UK employers who are sponsors under Tier 2 will be giving careful thought at the moment to their request for the new year’s (April 2016 – March 2017) allocation of certificates of sponsorship and looking at next year’s budgets.  When assessing this need sponsors should consider:-

  • are there any sponsored workers who will need to extend their leave in the UK under Tier 2 in this period?
  • what international assignments to the UK are under consideration?
  • where are the current recruitment hot spots and do they bring any challenges in relation to availability of skilled candidates?
  • in light of this need what costs are associated with Tier 2 support for the next financial year?

There is usually a degree of crystal ball gazing in this exercise and sponsors can take some comfort from the fact that additional certificates can be requested during the year if this assessment is not quite right.

This year however employers have a further challenge on the crystal ball gazing front as we await the Government’s response to the recommendations of the Migration Advisory Committee (MAC).  In the Summer of 2015 the Government requested that the MAC advise on a number of potential changes to 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. The MAC consulted in the Autumn and have recommended a wide range of changes including:

  • a new charge on employers who recruit from outside the EEA, likely to be at least £1000 per year for each non-EEA worker employed;
  • an increase in the minimum amount that a non-EEA worker must be paid in order to qualify as a skilled worker under the immigration rules to at least £30,000 in most cases;
  • tighter control on the ability of multi-national companies to transfer non-EEA personnel to the UK.

The recommendations are with the Government and although nothing is certain we expect many, if not all to be implemented, probably in April and October of 2016.

Let’s take a closer look at some of the key recommendations and how they might impact on the Tier 2 landscape:

New Immigration Skills Charge and extension of International Health Surcharge

The MAC has endorsed the Government’s proposal that businesses recruiting from outside the EEA should pay an ‘Immigration Skills Charge’ to discourage reliance on migrant workers and encourage investment in training and up-skilling for UK workers. Only Tier 2 Graduate Trainee and Skills Transfer would be exempt from this charge.

The amount of the charge will be for the Government to decide upon. The MAC suggests an appropriate amount would be £1,000 per year of the visa applied for. So the charge due on a 3-year visa would be £3,000 and on a 5-year visa £5,000.

New legislation will be needed to bring the charge into effect. The first step in that direction has already been taken, with the Immigration Bill being currently going through the Parliamentary process. It will be some time before that process is complete, meaning the skills charge is unlikely to take effect before October 2017.

In addition there is the recommendation that the current exemption of intra-company transfer from the International Health Surcharge should cease.  If this recommendation is adopted it will not matter that the employer meets health charges through private provision.

These changes will not limit or prevent the use of Tier 2 directly of course but will most certainly have an impact on the bottom line.  Taking into account annual visa fees increases the direct cost of a 3 year Tier 2 (General) hire with three dependants will increase from £5,023 to £8,023;   under Tier 2 ICT, the current cost would be only £2,623  but would also rise to the same amount.  .

Higher salary thresholds

Under the current rules, all Tier 2 (General) employees must be employed in a job with an annual salary of at least £20,800. In addition there are minimum salary requirements for specific occupations: where an occupation-specific threshold is higher than £20,800, the migrant must have a job at that higher rate (either new starter or experienced rates as applicable) to qualify for a visa.

The MAC has recommended that the overall threshold be raised to better reflect the higher qualifications that migrants now need in order to apply under this route. It recommends that it should be set at £30,000, with a lower threshold of £23,000 applying to those classed as ‘new entrants’. The MAC’s view is that there should, however, be no change to the basis on which occupation-specific thresholds are set rejecting the idea of a region assessment.

The MAC recommends that the £30,000 threshold should also apply in the Tier 2 (Intra-company Transfer) route to short-term staff and skills transfers, where the lower threshold currently stands at £24,800.

For graduate trainees in the Tier 2 (Intra-company Transfer) route, the MAC recommends aligning the salary threshold with that applicable to new entrants in the Tier 2 (General) route. If the rates recommended by the MAC are adopted by the Government that would mean a reduction in the salary threshold from £24,800 to £23,000.

Further controls on intra-company transfers

The MAC has recommended a number of other steps to ensure the Tier 2 (Intra-company Transfer) route is being used for its intended purpose. These include:

  • Extending the qualifying period with the company overseas for intra-company transfers from 12 months to 2 years for both short-term and long-term transferees (with no change to the existing requirement of 6 months for the graduate trainee route).
  • Requiring employers to set out why they need to bring the individual into the UK and what exactly they will be doing in the UK.
  • Creating a separate route, with a salary threshold of £41,500, for transferees used to carry out work for a third-party organisation. This change will primarily affect IT services companies who send  skilled employees to the UK to deliver contract to customers.

Limits on Tier 2 General

Ordinarily an employer wishing to use Tier 2 General must meet the requirements of the resident labour market test (RLMT).  There are a number of exceptions to this primarily for employees looking at graduates where an international student moves from Tier 4 to Tier 2.

The MAC expresses support for the and has recommended that all moves in the UK into Tier 2 (General) (unless the role is on the shortage occupation list) should require an RLMT.

If this recommendation is accepted by the Government employers will need to review carefully their graduate recruitment programmes to ensure that they meet the RLMT requirements  through the milk round or advertising options.

Comment

We have had a relatively stable couple of years in terms of Tier 2 and given the ongoing focus on migration, not least the Brexit debate, it was perhaps inevitable that we would see the MAC recommend some deep cutting changes.  For employers in the IT sector new route will require a full review of resourcing and cost modelling.  For all employers the impact on the cost of Tier 2 will require a close look at necessity the cost benefit analysis – this is exactly the Government’s objective of course.

We await the Government’s response.