UK launches Scale-up visa for high-growth companies

On 22 August 2022 the UK launched a new work visa route, aimed at high-growth businesses in the UK. Although it may be most attractive to the technology sector – for example the fintech industry – it is open to businesses in all sectors. 

At the first stage Scale-up visa applicants need a certificate of sponsorship (COS) from a business that holds a Scale-up sponsor licence, although Scale-up workers become unsponsored later. This visa potentially leads to settlement (permanent residency) after five years' continuous UK stay, either solely in the Scale-up route, or in combination with other qualifying visas. 

As is the case with most other UK visa routes, qualifying family members of Scale-up workers (partners and children) can apply for dependant visas if they meet the relationship and other conditions. As the Scale-up visa is a route leading to settlement, they will be potentially eligible for settlement too. 

What is the Scale-up visa?

High-growth businesses that want to hire workers into highly skilled roles for at least six months will be interested in the Scale-up visa. The visa application costs are lower than Skilled Worker and there are reduced sponsorship compliance duties after an initial period. 

There are two stages for workers entering the Scale-up visa route for the first time. Once a business has been granted an A-rated Scale-up sponsor licence:

• it can sponsor an initial two-year Scale-up visa, based on an intention to employ the worker for at least six months. The UK role must meet minimum salary and skill requirements, and the applicant must prove proficiency in English language to the required standard
• after six months, sponsorship ends automatically. The Scale-up worker can then work in any role or change job to a different UK employer without needing a new visa. If the salary they've received while holding the visa is high enough, they can extend the visa as an unsponsored Scale-up applicant for a further three years, without needing a new COS or a sponsor.

How does a business qualify to be a Scale-up sponsor?

Unlike Skilled Worker sponsorship, which is available to any trading UK employer, UK businesses only qualify if they had:

• average growth of at least 20% per year in turnover (revenue) or employment (headcount) for the previous three-year period, and
• at least 10 employees at the start of the three-year period

This is assessed using data submitted by the business to HM Revenue & Customs about its PAYE (payroll) reporting and its revenue through VAT returns. Generally, Scale-up licence applicants do not need to send any supporting documents unless they are a regulated entity.

This high-growth test will immediately disqualify many businesses, especially as the three year assessment period for companies wanting to apply now covers the pandemic. 

Businesses that do qualify can apply for a Scale-up licence - either a new licence or adding Scale-up to the scope of an existing licence – but it will only be granted for four years, with no option to renew. Once the licence is granted, the sponsor needs to ensure that the proposed role and salary meets the requirements – and that there is a 'genuine vacancy' like in Skilled Worker applications – but the sponsor only needs to confirm that the applicant is expected to work for them at least the first six months.

Who qualifies as a sponsored Scale-up worker?

Initial sponsored Scale-up visas are granted for a fixed two-year period. The minimum skill and salary level for sponsored Scale-up visas is higher than for Skilled Worker:

• the UK vacancy must be at RQF level 6 (graduate level) or above, which is the same as for intra-company transfers through Global Business Mobility (GBM), but is above Skilled Worker which has a minimum RQF level 3 standard for UK jobs
• the minimum flat rate annual basic salary is £33,000, rather than £25,600 in Skilled Worker, although in both cases sponsors must pay the higher of the going rate or minimum hourly rate (£10.10 for Scale-up workers) for the job if either rate exceeds the flat rate. Only basic salary counts - no other pay or benefits can be included when assessing salary – and Scale-up workers must be paid through PAYE. Unlike Skilled Worker, there is no option to reduce the minimum salary due to circumstances, for example if the applicant is a "new entrant" or the role is on the shortage occupation list.

Before sponsoring, businesses will need to check the list of approved Scale-up roles and going rate salaries, as some roles (below graduate level) that they have sponsored previously in Skilled Worker will not qualify in the Scale-up route.

The English language requirement is the same as for Skilled Worker and there's a similar financial requirement too, that sponsors can certify on behalf of applicants.  Although sponsors won't be able to certify the financial requirement in unsponsored applications, workers are exempt from the financial requirement once they've been in the UK for at least 12 months. Otherwise, they will need access to the necessary personal funds (at least £1,270 for 28 days, with an uplift if there are family members too).

Scale-up visas: conditions

During the initial six months of sponsorship, the worker must be employed in the specific graduate level job that are sponsored to do on their COS. But subject to their contractual employment obligations, they can also do other work for the same employer or different businesses – including self-employment or voluntary work – provided it's not as a professional sportsperson or sports coach. 

After that first six-month period, sponsorship ends automatically. Scale-up workers can then work without restriction in the UK (again except as a professional sportsperson or sports coach), including self-employment. They can continue working for the same employer or join a different employer, without needing to apply for a new visa. 

Although self-employment is permitted as the worker's main job after the initial six months of sponsorship, only PAYE earnings will count when assessing future unsponsored extension or settlement applications. So someone working solely as a self-employed contractor would then not be eligible for long-term stay in the Scale-up route.

Unsponsored Scale-up visas

The novel part of the Scale-up route is the ability of the worker to apply for an unsponsored Scale-up visa after they have been sponsored.

To qualify for the unsponsored visa, the worker must have had PAYE earnings in the UK equivalent to at least £33,000 per year during at least 50% of their visa permission as a Scale-up worker. Self-employment income or earnings outside the UK are disregarded. The test can be met using earnings from more than one UK job, so long as the applicant does not claim more than one set of PAYE earnings for the same period.

The test requires an assessment of actual monthly salary, not an average earnings figure. Applicants cannot offset months where their gross earnings are below £2,750 by relying on months with a higher level of earnings.   

When assessing the annualised £33,000 test, the Home Office will treat any of the following periods as having met the test:

• statutory maternity, paternity, parental or shared parental leave
• statutory adoption leave, or
• sick leave

The example given in the immigration rules is an applicant with two years’ permission as a Scale-up worker, who spent six months on the types of leave above. To qualify for the unsponsored Scale-up visa, they'd need to prove PAYE earnings in the UK equivalent to at least £33,000 per year during at least 6 months of the remaining 18 months of that permission.

Settlement

The Scale-up route is a path leading to settlement. The requirements are like Skilled Worker in that the applicant needs five years continuous UK stay - either solely in Scale-up or in combination with other qualifying visa categories - with absences from the UK that do not exceed the permitted threshold. 

The difference is that Scale-up workers do not need a sponsor to support their application. Instead:

• at the settlement application date, the applicant must be in PAYE employment in the UK with an annual basic salary of least £33,000, and
• the applicant must have had monthly PAYE earnings in the UK equivalent to at least £33,000 per year for 24 months of the three years immediately before the settlement application.

Why should businesses use the Scale-up route?

This is the key question. Many companies won't meet the growth test anyway, but what about those that do? The main selling points for businesses to use Scale-up are:

• exemption from the Immigration Skills Charge, which is payable for most Skilled Worker or GBM visas. That will reduce fees by up to £5,000 per applicant if the worker stays with the same business for five years, which is a considerable costs saving for each new case
• reduction in sponsorship compliance duties, because after the initial six months the sponsor's duties to the Home Office end, and
• compared to Skilled Worker, a greater flexibility for workers to engage in different roles for the business over time 

On the other hand, businesses still need to apply for a new Scale-up licence and sponsor new applicants, so there's still some red tape and cost, even if its reduced. Companies may be concerned that workers will use them to invest in their initial sponsorship and then leave after the initial six months to join another employer without needing a new visa. We expect an increased use of clawback provisions in the employment contract of Scale-up workers to counter that. 

It will be interesting to see whether having the option to sponsor in Scale-up becomes an important recruitment tool for high-growth businesses. For example, when hiring executives or key workers with specialist skills, will the lure of greater flexibility to the applicant of a Scale-up visa compared to Skilled Worker be a crucial factor in persuading top talent to join?

There are some tangible benefits for those fast-growth businesses that qualify to use the Scale-up visa route, but there are disadvantages too, so we expect Skilled Worker to remain the dominant work visa route. Each business will need to do their own assessment on whether they qualify to be a Scale-up sponsor, and if they do, whether they want to use that route. If you would like to explore any of this further, please do get in touch with us.