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Can't get the staff: the rules for hiring from overseas after Brexit

18 December 2020 by

While recruitment might be the last thing on some operators' minds, the new rules for EU immigration are set to dramatically change the way the industry hires. Ben Walker gathers the essential information

"Personally I've never seen it this bad," said Chris Galvin in a 2014 interview with the Institute of Hospitality, discussing the difficulty of finding new staff. The chef-patron of Galvin Restaurants said his HR team regularly went on recruitment roadshows across Europe to attract new team members.

Five years and one global pandemic later, the situation is very different. Galvin Restaurants recently had 100 applications for one chef de partie position. "Before, I'd be looking everywhere for someone to turn up to the interview. So I think there's going to be a lot of talent out there," Galvin told an online industry forum in November.

In the short-term, laid-off hospitality workers are looking for new positions. Since its launch during the first lockdown, for instance, Caterer.com's Hospitality Redeployment Hub has advertised 120,000 job vacancies and processed two million job applications, underlining the competition for relatively few opportunities.

Looking ahead to a post-vaccine recovery in late 2021, there is the possibility that the same skill shortages that existed before Covid-19 might return. This risk is compounded by the end of free movement between the UK and the EU, so operators need to be aware of Brexit's new rules on hiring workers from outside the UK.

In a nutshell, there are two big changes to the immigration system that will affect hospitality. Firstly, businesses that wish to recruit from the EU will now incur additional and potentially substantial costs; secondly, access to ‘low-skilled' new EU arrivals will be switched off.

The new immigration system treats EU and non-EU citizens equally, so EU citizens coming to the UK from 1 January 2021 will need a work visa. The same is true for EEA nationals and the Swiss, but Irish citizens are exempt and still free to work in the UK without a visa.

How do I get a sponsor licence?

The first step for businesses wishing to hire overseas workers is to apply for a sponsor licence online at www.gov.uk. A sponsor licence costs £1,476 (or £536 for a small company) and is valid for four years at a time. It normally takes about eight weeks to receive the licence.

The online application starts by checking your business is eligible (ie, you do not have criminal convictions for immigration offences or other crimes, such as money laundering or fraud), outlining your responsibilities in terms of monitoring sponsored employees and ensuring you have the correct HR systems in place.

Once you have the licence, you can use it to request certificates of sponsorship (CoS) for the people you want to employ on skilled worker visas, which are replacing Tier 2 (General) visas.

One major change is that the resident labour market test will be abolished. This means businesses can sponsor a foreign national for a skilled worker visa, even if they could find a British or Irish worker to the do the same job.

Some hospitality businesses have already done the legwork and are familiar with the process of getting a sponsor licence. Ninoska Leppard, group personnel and development director at Corbin & King, says: "We have held the licence for some years and the renewal process was straightforward."

For others, it's a new process and a lot to take on at a difficult time. "We've not had the requirement for a sponsor licence before and we're in the process of applying," says Charlotte Hutchings, people director at CH&Co.

"It has not been straightforward so far. There's a lot of administration, especially for a company like ours with multiple employing entities and multiple sites. The cost is also significant, as is the demand on resources. These factors could be seen as a barrier for many, especially in the current climate."

Indeed, the lowest ever number of new companies registered for sponsor licences from April to June 2020, according to government figures. This is hardly surprising, coming at a time when recruitment – let alone recruitment from outside the UK – is the last thing on most operators' minds. As a whole, just under 30,000 UK businesses hold a sponsor licence, a tiny percentage of the total.

How much will a skilled worker visa cost?

The cost of a new skilled worker visa ranges from less than £1,000 for a short-term visa to around £10,000 for a standard five-year visa (see panel). Small businesses with no more than 50 employees pay less.

There are two fees to pay when issuing the certificate of sponsorship: the CoS fee itself (£199) and the immigration skills charge (£1,000 per year or £364 for small businesses).

"Companies are not allowed to pass on the immigration skills charge to the individual," says Kim Vowden, senior associate at law firm Kingsley Napley. "The Home Office rules are that if they try and do that, they'll lose their licence. The attitude is: ‘You need to take the hit as the employer'. It's designed to discourage employers from sponsoring foreign workers. That's why the immigration skills charge is so high."

The employee then uses the CoS to apply for a skilled worker visa, for which there are further fees: the visa application fee, the optional priority visa service fee (£220) and the immigration health surcharge, which gives access to NHS treatment.

Whether these fees are paid for by the company or the individual varies, says Vowden: "Larger companies tend to fund the whole process, whereas small businesses might pay the CoS and the skills charge and then say: ‘We've done our bit, it's up to you to get your visa'."

Further points to bear in mind are that all costs must be paid upfront. This can represent a significant financial investment, especially for long-term visas. For shorter visas, the health and skills charges are exempt; holders of visas of six months or less need to take out their own health insurance.

How long will it take to get a skilled worker visa?

Applying for a skilled worker visa will be similar to the previous Tier 2 (General) visa process, but much quicker, says Vowden. Instead of a 10-week wait, applicants could complete the process in less than two weeks. The target processing time for a CoS is 24 hours.

Next, the candidate may need to take an English language test and a tuberculosis test. "The English test includes reading and writing as well as speaking and listening. So it may act as a barrier to bringing in people for short-term cover," notes Vowden.

The candidate then completes an online application and books a biometric appointment at a UK visa centre. EU citizens do not need to attend a visa centre; instead, they will provide facial recognition using a smartphone app.

The target processing time following biometric registration is three weeks (standard service), five days (priority service) or the next working day (super-priority service).

Which jobs qualify for a visa?

Hospitality firms can bring in chefs and most managerial positions on skilled worker visas. You will need to pay at least the overall minimum salary of £25,600 a year (based on 39 hours a week, pro rata), or the ‘going rate' for the job, whichever is higher.

If the candidate is under 26 years of age or switching from a student visa, then the going rate is reduced by 30% and the overall minimum salary permitted drops to £20,480.

The government uses a system of Standard Occupational Classification (SOC) codes to cover all hospitality jobs, where hotel and accommodation managers (SOC code 1221), restaurant and catering establishment managers (5436), chefs (5434) and publicans and managers of licensed premises (1223) are all eligible for skilled worker visas.

In many cases, the line between which jobs do and don't qualify can appear thin. For example, ‘chefs' qualify, but ‘cooks' don't, so employers need to be careful to enter the correct code (5434 for chefs and not 5435 for cooks) when writing their certificates of sponsorship.

The government's statement of changes to immigration rules makes it clear that hospitality roles such as housekeepers (including head housekeeper), catering assistants, waiters (including head waiter), cooks (including head cook and cook supervisor) and bar staff are not eligible for skilled worker visas.

Sam Baldwinson, hospitality and leisure sector specialist at Reed recruitment agency, points out that these so-called ‘low-skilled' positions make up the majority of the hospitality workforce. The only people allowed to do these jobs will be British and Irish citizens and others who already have permission to work in the UK, such as EU citizens with pre-settled or settled status.

The end of free movement

So how are operators preparing for the end of free movement? Hutchings at CH&Co says: "With the likelihood that the overseas recruitment pool will reduce, we've put measures in place to help develop UK talent through our development programmes and by using the apprenticeship levy. We're also taking an active role in promoting hospitality as a career choice with partners such as Springboard, the Food Service Circle and Careerscope."

Mark Field is the operations director at the Victory Services Club, a venue and accommodation provider in central London. He says: "What Covid 19 has made clear is that the people we have are vital to us."

Helping many of his team get EU settled status was essential: "There was a lot of concern from them. We needed to give them clarity and security. They needed a lot of HR support."

Worries about where the recruitment pipeline is coming from have disappeared for the time being. "When the market picks up there will be a lot of talent to recruit," says Field. "If we can pick our business up slightly quicker than others, that will be a good time to recruit."

The evolving recruitment pipeline

Experienced operators note that the recruitment pipeline has always changed over time. The hope is that government policy will adapt to the changing situation.

Enam Ali, owner of Le Raj restaurant in Epsom and founder of the British Curry Awards, describes how the arrival of Uber caused an exodus of staff from the UK's curry houses who chose to become taxi drivers. "We couldn't compete with Uber in terms of the flexibility of working hours," he says.

This recruitment hole of some 35,000 employees across the country was filled by Romanian and Polish workers. "There was a language barrier at the beginning, but we took them on because we didn't have a choice. They found it attractive because they often received food and accommodation too," he says.

Today, around half of the workforce in the UK's Indian restaurants are Eastern Europeans. Some have acquired what Ali calls "the knowledge" – not for cab-driving, but for preparing authentic ethnic cuisine.

For the hotel industry, the housekeeping department is of particular concern. On Caterer.com's website, by far the largest number of hotel vacancies are for housekeepers. In big cities, housekeepers are historically almost always from overseas. Will this now change?

"Our housekeeping staff have been with us a long time and that's why it's vital that we hold onto them," says Field. "It's not just us. There are fruit pickers, too. If the market needs staff and we don't have the staff, the government needs to have a plan for how we recruit them from around the world. I think other visas will be added, like when we had the schemes for bringing in people from Commonwealth countries."

How to prepare for the new immigration system

  • Make sure all of your existing EU staff have EU settled status or have started the application process.
  • Recruitment may not be a priority now, but consider your business's staffing needs in nine to 12 months' time.
  • If you are reliant on entry-level workers from the EU, plan new recruitment solutions for when this source of labour is switched off in 2021.
  • If you wish to employ foreign nationals, including EU citizens not already living in the UK, you will need to apply for a sponsor licence online at www.gov.uk.
  • If you employ EU citizens moving to the UK from 1 January 2021, budget for new visa costs.

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