New visa option for scale-ups goes live
Start-ups experiencing rapid growth have a new potential route to sponsoring overseas nationals to work in the UK. The Scale-up visa, which went live on 22 August, provides a more flexible and lower-cost alternative to existing employer-sponsored visas.
What is sponsorship?
This is the system under which employers obtain a licence enabling them to support visa applications for foreign nationals, either to the local headcount or on an assignment from an overseas entity.
Individual applications for visas need to meet specified salary and skills thresholds. Sponsoring organisations also need to meet a range of ongoing compliance obligations including reporting and record keeping duties to retain their licence.
Whilst the existing sponsorship regime has the advantage of certainty which aids in long term planning, there are some drawbacks for both organisations and individuals, for example;
- Significant government costs
- Requires long term monitoring of employee’s status
- Restrictions on individuals’ ability to explore other employment opportunities
How does the scale-up visa work?
This new category is targeted at businesses which meet the following criteria:
- Annualised growth of at least 20% for previous three-year period (either on headcount or turnover); and
- Had a minimum of 10 employees at the start of the three-year period
- The individual will be paid at least £33,000 or the “going rate” (as defined by the specific job description), whichever is higher.
Sponsors will benefit from reduced government costs, a more digitised licence application process and a reduced burden in terms of how long they sponsor employees for (they will only be considered a sponsor for the first 6 months rather than the full duration of the visa).
Sponsored employees will benefit from more flexible rules regarding who they can work for over the longer term when compared to traditional sponsorship routes.
So, this is an improvement on existing rules?
Yes and no.
The Immigration Skills Charge is not payable, which is a significant cost to traditional sponsor routes.
The reduced period of sponsorship means that administrative costs associated with compliance monitoring, as well as the time frame over which to get things wrong, will be reduced.
Perhaps most importantly in a competitive recruitment market, the flexibility the route offers individuals in not being tied to a single employer for more than 6 months may make your organisation more attractive than more established enterprises who cannot use this route. The drawback of course being that you may see a greater turnover of sponsored workers.
The biggest question mark over this route is the shelf-life of this category for a specific organisation as they grow and whether they will be better served by a more traditional sponsor licence from the outset. The risk associated with getting things wrong is also likely to increase where running the two in parallel.
Ultimately, this category is new, and the opportunities and challenges it presents will emerge over time. For any organisation wishing to explore this route, it is always worth taking advice at the outset.
We are not a start-up, so I guess this is irrelevant no?
Not quite. Whilst it is unlikely your organisation will need to concern itself with another category of sponsorship, it is possible you will see individuals with Scale-up visas applying for jobs in the future.
As a minimum you will most likely need to familiarise yourself with further updates to the right to check rules to ensure the individual has the appropriate permission to work for you after their initial period of sponsorship.
Beyond this, understanding some of the nuances surrounding how the visa works in practice will help with your longer-term planning and determine whether to onboard them in this category or sponsor them yourself.
This update is for general purposes and guidance only and does not constitute legal or professional advice. You should seek legal advice before relying on its content. Greenwoods Legal LLP is a Limited Liability Partnership, registered in England, registered number OC306912. Our registered office is Queens House, 55-56 Lincoln’s Inn Fields, London, WC2A 3LJ. A list of the members’ names is available for inspection at our offices in Peterborough, Cambridge and London. Authorised and regulated by the Solicitors Regulation Authority, SRA number 401162. Details of the Solicitors’ Codes of Conduct can be found at www.sra.org.uk. All instructions accepted by Greenwoods Legal LLP are subject to our current Terms of Business. VAT Reg No: 161 9287 89.