Pro and cons of new scale-up visas

The UK's new Scale-Up Visa system came into effect on Monday, August 22, offering a cheaper, easier route to hire overseas talent, particularly for the tech sector.

Pro and cons of new scale-up visas
But an immigration lawyer at leading law firms is warning that, while the new visas offer many advantages over other skilled worker routes, the system is not without potential problems.

The new visas, which last for three years initially, are only available to companies that can show annual financial or staff growth of at least 20% in the three years prior to any application. They must also have had at least ten employees at the start of that three-year period.

According to an analysis of official data by the ScaleUp Institute, there were 33,445 scale-up businesses in the UK in 2019, the last year for which statistics were available. Although this number probably declined because of the pandemic, the remaining pool is still regarded as substantial.

Andrew Osborne, head of the immigration practice at Lewis Silkin, says that advantages of the scale-up route include the fact there is no Immigration Skills Charge (ISC), which represents a saving of £1,000 a year compared to the Skilled Worker, Senior and Specialist Worker schemes.

Additionally, applications are promised to be fast-tracked with reduced administration after the first six months.

But Mr Osborne, writing on the company website, also points to potential disadvantages for sponsors including the fact they will continue to have sponsor licence obligations during the life of the licence even it is not actively sponsoring workers.

He points out that the visa holder is not tied to the sponsoring company and that he or she can change jobs after six months, affecting the chances of employee retention. And the minimum salary threshold for the scale-up route is £33,000, compared to the £25,600 for Skilled Worker visas.

"The salary requirement of £33,000 under the Scale-up visa route aims to minimise the risk that visa holders in this category will occupy lower-skilled positions in the labour market," says Mr Osborne.

"It is possible that some workers could still end up working for lower-skilled and lower-paid jobs for multiple employers, and this is something the Home Office will be monitoring.

"Previous schemes were subject to the risk of visa holders fraudulently reporting self-employed earnings in order to meet earnings criteria for extension and settlement. This is addressed under the scale-up route through the requirement for qualifying earnings to be via PAYE only.

"If this route proves to be successful, it may pave the way for more liberal sponsored to unsponsored schemes to emerge."

Sacha Schoenfeld, head of Fox Williams' business immigration team, says the scale-up route should enable UK businesses to compete internationally for the sought-after and highly skilled workers they need, and help maintain the UK’s status as a leading international hub for emerging technologies.

"Although the Scale-up route is not limited to tech companies, it is anticipated that businesses in this field will be some of the most frequent users given the abundance of fast-growing businesses in the sector," she says.

Ms Schoenfeld points out that the new scheme offers both a Sponsored Application route and an Unsponsored Application route, although the latter is only available to applicants who have previously been granted permission to enter or remain as a Scale-up Worker.

"Whilst the Scale-up route intends to provide an opportunity for highly skilled individuals to join growing eligible businesses, it does retain some similarity with the Skilled Worker visa," she says.

M Schoenfeld says that it remains to be seen whether the new route will be a beneficial alternative to the Skilled Worker route but she says there are advantages in the new scheme.

"Given that foreign talent represents more than 40% of those employed in the UK fintech industry, for example, the Home Office have introduced this route to try to avoid a significant shortage in human capital within the tech sector generally," she says.

"It should therefore be substantially easier for companies to attract and retain high-skilled, globally mobile talent for qualifying businesses, and to avoid such businesses relocating to other locations where it may be easier to source that talent – something that is to be welcomed in the current climate."

Immigration practice Smith Stone Walters believes the fact the new route only requires individuals to be sponsored for six months will add to the global appeal of the scheme.

"This will enable UK businesses to compete for the internationally sought-after and highly skilled workers they need, and help maintain the UK’s status as a leading international hub for emerging technologies," the firm commented.

"The new Scale-Up Visa recognises the benefits high-growth businesses offer to the UK, and the need to ensure they are fully supported in maintaining this growth at a key time. Although the Scale-up route is not limited to tech companies only, it is anticipated that businesses in this field will be some of the most frequent users given the abundance of fast-growing businesses in the sector."
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