Immigration continues to be a hot topic in the UK, not least in light of the upcoming Brexit Referendum on 23 June 2016 and the Home Office’s response to the Migration Advisory Committee’s report recommending steps to tighten the Tier 2 visa route. Whilst limited changes to the visa route were introduced from April 2016, more significant changes will be introduced from Autumn 2016 and April 2017.

Key changes in Autumn 2016

  • All Tier 2 ICT applicants applying for a visa of more than 6 months will be required to pay the Immigration Health Surcharge.

Comment – currently Tier 2 ICT applicants are exempt from this surcharge (which is a mandatory contribution to the NHS and which is payable upfront when applying for the visa, whether or not the applicant ever uses the NHS and even if the applicant has private medical insurance). The surcharge for Tier 2 ICT applicants will be the same as Tier 2 General applicants have been paying since April 2015 – £200 per applicant per year of the visa – so this change ensures consistency between the two routes. Where possible we recommend submitting ICT applications before October 2016 to avoid this charge.

  • Under Tier 2 (General) extra weighting will be given within the annual limit to businesses sponsoring overseas graduates. Graduates will be allowed to switch roles in a company if they secure a permanent position at the end of a training programme.

Comment – this will give employers flexibility to employ and retain graduates and increased confidence to invest in their training knowing that they should be able to retain those individuals more easily in the future.

  • Minimum Tier 2 salary thresholds will increase to £30,000 (Tier 2 ICT Short Term) and £25,000 (Tier 2 General experienced workers). They will not apply to certain public sector roles until July 2019.

Comment – increasing salaries will place more pressure on sponsors unable to recruit for lower paid roles from the resident workforce, especially start-up and growth businesses.

  • The Tier 2 ICT Skills Transfer category will be closed to new applications.

Comment – this category has been used less than expected so may not have a significant impact.

Key changes in April 2017

  • A new Immigration Skills Charge will be imposed on all Tier 2 sponsors at a rate of £1,000 for each year of the visa on the Certificate of Sponsorship. A lower rate of £364 will apply to small and charitable sponsors. PhD level occupations, Tier 2 ICT Graduate Trainees and those switching from Tier 4 to Tier 2 will be exempt.

Comment – this significant change, in addition to the expansion of the Immigration Health Surcharge, will substantially increase a sponsor’s costs for a visa from April 2017 adding up to £5,000 to the costs of a 5 year visa under Tier 2. Sponsors are advised to accelerate any planned Tier 2 visa applications prior to 6 April 2017. We also anticipate that UK Embassy processing times will slow down around this time.

  • The Home Office is proposing that all Tier 2 ICT categories be replaced with one single ICTcategory with a minimum salary threshold of £41,500. The Tier 2 ICT Short Term category will be closed to new applications. There will be greater flexibility in the Graduate Trainee category with a reduction in the minimum salary threshold (from £24,800 to £23,000) and an increase in the number of trainees an employer may bring to the UK from 5 to 20.

Comment – this will reduce an employer’s options to transfer staff to the UK for specialist but lower paid positions. The Home Office is taking further steps to encourage employers to look to the local workforce for its hiring needs which may not always be possible.

  • The Tier 2 (General) minimum salary threshold will increase to £30,000 for experienced workers. The minimum threshold for new entrants will remain at £20,800.

Comment – whilst the minimum SOC Code salaries for experienced workers (which must also be met) is often higher than £30,000, this change will put pressure on sponsors recruiting for lower paid roles where the individual does not meet the new entrant criteria (which apply to qualifying switches from a Tier 4 visa, ICT Graduate Trainees and those 25 or under).

  • The “high-earner” minimum salary allowing ICT holders to work in the UK for between 5 and 9 years will decrease from £155,300 to £120,000, but the Tier 2 (General) high-earner threshold will remain at £155,300.

Comment – this will be a useful change to allow ICT visa holders to delay the impact of the 12 month “cooling off period” especially as certain guaranteed benefits (including accommodation allowances pending further government review) can be included in this salary.

  • The current Tier 2 ICT requirement that employees have at least 12 months’ experience with the overseas employer will be removed for workers paid over £73,900.

Comment – this will give sponsors flexibility to transfer senior new staff hires to the UK immediately upon their recruitment.

  • Extra weighting will be introduced in the Tier 2 (General) monthly limit for “restricted” applications associated with the relocation of a high-value business to the UK or that may support an inward investment. Furthermore the Home Office advertising requirements (theRLMT) will be waived for these applications.

Comment – this is a helpful commercial change for business looking to grow in the UK. It will be interesting to see the detail behind the change to see how it will operate in practice.

Whilst a number of these changes will increase sponsorship costs and force employers to conduct a more rigorous cost-benefit analysis when considering international assignments, the changes do not go as far as we had anticipated. For example there were no changes to the work rights of Tier 2 family members or to the concessions available to employers hiring UK graduates, both of which were considered. The use of transitional periods has also softened the blow for employers. If you are contemplating transferring staff to the UK we advise planning and, where appropriate, expediting these transfers before the changes are enforced this Autumn.

In addition to the above changes which will be rolled out over the next 12 months, the Home Office has also introduced some other changes which bear consideration:

Changes to Tier 2 General Restricted Certificates of Sponsorship (RCoS) monthly allocation

The Home Office has altered the arrangements for the monthly allocation of RCoS. Whilst the annual allocation remains the same (20,700 places per year) the revised allocations better reflect seasonal demand for places across the year based on recent trends. This means that a higher allocation will be available in the first half of the year (2,000 in the May 2016 allocation compared to 1,000 in the February 2017 allocation). Unused places will be carried over from previous months.

Comment – whilst this may reflect historic demand for the RCoS route, it will be interesting to see whether in practice this means that fewer CoS will be awarded in latter months or whether the rollover of unused places will lead to very little change to the current system.

Removal of Points-Based Calculator and reliance on UK NARIC

The calculator was developed to assess whether (i) applicants were eligible to work or study in the UK and (ii) overseas qualifications met the academic and English language requirements under the Immigration Rules. As it has now been shut down, applicants will need to pay to obtain an official statement from UK NARIC to evidence their qualifications meet the test.

Comment – whilst it is too early to assess the impact of this change, the new may result in processing delays to submitting visa and nationality applications. In some cases it may be simpler and quicker for an applicant to sit a compliant English Test.

Settlement – minimum salaries

Regardless of the appropriate minimum salary paid during the visa period, any Tier 2 visa holder applying for Indefinite Leave to Remain must now meet the minimum settlement salary threshold at the time of the application to qualify. The threshold is a flat rate which is currently set at £35,000 per year, but which will increase over time up to £36,200 for settlement applications on or after 6 April 2020. Tier 2 visa holders in jobs that are on the shortage occupation list (or that were on that list in the preceding 5 years) or that are in PhD level occupations are exempt.

Audits and Civil Penalties

At the start of each visa year in April, the Home Office ramps up its audit procedures and visits. The Home Office also continues to work more closely with other Government departments to trace and question those who may not have the right to work legally in the UK and, where appropriate, to issue civil penalties. Now is a good time for licence holders to review their right to work records and to carry out general housekeeping checks. For further assistance in this regard please see our previous article on the immigration landscape and how to protect your business.

Brexit

Finally it is impossible to fully predict the outcome of the referendum on 23 June and the impact that any exit would have on UK immigration. European nationals currently have the right to live in the UK so long as they are exercising treaty rights and do not need to obtain visas or documentation to evidence this right. However, with the uncertainty of Brexit, during the 6 weeks before the referendum we recommend that European nationals living in the UK take steps to obtain documentation to evidence their status in the UK. This is recommended as the Home Office costs to do so are minimal (around £65), although applications can only be submitted by post and can take months to process. We envisage that this process will slow down even further if there is a Brexit.