Following the publication of the Migration Advisory Committee’s (MAC) report in January, (where they were commissioned to advise the government on reducing economic immigration from outside Europe), the government issued its response to MAC’s recommendations on 24 March 2016.
It will come as no surprise that the government intends to accept the majority of MAC’s recommendations and as a result there will be several policy changes to Tier 2 (General) and Tier 2 (Intra-Company Transfer) (ICT). These changes will come into effect from autumn this year, with all proposed measures being implemented by April 2017. This allows a transition period for employers.
The Tier 2 minimum salary threshold will increase to £30,000. This increase will be phased in, with the minimum salary threshold increasing to £25,000 in autumn 2016 and then up to £30,000 in April 2017. The current minimum threshold of £20,800 will remain for new entrants. The increase in the minimum salary threshold is proving to be unpopular amongst employers, and limits their ability to provide sponsorship to those jobs at the lower end of the salary scale despite skills shortages.
Nurses, medical radiographers, paramedics and secondary school teachers in mathematics, physics, chemistry, computer science and Mandarin shall be exempt from the increases until July 2019 due to recruitment challenges in those occupations.
Non-EEA graduates of UK universities will continue to be able to switch from a Tier 4 visa to a Tier 2 visa without employers having to satisfy the resident labour market test and without being subject to the annual limit on Tier 2 (General) places of 20,700 places per year.
From autumn 2016, the Home Office will give extra weighting within the Tier 2 (General) limit to those businesses sponsoring overseas graduates and will allow those graduates to switch roles within the business once they have secured a permanent position at the end of their training.
Sponsoring migrant workers is set to become even more costly for employers. Despite already having to pay for a Certificate of Sponsorship (CoS), with some employers bearing some or all of the costs of entry clearance fees and the immigration health surcharge on behalf of the migrant employee, they are now set to face a new Immigration Skills Charge (ISC). The ISC will be £1,000 per sponsored worker per annum. This will effectively increase the cost of the usual five year visa under Tier 2 (General) by £5,000 by April 2017. A reduced rate of £364 per sponsored worker per year will apply to small businesses and charities.
For those businesses who currently use or intend to use the ICT route, a number of changes are on the cards. All transferees will be required to qualify under a single visa category with a minimum salary threshold of £41,500 by April 2017. A number of routes under the ICT sub-category will be closed.
From autumn 2016, the Home Office will close the Skills Transfer ICT route to new applicants and increase the minimum salary threshold for Short Term transferees to £30,000. From April 2017, the Short Term category will also close.
The Graduate Trainee category will remain under the ICT sub-category. The minimum threshold salary will actually reduce from £24,800 to £23,000. The government also intend to increase the number of trainees that can be brought to the UK by the employer via this route to 20. The current allowance is 5.
So what does this all mean for employers?
Employers will need to review their recruitment practices and their skills requirements for the future in line with these changes. Businesses will need to determine whether sponsoring a non-EEA national is cost efficient and beneficial for their business. They will need to weigh up the costs involved following the new reforms, together with the onerous burdens already placed on Sponsors by the Home Office, and determine if sponsorship remains a viable option for their business, as the costs and liabilities of sponsorship are clearly stacking up.
It is clear what the government is trying to achieve here in order to curb economic migration to the UK, and these measures may be effective in the future. However, they do not solve the current skill shortages that employers face in the UK labour market today. The government is trying to deter employers from recruiting non-EEA nationals by imposing ever rising costs and stipulations on migrant recruitment in order that employers recruit from the resident labour market. The government want employers to invest in training, apprenticeships and the up-skilling of the UK resident workforce. However, such measures could, even in the short-term, affect the UK’s ability to attract and retain the business, the talent, and the skills that it needs in order to strive and compete in a highly competitive and growing global marketplace.