,000 for most applicants and January £50,000, a large number of requests were rejected. We are still waiting for official confirmation on the final salary band for approvals in February; however, it is looking to be around £49,999.

The Impact

When the RCoS cap was previously reached in June 2015, the minimum salary band required was £46,000. Although many sectors and graduate roles were impacted, it did appear as the consequence of a ‘busy’ month for immigration and perhaps the result of a large number of graduate recruitment schemes preparing for annual intakes.

The unexpected effect of the December 2017, January and February 2018 oversubscriptions was the level of salary required. A large number of Tier 2 applicants would have fallen below the salary band – particularly in certain sectors such as healthcare and engineering.

The financial and personal impact should also be mentioned. Due to the requirement to advertise the role to ensure no settled worker was suitable before an employer can make an RCoS request, the process would have begun around early November at the very latest and in many cases much earlier, meaning that many employers would have so far been waiting three months or longer for their new chosen recruit to start. The applicant would have likely put their relocation (as well as that of their family) into motion for what would usually take around one month to complete.

Why is this happening?

There are several possible reasons. One is the closure of the Tier 2 Intra Company Skills Transfer and Short Term visa categories, which both provided for a lower minimum salary of £24,800 (Skills Transfer) or £30,000 (Short Term Visa). The remaining Tier 2 ICT option, the long term category, (other than the lesser used Graduate ICT visa) – provides for a salary of at least £41,500. The minimum salary requirement of £30,000 for a Tier 2 General visa has provided a potential option for assignees who do not meet the higher Tier 2 ICT Long Term salary band and where employers are unable to find a settled worker suitable for the role, however this results in further strain being placed on the number of monthly requests for RCoS.

Another consideration is the impact and uncertainty of Brexit, which has seen a lower number of EEA nationals moving to the UK to take up these roles resulting in companies looking for the skills elsewhere.   

What to expect over the next few months and the year ahead

With the March allocation only sitting at 1,000, it is likely we will see the limit being reached again. Some welcome news is that April should provide respite for employers and applicants with the start of the new allocation year, where the Home Office provide a higher allocation. A word of warning however – in the past we have not seen the consecutive month limits being reached and the subsequent overspill of requests. If March is also hit, April will in turn be a busier than normal RCoS request month reducing the number of ‘spare’ allocations that would roll over to May – potentially causing a domino effect. Additionally, on the assumption that April will be a busy month for RCoS requests, the impact of this may be felt later in the year as we work through the months such as September onwards where the available allocation falls to around 1,500.

With a new immigration system potentially around the corner, hopefully a solution will be found for those roles offering salaries below £41,500. In the meantime, UK employers are likely to face challenges in their search for bringing talent to the UK.