Following our previous update which set out phase one of the government’s strategy to implement the proposals put forward by the Migration Advisory Committee (“MAC”) in connection with Tier 2, phase two of these changes is expected to take effect from 6 April 2017. This phase brings the following key changes which UK businesses will need to be aware of when taking on migrant workers:

  • Immigration Skills Charge (“ISC”): The ISC is to come into force in April 2017 and requires sponsors to pay £1,000 for each migrant worker, per year worked in the UK. The charge will result in additional costs being incurred for UK businesses who take on employees from outwith the UK and the EEA. Helpfully, there are a couple of exceptions to the ISC and it will not apply to dependants of migrant workers or to migrant workers looking to extend their leave to remain in the UK who were sponsored before April 2017. There is also consideration given to small businesses and charities where the level of ISC is reduced to £364 per year.
  • Tier 2 (General): The key change to the Tier 2 (General) route for employers will be the increase in minimum salary thresholds from £25,000 to £30,000. This will exclude a significant number of workers.
  • Tier 2 (Intra-Company Transfer) (“ICT”): The Tier 2 (ICT) visa category witnesses the most significant transformation in this recent wave of changes. Migrants and their dependants who apply for leave to remain in the UK by way of a Tier 2 (ICT) visa will no longer be exempt from the immigration health surcharge. Moreover, the Tier 2 (ICT) sub-category for short-term staff is to close, forcing employers to sponsor workers by way of the Tier 2 (ICT) long term sub-category (which requires a minimum salary of £41,500). There is some good news for applicants who are to earn an annual salary of more than £73,900, as they no longer need to work for an overseas group entity for more than 12 months to apply via the Tier 2 (ICT) route. Additionally, the level of salary required for a Tier 2 (ICT) migrant to work in the UK for up to nine years is now £120,000 (previously it was £155,300). The graduate trainee sub-category of the Tier 2 (ICT) also sees a salary change, with the minimum threshold being reduced from £24,800 to £23,000.

Despite some of the positive developments for workers applying by way of the Tier 2 (ICT) route, many employers are likely to view the other changes implemented by phase two as a further detriment to recruiting migrant workers. There is a risk that the ISC in particular will simply be too high a price for UK businesses to pay which in turn may force them to reduce the number of staff they recruit from overseas and this would certainly accord with the UK government’s objective to reduce the number of overseas workers coming to the UK.