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Removing the resident labour market test — transitional teething problems — or here to stay?

We highlight some of the key transitional issues facing business, including the impact recruiting and sponsoring skilled workers has had on…


The new immigration points-based system received much commentary in the lead up to its implementation. Over a month down the line with some of the dust now settling, we highlight some of the key transitional issues facing business — in particular, what impact removing the resident labour market has had on businesses when recruiting and sponsoring skilled workers.

Requirements for a Skilled Worker Visa

Firstly, under the new immigration system, it is generally understood that the four main requirements for a Skilled Worker Visa are:

  • the applicant must have a certificate of sponsorship from an employer approved by the Home Office;
  • the job must be sufficiently skilled;
  • the job must meet the minimum salary requirement — how much will depend on the type of work carried out; and
  • the applicant must satisfy the English language requirement.

Therefore, if a candidate meets those requirements for any role advertised and is willing and able to cover the costs of sponsorship, there would appear to be no real barrier to recruitment thereafter. However, many businesses are still encountering a number of challenges as discussed below.

The resident labour market test

For those not too familiar with the resident labour market test — businesses looking to sponsor a skilled worker (under the previous Tier 2 (General) visa) had to first carry out a resident labour market test.  This added at least 28 days to the recruitment process and was rather prescriptive. Businesses were required to ensure any vacancy advertised could not be carried out by a UK citizen/settled worker. If a UK citizen or settled worker had the skills and requirements listed in the job advert, the business could not offer it to the individual requiring sponsorship — even if they were the stronger candidate.

The resident labour market test was abolished from 1 January 2021 and was potentially great news for businesses. One of the hailed benefits was the freedom and ability to recruit from anywhere in the world, without the need to default to the resident labour market. Understandably, that is a positive step for business with the recruitment net now boundless and indiscriminate. 

However, what has become apparent is the administrative and operational challenges this freedom now places on business and ironically, may still plunge them into discrimination territory. 

The real cost of widening the net

With the new points-based system in place and the removal of the resident labour market test, applicants cannot and should not be rejected on the basis of their immigration status. That said, sponsorship costs and ongoing compliance obligations are not insignificant and understandably, some businesses may not wish to enter sponsorship territory — so what do businesses need to be aware of when managing that conflict?

Stating you will only recruit and/or offer employment to those who have the right to work in the UK may lead to race discrimination claims on the grounds of nationality. Naturally, businesses should do all that they can to avoid that. We would therefore recommend the following steps are considered and taken to avoid race discrimination claims:

Planning and Strategy

  • Understand where your vacancies could be mapped on the new immigration points-based system:
  • Is the role on the skilled occupation list?
  • Does the salary you intend to offer match the going rate for the role?
  • If not, are there tradable points available that would?

Carrying out that exercise will help you prepare and manage the recruitment process, with the new points-based system in mind. If the role or salary requirements do not meet the new immigration points required, then that would be the basis of any rejection — not the individual’s immigration status.

  • You may wish to consider mapping your entire organisational structure against the new points-based system (as suggested above). In the event of a recruitment drive or urgent placement, you would then be prepared to manage the process in line with the new points-based system and be clear on which roles would meet the role and/or salary requirements beforehand.

Internal Process and Training

  • Ensure your recruitment team have received training on the new immigration points-based system.
  • Make sure your recruitment team know that the resident labour market test no longer applies and applicants should not be rejected based on their immigration status.
  • Don’t state in any job vacancy or advertisement that you do not hold a sponsorship licence.
  • Consider applying for a sponsor licence if you are likely to be recruiting a skilled worker — this avoids it being a barrier or causing a delay in your recruitment process at a later date.
  • Don’t introduce a recruitment policy confirming you only accept applications subject to immigration status and/or from those who do not require sponsorship.
  • Avoid decisions being made based on costs only (further details below).

What if you do not want to be a sponsor?

If it can be established that a business has applied a provision, criterion or practice that places any nationality at a disadvantage when compared to another, then it is still open for that business to objectively justify that provision, criterion or practice. What does that actually mean? Well, it means that if you operate in any way that could place any nationality at a disadvantage, for example, not wanting to incur the costs of sponsoring a worker, or not wanting a sponsor licence, you will have to justify that decision by:

  • being clear on what your legitimate aim is — i.e. what is your real business need; and
  • ensuring that how you achieve that aim is proportionate — i.e. it is reasonably necessary in order to achieve that aim?

If the cost of sponsorship is your only reason for not offering a role to a potential candidate, then you are not going to successfully defend any race discrimination claim. It is not enough to simply say “it’s too expensive to sponsor a worker”.  So if there are other considerations, then you must be clear on what they are. For example, it may be that in relation to the administrative, compliance and/or general obligations that go with sponsorship, you just don’t have the resources or expertise to manage that confidently.

The courts recognise and understand that most business decisions have due regard to costs, so something cost-driven but not solely cost-based is capable of justification. However, you must be very clear on any other ground you rely on for not offering a role that is not purely cost-based and remember, you still have to demonstrate that any cost-driven approach is proportionate. 

This is a fairly complicated area within the recruitment process and naturally, we would advocate seeking legal advice if you are unsure of any basis for rejecting an applicant requiring sponsorship.

Do you have a genuine vacancy? 

Though there is no longer a requirement to carry out a resident labour market test, you must still have a genuine vacancy, which means employers must ensure that any role advertised is genuine, meets the relevant skills threshold and salary requirement.   

The role must not be fake, a sham or created so that an applicant can apply for a visa. The best starting point to determine whether an applicant meets the required skills threshold is to consider the vacant role on the Government’s skilled occupation list. 

If a vacancy is not overtly capable of being plotted under a relevant job code on the skilled occupation list, there may be a temptation to try and “fit” it under a different job code on the list. In the main, so long as you genuinely consider, and can demonstrate, that the role matches the relevant job code on the list, that should be fine. However, if there is any blatant attempt to make an application for a role that does not fulfil the relevant skill threshold, then you could encounter the following problems with your skilled worker visa/sponsorship application:

  • the application being rejected;
  • the application being accepted in error but later investigated, subject to a compliance visit and/or your application being rejected at a later date;
  • the Home Office could consider your application misleading, which could result in:
    • a fine
    • further consequences in respect of your sponsor licence, e.g. downgrading
    • you being on their radar for all future applications and under more scrutiny.

You will be best placed to understand the requirements of the vacant role and how that may or may not correspond with the relevant job code on the skilled occupation list.  It is important that your recruitment team are comfortable and compliant with how this process is carried out.


There are many ongoing conversations about the new points-based system at the moment, but we have focused this particular article around what impact the removal of the resident labour market test has had on businesses and the broader considerations that need to be factored into your recruitment and decision-making process going forward. 

Essentially, you should ensure your recruitment team are up to date on the immigration rules, the new points-based system and are clear on how to avoid any discriminatory practice within your recruitment process.  

It is easy to assume that your team are up to speed on these matters, but it does no harm to organise refresher equality and diversity training and/or training around the new immigration points-based system in general both of which we can assist with.

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