The cost to construction of the end of free movement and the new skilled worker visa for European workers

Posted onDecember 1, 2020

Many of those in the construction industry campaigned against Brexit as they were concerned about the impact of the end of free movement on the import and supply of construction material and on the availability of skilled European construction workers. The UK construction industry, and particularly so in London, relies heavily on its European workforce. Construction companies, in the run up to the end of the transition period on the 31 December 2020, are now counting the cost of Brexit and looking for the best immigration and employment solutions to ensure that they are able to meet budgets and build targets.

UK Sponsor Licence and skilled worker visa solicitors

London based OTS Solicitors specialise in business immigration law and have an expert team of work visa and sponsor licence solicitors with substantial experience in applying for and managing sponsor licences and work visa applications. For advice on how to get your construction business ready for the end of free movement and information on applying for a Sponsor Licence and the new skilled worker visa call the immigration lawyers at OTS Solicitors on 0203 959 9123 or contact us here. Appointments are available through video conferencing, Skype or by telephone appointment.

The construction industry conundrum

Chickens coming home to roost is one of the descriptions that specialist construction firms have used to describe the run up to the end of free movement and lack of EU trade deal on construction firms. Many construction businesses are now realising just how important their current EU workers are to them and how valuable their employees are to competitor firms who are actively poaching skilled European construction workers in the knowledge that with the introduction of the new points based Immigration system the immigration and Employment issues in the construction industry are only going to get more complex. That’s because, from a construction firm’s perspective, those drafting the new points based Immigration system and skilled worker visa haven’t listened to what the building industry actually needs to drive the economy forward and instead have focussed on the political imperative of keeping Immigration figures down, whatever the cost to the likes of the construction sector.

What is the problem? Historically, the construction industry has relied on overseas workers for about thirty percent of its workforce and the vast majority of those workers are from EU countries. In some cities, such as London, the percentage is higher. The reliance on EU workers was fine whilst there was free movement of EU workers but free movement ends on the 31 December 2020. You may think that your construction firm won't have a problem as you have sufficient workers but what happens if any of your workers leave or are poached by competitor firms? After the 31 December 2020, you won't be able to recruit replacement EU construction workers from EU countries with ease because, for the first time, you will need a Home Office issued Sponsor Licence to recruit both non-EEA and EU workers and the workers (whether from non-EEA countries or the EU) will need to meet the eligibility criteria for the skilled worker visa. That’s because the government hasn’t introduced a lower skilled worker or trades visa.

What is the solution? Well the government says that the solution is to invest in UK settled workers and ensure that there are the training programmes in place so any UK skills gap is addressed to avoid or reduce the need for reliance on European construction workers. Whilst the Covid-19 pandemic may increase the pool of UK job applicants many of those in the construction sector don’t see UK recruitment as either a quick fix because of the current skills gap or potentially a long term solution if the UK economy recovers and construction isn’t then seen as an attractive career choice. Employment and immigration law solicitors say the other solutions are:

Ensure that your existing EU workers can continue to live and work in the UK free of Immigration control and without the need for a skilled worker visa. Your EU construction workers can do this by applying for pre-settled status or settled status under the EU Settlement Scheme. An EU worker needs to make their settled status application prior to the cut-off date of the 30 June 2021. Many construction firms are encouraging EU workers to use same day settled status application services to make the process easy for European workers
Consider your 2021 recruitment needs now so that if you know that you will need additional construction workers and you doubt that you will be able to recruit workers with the necessary skill set or experience from within the UK you recruit EU workers before the end of free movement on the 31 December 2020. Provided that the EU worker is living and working in the UK before the deadline of 11 pm on the 31 December 2020 they will be eligible to apply for pre-settled status and in turn they can then secure settled status
If your construction workers are being poached by competitor firms because your competitors are realising just how valuable experienced but technically low skilled construction workers will be when the flow of European workers ceases in January 2021 then you may be tempted to poach their employees. Alternatively, you could make it harder for them to lure your employees away with bonus packages that gives all your workers an incentive to stay or loyalty schemes, such as additional holidays for years of service
Apply for a Home Office Sponsor Licence so that you have the ability to recruit skilled non-EEA and European construction workers by providing them with a Certificate of Sponsorship so that they can then secure a skilled worker visa. If you are applying for a Home Office Sponsor Licence it is important to cost out the additional recruitment costs for each overseas worker so that these costs can be reflected in budgets and cost projections.

The cost of applying for a Sponsor Licence

If your construction business concludes that even with the UK government focus on apprenticeships you won't be able to recruit sufficient numbers of UK settled workers with the right skills it is best that you take action now and apply for a Home office Sponsor Licence rather than wait until you have recruitment and retention issues. Delay may mean you aren’t able to meet construction deadlines because of the wait in securing your Sponsor Licence before being able to recruit non-EEA and European construction workers.

If you already employ non-EEA construction workers and therefore have a Sponsor Licence the positive news is that you won't need to apply for an additional Sponsor Licence to be able to recruit EU workers and the Sponsor Licence that enables you to recruit workers under the Tier 2 (General) visa will be valid to recruit overseas workers coming to the UK on the skilled worker visa, that replaces the Tier 2 (General) visa.

For those construction firms who need to make an application for their first Sponsor Licence the first expense you will incur is the cost of the Home Office sponsor licence. The amount of the fee depends on the size and nature of your business rather than the number of overseas or European construction workers that you need to recruit on skilled worker visas. The fees are based on if you are a small or medium to large business:

Small businesses -if your business is classed as a small business the Sponsor Licence fee is £536. Your company should be classed as ‘small’ if your business has a turnover of no more than £10.2 million or the firm has fifty employees or fewer
Medium or large businesses – if your business is a medium or large firm then the Sponsor Licence fee is £1,476.

As a matter of choice, your firm can choose to pay the Home Office for a premium service so you get additional support and an account manager. The fee for the premium service depends on the size of your business and the length of time your business wants the Home Office premium support for. The cost ranges from £2,000 to £8,000 for a small business to £6,250 to £25,000 for a large business.

However, the Home Office fees don’t stop with the initial Sponsor Licence fee as each time your business sponsors an EU construction worker you have to pay for a Certificate of Sponsorship and the cost of each certificate is £199. The cost doesn’t vary on the size of your firm or the number of Certificates of Sponsorship you apply for.

Where the cost of recruitment of a skilled EU construction worker starts to become expensive is when you factor in payment of the Immigration skills charge, another fee payable to the Home Office. The Immigration skills charge can't be passed onto your recruit (for example, by offering lower wages to non-EEA and EU workers or by deducting the cost from salaries). Unlike the Certificate of Sponsorship fee the Immigration skills charge is based on the size of your business. The Immigration skills charge fees are:

Small businesses - if your business is defined as a small business the Immigration skills charge is £364 for the first twelve months and £182 for each additional six months of the skilled worker visa for each worker subject to UK Immigration control
Medium or large businesses – if your business is medium or large then the Immigration skills charge is £1,000 for the first twelve months and £500 for each additional six months of each skilled worker visa you are sponsoring.

One thing that doesn’t help with cash flow is that the Immigration skills charge has to be paid in full for the length of the skilled worker visa at the date of the application. That means if an EU worker is coming to the UK on a three year skilled worker visa you will need to pay between £1,092 to £3,000 for the Immigration skills charge although if the sponsored worker leaves your Employment before the expiry of their visa then your business can apply to the Home Office for a partial refund of the Immigration skills charge.

In summary, for ten skilled EU construction workers on three year skilled worker visas you are looking at Sponsor Licence costs of:

Fee for three year skilled worker visa for ten overseas employees	Small company	Medium to large company
Sponsor Licence fee – renewable every four years	£536	£1,476
Certificate of Sponsorship £199 x ten employees	£1,990	£1,990
Immigration skills charge £364 x three years x ten employees	£10,920	£30,000
Total	£13,446	£33,466

Those are the Home Office fees but in addition to that there are:

The costs of managing the Sponsor Licence – you can either pay an immigration solicitor to provide sponsor licence management duties or your HR staff will need to carry out this additional function
The costs incurred by the visa applicant in applying for a skilled worker visa – some companies will agree to pay these for the visa applicant as otherwise they can't recruit sufficiently skilled EU construction workers as the workers can choose to work in a country where they don’t have to incur such fees.

Whilst the fees may appear expensive for many in the construction sector it isn’t a simple choice of recruiting skilled European workers or paying the costs of training UK or settled workers to get over the issue of the UK skills shortage. That’s because gaining skills takes time and the industry can't grind to a halt whilst hoping that recruitment needs can be met by the existing pool of EU construction workforce applying for settled status and training UK youth.

How much will a skilled worker visa cost a European construction worker?

The Home Office fee for a skilled worker visa doesn’t depend on whether the visa applicant is from a non-EEA country or from the EU but instead it is determined by:

Whether the visa application is being made from within the UK or from overseas
The length of the visa application
Whether the job applied for is on the Shortage Occupation List.

The cost of the skilled worker visa can range from £462 to £1,220.

In addition to the visa application fee, a European construction worker will also need to pay the Immigration health surcharge. This is a mandatory fee that has to be paid to access National Health Service treatment. The fee has to be paid upfront and isn’t paid on a pay as you go basis and isn’t refundable if National Health Service healthcare isn’t needed.

The Immigration health surcharge is £624 per year for each skilled worker visa applicant. If the job applicant has family that are accompanying them to the UK on dependant visas then each dependant has to pay a dependant visa fee and the Immigration health surcharge. The fee is discounted to £470 for children under the age of eighteen.

The full Immigration health surcharge is payable at the time of the visa application so if a visa is for three years the Immigration health surcharge fee is £1,872. Whilst the visa application fee and Immigration health surcharge are payable by the visa applicant many employers will cover the cost of the fees if they can't otherwise attract the right candidate. That in turn adds to overseas recruitment costs. Take the example above of recruiting ten EU skilled workers, if your firm commits to paying the visa and Immigration health surcharge the total cost to ten employees on three year skilled worker visas rises to:

Fees for ten workers on three year skilled worker visas – all costs including those of the visa applicant	Small company	Medium to large company
Sponsor Licence fees and employer costs as per above table	£13,466	£33,466
Home Office visa application fee x ten employees	£4,620 to £12,200	£4,620 to £12,200
Immigration health surcharge for three years x ten employees (not including any dependant visa costs)	£18,720	£18,720
Total	£36,786 to £44,366	£56,806 to £64,386

How can OTS Solicitors help?

The financial and time of cost of sponsoring a skilled worker means that it is best to take Immigration and employment law advice on your options and to ensure that there is no delay in your Sponsor Licence application being processed or managed and to ensure your construction business gets the maximum benefit from continued recruitment of a skilled EU workforce.

OTS Solicitors are specialist sponsor licence solicitors with the expertise to guide your construction business through the Sponsor Licence application process and to manage your sponsor licence for your business .

OTS Solicitors specialise in business immigration and employment law and are recommended in the two leading law directories, The Legal 500 and Chambers Guide to the Legal Profession. For Sponsor Licence advice call OTS Solicitors on 0203 959 9123 or contact us here. Appointments are available through video conferencing, Skype or by telephone appointment.