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EU Settlement Scheme

| Heidi Thompson | 4 December 2020

The UK left the EU on the 31 January 2020, but this went largely unnoticed because the UK then began an 11 month-long transition period which will end on the 31 December 2020. 

During this transition period things like travelling to an EU country and freedom of movement and trading were unchanged. The transition period was arranged to allow both the UK and EU to negotiate on the terms of the final Brexit arrangement.   

One significant thing that will stop at the end of the transition period is freedom of movement which up until that point, allowed UK based employers to freely hire European workers from outside of the UK with no barriers to then entering. 

On 13 July 2020, the government set out details of the UK’s points-based immigration system. These new arrangements will take effect from 1 January 2021 when the current rules for hiring workers from the EU changes. 

From 1 January 2021, freedom of movement between the UK and EU will end and the UK will introduce a points-based immigration system that will treat EU and non-EU citizens equally and transform the way in which employers recruit internationally. 

In order for those EU, EEA and Swiss nationals already working in the UK to continue to live and work in the UK after 30 June 2021, they must apply for either settled or pre-settled status through the government’s EU Settlement Scheme.   

The EU Settlement Scheme is currently open and free to apply. The deadline for applications is 30 June 2021 and EEA or Swiss citizens already living in the UK by the 31 December 2020 have to apply for EU Settlement Status. Individuals can apply online through the government's website and they will be required to provide proof of identification as part of the process. 

The new points-based immigration system will ensure the UK prioritises and invests in those people already in the UK, upskilling our current workforce, whilst also attracting the best and brightest from around the world. 

From 1 January, there will be guaranteed changes for businesses: 

  • Employers will need to be a licensed sponsor in order to recruit eligible workers from outside the UK, including EU countries - this normally takes eight weeks from application to gaining licensed sponsor status and fees apply.
  • New job, salary and language requirements will apply to anyone that you want to hire from outside the UK.  

The new system will not apply to hiring Irish citizens or EU citizens already living and working in the UK who are eligible under the EU Settlement Scheme. 

What is Sponsorship? 

Tiers 2 and 5 of the points-based immigration system are the primary immigration routes for non-European Economic Area (EEA) migrants who wish to work in the UK. These migrants must be sponsored by an organisation or company that holds a Tier 2 and/or Tier 5 licence. A licence is a permission given to an organisation to sponsor workers in its business - the organisation is known as a sponsor, individual persons are not recognised as sponsors.  

A migrant must have a sponsor before they can apply to come to, or remain in, the UK for work. 

Sponsorship plays two main roles in a migrant’s application for permission to come to, or remain in, the UK to work: 

  • Where appropriate, it provides evidence that the migrant will fill a genuine vacancy that cannot be filled with a suitably qualified or skilled settled worker
  • It involves a pledge from the sponsor that it accepts all of the duties expected when sponsoring the migrant 

The fee for a sponsor licence depends on the size of the organisation that is applying. This fee is to allow for consideration of applications and will not be refunded if a license is refused or it is withdrawn after consideration of it has begun. A sponsorship license is valid for four years, after which it will expire and the employer must apply again.   

Becoming a Licensed Sponsor 

Being a sponsor allows an employer to recruit skilled workers globally for a four year period. 

If you think you’ll want to sponsor migrants through the skilled worker route from January 2021, you should apply now

Prospective employees from outside of the UK (excluding Irish citizens) will need to apply for permission first. Employers will be required to have a sponsor license in order to hire workers from outside of the UK in most cases. 

Types of Licence 

There are two types of licence that an employer might need when recruiting from outside of the UK and employers can apply for either or both of the licences. 

Tier 2 

Tier 2 is for skilled workers who will be employed long-term or permanently. This tier is split into four categories: 

  • General - the role must meet the job suitability requirements 
  • Intra-Company Transfer - for multinational companies which need to transfer employees to the UK 
  • Minister of Religion - for people coming to work for a religious organisation (for up to three years) 
  • Sportsperson - for elite sportspeople and coaches who will be based in the UK 

If the job that you are offering is not included on the shortage occupation list, you may be required to advertise the job for a minimum of 28 days and employers must be able to demonstrate that they did not find a suitable worker. 

Tier 5 

Tier 5 is for skilled workers who will be employed on a temporary basis. This tier is split into five categories: 

  • Sportsperson, Entertainer or Artist 
  • Charity worker 
  • Religious Workers 
  • Government Authorized Exchange (Work Experience) 
  • International Agreement (eg overseas government workers) 
  • Seasonal Workers; This is a pilot route which aims to enable employers in the edible horticulture sector to employ seasonal workers through an approved scheme for up to six months. 

If you think you’ll want to sponsor migrants from 1 January 2021, you should apply for a sponsor license now

Hiring Skilled Workers 

From 1 January 2021, anyone you recruit from outside the UK using the Skilled Worker route will need to demonstrate that: 

  • They have a job offer from an approved sponsor 
  • They speak English at the required level 
  • The job offer must be at the required skill (RQF A Level equivalent) and salary level  

When employing a skilled worker, employers must assign a certificate of sponsorship to each foreign worker. This is electronic and not a physical document and there may be fees associated with this. 

Right to Work checks for EU Citizens 

Up until 30 June 2021, employers can continue to check an applicants’ right to work in the same way as they do now for applicants already living and working in the UK using the relevant document or online checks. If an applicant uses the online checking service this will generate a share code. Employers must then use the share code to view the employers online service to check the applicant’s right to work.

Employers have a duty not to discriminate against EU, EEA or Swiss citizens and therefore cannot require them to prove their status under the EU Settlement Scheme until after 30 June 2021. 

From 1 January 2021, a new immigration system will apply to people arriving in the UK to work, who will be required to obtain a visa in advance. The new system will not apply to EU citizens already living in the UK by 31 December 2020. They and their family members are eligible to apply to the EU Settlement Scheme and have until 30 June 2021 to make an application. It will not be necessary to make retrospective checks for existing employees. 

As a transition measure, employers can continue to accept the passports and national identity cards of EU citizens as evidence of their right to work up until 30 June 2021.   

Some EU Citizens may still choose to evidence their right to work using digital status obtained from the Home Office instead of using their passport or ID card. This can be undertaken by using the Home Office online right to work checking service.  

When an individual wishes to demonstrate their right to work using this service they will need to provide you with their date of birth and a share code. They can provide this directly or they may choose to send it via the online service portal.  

Employer Responsibilities 

Employers must ensure that workers have the necessary skills, qualifications or professional accreditations to do the job that they are being hired for. Copies of all documents must be retained for audit purposes. 

As a licensed sponsor, employers are responsible for reporting if migrant workers do not turn up for work, or are absent without permission for a significant period. Employers must keep up to date records of any migrant workers including up to date contact details and a copy of their Biometric Residence Permit (BRP) which must be produced upon request. 

Employers must report any significant business changes within 20 working days, for example if: 

  • The business stops trading or becomes insolvent 
  • The nature of the business changes substantially  
  • The business is involved in a merger or take-over 

You must also tell UKVI if you’re changing your details, like your address or allocated roles. 

Sponsoring under-18s 

Employers must make sure that foreign workers under 18 have suitable care arrangements for their: 

  • Travel to the UK 
  • Arrival in the UK
  • Living arrangements in the UK 

Employers must also get a letter from their parents giving consent to the care arrangements and where appropriate, a Disclosure and Barring Service check may be required. Employers failing to complete these checks are likely to lose their sponsor license.  

Monitoring Employees 

Employers must have HR systems in place that will allow them to: 

  • Monitor employees’ immigration status 
  • Keep copies of relevant documents for each employee, including passport and right to work information 
  • Track and record employees’ attendance 
  • Keep employee contact details up to date 
  • Report to UKVI if there is a problem, for example if your employee stops coming to work 


If you would like further advice and guidance, we would recommend speaking with an immigration specialist or contact us to speak to one of our HR advisers.


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