The immigration cap: Potential borders between law firms and trainees

Since David Cameron first came to the fore in 2011, his Conservative government introduced an immigration cap/quota, limiting the number of migrants who can live and work in the UK. The cap, however, was not implemented across all of the immigration categories - far from it.

In fact, the cap was applied to, and continues to apply to, tier 2 general (work authorisation) visa applications submitted from outside the UK, excluding roles paying above £155,300. Those who fall under the cap are therefore new hires to a business, applying for their tier 2 general visas from outside the UK, and will earn less than £155,300. Dependants of certain UK students applying for tier 2 general visas are also covered.

For the last four years, UK law firms, together with other organisations that sponsor foreign workers, have not been impacted by the cap. This all changed on 11 June of this year when the cap was exceeded, resulting in a large number of firms being unable to obtain visas for lawyers they wanted to hire.

How does the cap work?

For a new hire to apply for a tier 2 general visa, the sponsoring law firm will need to advertise the role in the UK and undertake a resident labour market test before the visa application can be submitted.

Once the advertising process has been completed, and on the basis that no suitable resident workers have been found to undertake the role, the visa application process can proceed. There are essentially two main steps to the application:

• Step 1: Apply to the Home Office for a restricted certificate of sponsorship (RCoS), the corporate document that facilitates the visa application. RCoS applications are awarded points based on the type of job and salary - put simply, the higher the salary, the higher the chance of success.

• Step 2: Once the RCoS is in hand, the individual can submit their visa application from overseas.

Cap by numbers

The immigration cap has been set at 20,700 migrants per year since its introduction in 2011. This means that 20,700 RCoSs are available every year (April to April) to all UK employers seeking to sponsor non-European Economic Area (EEA) workers earning below £155,300 per annum. To ensure visas are available throughout the year, the Home Office grants RCoSs to companies on a monthly basis. This equates to approximately 1,650 RCoSs available each month, with slightly more available at the start of the year. 

UK-based firms and firms with offices in the UK often recruit specialist lawyers who require a work authorisation or tier 2 visa before they can work in the UK. As new hires to the firm, these individuals' visa applications are subject to the immigration cap, assuming they are not 'high earners' (earning less than £155,300).

Whereas previously firms only needed to ensure they met the relevant eligibility requirements (advertising correctly and ensuring the salary and skill level, etc. for the role were adequate), they now need to consider cancelling a proposed hire if they cannot obtain an RCoS for the individual to submit their visa application.

Training contract conundrum

Fragomen represents a number of firms, many of which undertake annual 'milk round' recruitment. Recruits identified through the milk round recruitment process then leave the UK and apply for their tier 2 general restricted visas from their home countries upon completing their legal practice course (LPC). These visa applications are usually submitted in June or July of the same year, within three months of their training contract start dates in September. This has been, and continues to be, a standard process for many firms.

A particular problem for large and international firms is that they have bespoke, fast-track LPC courses, which are reduced to six months from nine. However, a number continue to have September intakes. This means future trainees finish their LPCs in March and have to leave the UK and submit their tier 2 general restricted applications a few months later in June or July, enabling them to commence their training contracts in September.

Trainees in this situation cannot switch into the tier 2 general category from within the UK because their training contract start dates are too far away, starting in September, more than five to six months after their LPCs finish in February or March. With the cap being met and in-country switching not possible in this scenario, there is now the real possibility that firms will not be able to obtain the required RCoSs for their trainees to subsequently make their out-of-country visa applications.

When the cap is exceeded, the Home Office rank the RCoS applications, placing a strong emphasis on salary level, i.e. the higher the number of applications received, the higher the salary will need to be for the RCoS application to be successful. Unless an exception applies, those applications which do not meet the salary level are then rejected.

The trainee salary at a number of City firms is around £30,000 to £40,000, which would not have met the required salary level in June; the salary level was raised that month by the Home Office because the cap was exceeded. In June, only those RCoS applications with salaries of £46,000 or more were approved. This is in comparison to July when the cap was exceeded, but fewer applications were received, and the required salary level was raised to £32,000.

Proposed options

For those firms that have been impacted by the cap being exceeded, what action can they take to ensure that their trainees obtain their visas? It is still early days but here are a few possible options:

• Raise trainee salary levels. This will increase the chance of the RCoS applications being approved as, if the cap is reached, those applications with higher salaries have a greater chance of being approved. The problem with this option is that it causes disparity in pay levels unless applied to all trainees regardless of nationality, and implementation still does not guarantee beating the cap. Furthermore, this is likely to be unpopular with firms, given the level of uncertainty.

• Encourage firms to have March intakes, although this is also likely to be unpopular as it involves a major internal reshuffle at the firms.

• Move trainees onto a nine-month LPC so that they finish in June or July, enabling them to switch in-country into the tier 2 general visa category. This would mean, though, that firms would have to change their LPC programmes.

• Continue as planned and apply for an RCoS when required, although this runs the risk that the cap will be met and the RCoS applications will be refused.

At the time of writing, we do not know if the immigration cap will have been met in August, although we suspect it will have been. The relevant date for the diaries is always the 11th of every month, so firms that submitted their RCoS applications at the end of July or start of August will now have found out if their applications have been successful. 

Has this fundamentally changed the way firms will have to recruit overseas lawyers and also recruit their trainees? Perhaps, but it is too early to tell. One thing is certain, however: things will continue to get tighter as the UK government reaffirms its commitment to reduce net migration into the UK, so we are almost certainly going to see a number of changes over the next few years.

We will be sure to keep you posted as and when, and if possible before, these changes take place. SJ

Rajiv Naik is a senior associate at Fragomen @fragomen