Sponsorship of Migrant Workers: In this article, Joanne Hennessy and Leeanne Armstrong, from TLT LLP Solicitors, talk us through points to consider in light of the abolition of the resident labour market test.

Abolishing the resident labour market test (RLMT) was seen as a win by many, but it opened a can of worms many employers are still grappling with today. Here we look at the potential discrimination risks removing the RLMT has given rise to for employers and how to approach such risks.

What was the RLMT and Why are we Still Talking About it?

The UK’s points-based immigration system was overhauled in line with the UK’s withdrawal from the EU. A key aspect of this was the abolition of the RLMT for employer-sponsored skilled workers.

The RLMT required employers who wanted to sponsor migrant workers for Tier 2 (General) visas (now replaced by the skilled worker visa route) to conduct a specific recruitment test. In short, this involved advertising the role in line with very prescriptive requirements for 28 days. In most cases, only if the employer could evidence being unable to fill that role with a suitable settled worker (who didn’t need an employer-sponsored visa) would they be able to sponsor their intended recruit for the required work visa.

The RLMT was a blunt tool intended to help restrict migration to the UK. Many viewed it as a barrier to recruitment, sometimes preventing employers from recruiting their preferred candidate where the role could, on paper, be filled by a settled worker that met the minimum requirements of the role.

The Government abolished the RLMT, in part relying on the costs associated with sponsorship and visas in the UK to discourage employers from employing migrant workers. Most saw this as a win, removing the need for what often felt like contrived and duplicated recruitment exercises to tick the RLMT boxes.

Alongside these changes, when the skilled worker route replaced Tier 2 (General), the range of roles eligible for the visa was significantly expanded, adding many roles previously deemed insufficiently skilled for a sponsored work visa. So, in a post-RLMT world employers often face a significant increase in applications from candidates who require sponsored work visas in the UK.

The Discrimination Risk

The removal of the RLMT has caused one particular challenge. Whilst the Government would ideally want UK employers to continue to prefer settled workers as far as possible, abolishing the RLMT removed a key tool employers could rely upon to legally do so, opening the door to discrimination risks.

Recruiting individuals who don’t require a sponsored work visa will avoid obvious costs, processing timescales and ongoing compliance duties. Indeed, for lower paid and entry level roles the costs associated with sponsored work visas may seem disproportionate for a business.

If an employer can easily fill a role with a suitable candidate who doesn’t require a sponsored visa – can they prefer that individual over an equally suitable candidate who would require a sponsored visa in order to avoid the related costs etc? Even if an individual with the right to work requires some upskilling for a role in comparison to a candidate that requires a visa, that may be considered a better and more cost-effective investment.

It would seem a leap for an unlicensed employer to be required to secure a sponsor licence to facilitate the recruitment of a particular individual, as opposed to recruiting an alternative candidate who does not require sponsorship. However, what if the employer already holds a sponsor licence?

These are some of the queries that frequently arise, particularly in the cost-sensitive climate businesses are currently operating in. This is where immigration and employment law begin to clash.

Some roles still simply won’t qualify for a sponsored work visa based upon their skill and/or salary level. Where that is the case, the employer can make clear, for example in the job advert, that the role will not meet the requirements for sponsorship in order to manage expectations. If a candidate required sponsorship, they would not be able to fill such a role unless they could find another lawful basis upon which to live and work in the UK.

However, more often than not these considerations arise when the role would qualify for a sponsored work visa.

Best practice remains to make a merits-based assessment, considering individual immigration requirements once shortlisting, assessments and interviews have been completed. However, commercial realities will often dictate that a different approach is taken, but employers should be aware, if taking a different approach, rejecting a candidate on the basis of their immigration status could amount to indirect discrimination. As such, employers must consider whether they can objectively justify such indirect discrimination.

Cost Plus Approach as a Legitimate Aim

The concept of whether saving or avoiding costs can be a legitimate aim in the context of indirect discrimination has been explored in various legal cases and has resulted in the development of the "cost-plus" approach. This approach acknowledges that while cost can be a legitimate aim, it cannot be the only legitimate aim and must be weighed alongside other factors.

The recent case of Heskett v Secretary of State for Justice [2020] EWCA Civ 1487 clarified that the saving of costs alone cannot justify discriminatory actions. Employers seeking to avoid discrimination cases will therefore need to continue with the rather nuanced (and sometimes artificial) search for the "plus factor". So what “cost plus” arguments may be successful?

1)     The fine distinction on costs and “cost-plus” is evidenced by the fact that the need to operate within a budget or balance the books has been found to be a legitimate aim that is more than just saving cost. Even keeping to a self-imposed budget appears to be legitimate. Since all organisations are subject to budgetary constraints and the need to balance the books, this arguably sets the "cost-plus" bar relatively low.

2)     The administrative time incurred in applying for sponsorship visas may be another costs plus justification for avoiding this route. The need for an employer to fill a role quickly as a legitimate aim was explored in the case of Mrs Elizabeth Ryan v South West Ambulance Services NHS Trust: 1400628/2018. In this case, Mrs Ryan worked for South West Ambulance Services NHS Trust and she had responsibility for the development of the Trusts talent pool. This pool was created to assist the Trust to fill leadership and management positions quickly without the need for external advertisements and interviews. The pool contained employees who were well suited to management positions and so this was the first place the Trust would look when filling these roles. Mrs Ryan subsequently brought a claim for indirect age discrimination. Consequently, the Tribunal had to consider whether the use of the talent pool caused any disadvantage, and if so, whether it was justifiable. Although the pool was held to cause a disadvantage, it was held that the trust would have been able to rely on a justification defence being the need to fill short-term immediate vacancies. The Tribunal highlighted five reasons why the PCP was a proportionate means of achieving a legitimate aim. One of the reasons was that the trust would review the pool twice a year to ensure fair representation, and that the Trust had in place Equality Impact Assessments and continually looked at the representation within the pool on the basis of the protected characteristics. This case gives some comfort that the need to fill vacancies quickly can help avoid discrimination claims.

Clawback Arrangements and Discrimination Risks

Understandably, employers will seek to protect their financial position against an employee who is supported to secure a work visa in the UK, and then decides to leave employment at short notice. However, employers must exercise caution in this instance as it may be potentially discriminatory in the UK if the clawback agreement disproportionately affects a particular group of employees based on a protected characteristic, whether this be sex, age or race. It is therefore advised that if an employer wishes to include a provision where they can attempt to recover the immigration costs then they must ensure that this is applied consistently and fairly to all employees.

Repayment clauses may be included in an employment contract to cover a wide variety of scenarios to suit each individual’s employment. For example, the employment contract may include a clause which would allow the employer to recover immigration fees should the employee leave within a certain time. Additionally, the employer may wish to include wording to set out the circumstances in which no repayment of costs will be necessary, such as the termination of employment under specific circumstances.

However, one important aspect for an employer to consider is that the clawback clause should not be construed as a penalty clause as this would generally be unenforceable. This is an area of focus for the Home Office at the moment, particularly in the care sector where debt bondage concerns have arisen. For example, the clause should not be seen as an attempt to force the employee to stay in employment. Clawback clauses are commonplace in contracts where training is provided and provided these are adopted on a sliding scale then the discrimination risk is considered low. It is important to also remember that employer sponsorship costs should not be included in such clawback arrangements as these costs must not be passed on to the individual.

Recommendations

It is clear there is a continued role and need for migrant recruitment in the UK labour market and it is positive employers now have relative freedom to recruit the best candidate for their business. However, where roles can be filled easily without incurring extensive immigration costs, processes and compliance duties, it is understandable that employers may wish to select the most cost-effective candidate.

These are thorny issues to navigate. We recommend that employers:

1. Approach these issues and considerations on a case-by-case basis, being alive to the risks
2. Consider at the outset whether a role could qualify for a sponsored work visa (taking account of the applicable skill and salary requirements);
3. Map out the reasons for wanting to avoid incurring immigration costs and processes for a particular role, considering the strength of such justification and documenting that;
4. Keep an open mind on such issues, as opposed to adopting a blanket fixed approach across the business.

The Government’s focus on net migration levels appears to be increasing. It remains to be seen whether further measures will be introduced to attempt to restrict the levels of economic migration to the UK, such as a reintroduction of the RLMT or perhaps a return to annual limits on migration levels.

TLT’s business immigration and employment teams are on hand to support clients in such considerations.