Following our Webinar on Thursday 28 January when we discussed the recommendations made by the Migration Advisory Committee (MAC) to the Home Secretary, we summarise below the details of their proposed reforms and the restrictions which could have a significant impact on employers who sponsor workers from overseas or wish to do so in future

Time Line to date:

On 10 June 2015, the government commissioned the Migration Advisory Committee (MAC) to review Tier 2 of the points-based system to address concerns about the rising number of migrants in that route and reliance on them to fill shortages.

On 19 January, MAC made their recommendations to the Home Secretary and the proposed reforms and restrictions could potentially significantly impact employers who sponsor workers from overseas or wish to do so in future.

The Government asked the MAC to consider and provide advice on 5 issues:

  1. How to prioritise applications under Tier 2 to ensure maximum benefit for the UK;
  2. Applying a skills levy (immigration skills charge) to businesses employing non-EEA migrants;
  3. How to tighten the intra-company transfer route;
  4. Whether jobs should be automatically removed from the shortage occupation list;
  5. Restricting dependants’ access to the UK labour market.

MAC did not recommend:

  1. How to limit the time that sectors can remain on a shortage list
  2. Restrictions on the automatic right of Tier 2 dependants to work

1. How to prioritise applications under Tier 2 to ensure maximum benefit for the UK;

MAC saw part of their task in their report as looking for a better way to prioritise and target the skills that migrants bring to the UK as well as to address the potential disincentives to up-skill the domestic labour market.

MAC states that Tier 2 should gravitate towards the more selective recruitment of the, arguably, higher value, highly specialist experts and away from the numerically larger recruitment of workers whose skills may, in time, be replicated in the UK labour market.

MAC recommends that any restriction be done by price rather than try to hand pick which roles should be defined as highly specialist or in genuine shortage.

Restriction by Price: MAC recommends raising the minimum salary levels that migrants have to be paid

  • Tier 2 (General) and short-term Tier 2 (Intra-company Transfers) minimum salary raised to £30,000 per annum.
  • For new entrants within Tier 2 (General), and the graduate trainee route within the Tier 2 (Intra-company Transfer) route, minimum salary raised to (£23,000).

Note that MAC did not recommend regional variation in the salary thresholds

Public Sector Salaries: MAC recommends that the thresholds for the predominantly public sector occupations should gradually be increased over time to reach the £30,000 threshold.

Note that some Band 3 registered nurses in a Care Home are currently paid £25350 per annum.

2. The implementation of a levy on Tier 2 visas, to fund apprenticeships,

After deliberation on what the charge should be, and the recommended level at which the ISC should be set will be a matter for HM Treasury, MAC suggests that Sponsors should pay an upfront charge of £1,000 per year for each Tier 2 migrant

MAC’s rationale is that an Immigration Skills Charge will:

  • Incentivise employers to reduce their reliance on employing migrant workers and to invest in training and up-skilling UK workers.
  • Provide a source of funding to help with this training and up-skilling.

MAC recommends that the ISC is used in addition to raising salary thresholds.  Their view is that:

  • an overall minimum threshold prevents undercutting and provides upwards pressure on wages.
  • The ISC influences demand and raises revenue.

and therefore the two measures are complementary.

MAC proposes that the ISC be applicable to all employers recruiting migrants across all Tier 2 routes.

Exemptions: Tier 2 (Intra-company Transfer) Skill Transfer and Graduate Trainee routes.

3. Tier 2 Intra-company Transfer – Tightening up on the intra-company transfer route, including applying the immigration health surcharge (IHS) to intra-company transfers

MAC recommends:

  • Extending the qualifying period with the company overseas for intra-company transfers from 12 months to 2 years for the short-term and long-term routes. MAC’s rationale is that this will ensure the Tier 2 (Intra-Company Transfer) route is being used to bring in senior managers and specialists and not displacing resident workers.
  • 6 months for the graduate trainee route be maintained as these could be newly recruited staff who need to gain experience of working in the UK office.
  • Sponsors should be be required to enter a more detailed description of the role required on the CoS application form to ensure that the role is sufficiently specialist.
  • Immigration Health Surcharge: Tier 2 (Intra-Company Transfer) migrants should pay the IHS £200 per year.
  • For the future, MAC suggest that HMRC and the Home Office should work together to consider whether the current tax provisions made available for allowances, and the exemption of national insurance contributions, are working in the interests of the UK.

New Tier 2 (Intra-company Transfer) route – 3rd party contracting

MAC recommends:

  • a new route be created designed specifically for third-party contracting.
  • An increase in the salary thresholds to £41,500 pa as a way to prioritise applications and prevent any undercutting and displacement within the UK labour market.

MAC recommends that the Government commission a more in-depth review of skills shortages within the IT industry.

Tier 2 (General)

MAC recommends that in the Tier 2 Restricted COS process, applications for graduate programmes/schemes to be considered as if the salary is £7,000 higher .

Resident Labour Market Test (RLMT)

In-country switchers are not subject to an RLMT and are not included in the annual limit on Tier 2 migration these include:

  • Tier 2 General migrants extending leave to remain and Tier 4 Graduates.

MAC argues that as long as there is a limit on some areas of Tier 2 (General) there should be a limit on all areas otherwise highly paid out-of-country applicants may be turned down whilst lower paid in-country switchers continue to be admitted and, this does not achieve the Government’s objective of ensuring that the highest value migrants are admitted under Tier 2.

MAC recommends that Tier 2 General migrants and those switching from other routes in the UK should require a RLMT.

4. How to limit the time that sectors can remain on a shortage occupation list

MAC does not recommend an automatic sunset clause to remove job titles from the shortage occupation list.

5. Restrictions on the automatic right of Tier 2 dependants to work

MAC does not recommend restricting the automatic work rights for dependants because:

  • restricting the right to work for Tier 2 dependants – whether in highly skilled or low skilled work – would not lead to improved economic outcomes for UK residents.
  • restrictions on the right to work for Tier 2 dependants would likely impede their integration into UK society, potentially leading to undesirable social outcomes.

Conclusion

Theresa May and her Minsters will have to take all of the report into consideration, engage with other government department i.e. HMRC/HM treasury and Department for Business, Innovation and Skills (BIS).

In the meantime, we urge you to consider the implications of planning and cost considerations, in particular:

  • Salary Increases to meet minimum requirements
  • Extension of Immigration Health Surcharge to all ICT categories and family members. Note that from 6 April the IHS will also be payable by Australians or New Zealanders who are planning to spend more than six months in the UK, or who are applying to extend their stay.
  • Immigration Skills Charge – £1000 per year
  • Increased Visa Application Fees from April 2016