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Immigration Issues for the Tech Sector

The UK faces a digital skills crisis and as the economy digitises, competition for tech talent will only become fiercer. Whilst industry and government work to create a domestic pipeline of future tech talent, there is an immediate need for skilled labour in the tech sector. Migration, both from Europe and the rest of the world, remains key to UK tech’s continued success.

Yet the current immigration rules present bureaucratic and financial barriers for tech companies hiring migrant workers, while imminent changes in the UK immigration system are set to open up further recruitment and workforce challenges.

 

End of EU free movement  

With critical shortages of digital skills in areas such as programming, statistical analysis as well as emerging areas like machine learning, the sector has turned to international talent to plug the gaps. Yet the imminent introduction of a new UK immigration system and the government’s hardline approach to immigration are fuelling concerns among UK tech companies that more skills shortages are ahead since fewer people will be attracted to the UK and it is likely to be harder to bring in enough people.

The end of EU free movement of labour in December 2020 is one of the biggest challenges facing UK tech companies. The impact on UK workforce planning cannot be underestimated. After this date, non-UK resident EU citizens wanting to come to the UK to work will need to apply for permission to enter and work in the same way as non-EEA nationals.

Tech talent is extremely valuable and hard to find, demanding significant time and cost investment in looking for the right people and nurturing those relationships. Yet with countries such as Canada and Australia taking a more open and welcoming approach to economic migrants, post-referendum Britain has UK tech companies are labouring against a decline in appeal of the UK as a destination for tech workers.

While the detail of the future immigration system eludes, employers should be gearing for 2021 and the end of EU free movement when all migrants, regardless of nationality, must qualify for permission in some way under a skills-based regime to work in the UK. This will necessarily incur Home Office and professional fees to apply and secure the relevant visa.

Tech companies must consider now the impact of the changes, along with the introduction of a new points-based immigration system for 2021, on their recruitment strategies and budgets.

While the EU settlement scheme offers those EU citizens currently in the UK protection over their immigration rights, EU employee attrition in the UK has increased since the referendum result as EU citizens opt to leave the UK, its uncertain future and hostile environment. UK employers are being urged to encourage their EU workers to register for the EU settlement scheme in advance of the deadline to safeguard their status post-Brexit. Settled status registration numbers however remain far short of 100%, creating further uncertainty for UK employers over their ability to retain EU workers.

 

Global Talent route 

The government has pledged its commitment to supporting the UK’s tech sector through specific policies. The Global Talent route, from 20th February 2020, has been designed to replace and enhance the Tier 1 Exceptional Talent visa in appealing to tech and digital professionals.

The new route does not require sponsorship by an employer, but applicants will have to secure endorsement from a government appointed endorsing body to confirm they meet the required skills and ability threshold as either an established or promising talent in their professional field. Only with endorsement can the applicant apply for their visa to come and work in the UK.

Tech employers are now considering the Global Talent visa as an alternative to the Tier 2 (General) route for skilled workers.

 

Undermining competitive advantage 

The current immigration systems lacks flexibility and agility for UK companies needing to respond quickly to commercial opportunities and act quickly in bringing in international talent, with poor differentiation between long-term migration and short-term business-necessary mobility.

Complex fee structures and high fee levels also act as deterrents for UK employers. At present, the Rest of World migration system consists of a plethora of fees which are difficult to navigate for both the employer and individual, including for example the NHS surcharge and employer need for a resident labour market test.

 

Limiting routes for international tech entrepreneurs 

It has become more difficult for non-UK entrepreneurs to come to the UK to set up a tech business than ever before. Following the closure of the Tier 1 Entrepreneur visa route in March 2019, and the introduction of the new Start Up route for first time business owners, and the Innovator route for more experienced business owners, applications from migrant business owners to come to the UK to either invest in or establish businesses have plummeted.

The new routes it seems have yet to gain traction or show appeal to international entrepreneurs. This is being attributed in good part to a lag in implementing the new endorsement and application process, which required government-appointed endorsing bodies to assume responsibility for approving business credentials and viability.

The UK has traditionally attracted the lion’s share of money invested in fintech in Europe, but initial indications are that these new immigration routes will impact tech sector growth and the prevalence of foreign start ups in the UK.

 

Need assistance?

DavidsonMorris are established advisers to the tech sector. As employer solutions lawyers, we work with tech companies to support with their full people requirements including immigration & employment legal advice and global mobilityhuman resource expertise.

We understand the commercial and legal challenges facing businesses in the sector, and work to support our clients in meeting their people management and planning needs while reducing legal risk exposure. Contact our tech sector specialists today.

Last updated: 2nd January 2020

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