Migration Advisory Committee recommends major restrictions to stem skilled migration

19 Jan 16



What is the change? The Migration Advisory Committee has released a much-awaited report, recommending significant changes to Tier 2 visa categories for migrant workers.

What does the change mean? Among the changes, the committee recommended that the government raise minimum salary thresholds for Tier 2 (General) and Tier 2 (ICT), extend the Immigration Health Surcharge scheme to all intra-company transfers (ICTs), impose a new “Immigration Skills Charge” on employers across nearly all Tier 2 categories, and set up a separate route for third-party contracting of Tier 2 ICTs. The changes would make employing migrants, including assignees, significantly more difficult and expensive.

  • Implementation time frame: The government will review the report and is likely to introduce reforms by April 5, the date immigration rule changes typically come into effect.
  • Visas/permits affected: Tier 2 (General) and Tier 2 (ICT) visas.
  • Who is affected: Employers hiring skilled non-EU migrant employees and assignees.
  • Business impact: If adopted, the reforms would significantly increase business costs for companies hiring and assigning non-EU staff into the U.K.

Background: The government commissioned the committee to make recommendations on changes with an eye toward limiting net migration into the U.K. The committee is an independent group of five senior economists charged by the government to advise the Home Office on migration policy issues in light of independent socioeconomic data.

The key recommendations in the nearly 400-page report are:

  • Higher minimum salary thresholds. Tier 2 (General) and Tier 2 (ICT) should be raised to £30,000 (from the current £20,800) in order to restrict Tier 2 migration and to reflect the higher skill level for these routes. A lower threshold of £23,000 should be offered to graduate hires who have just completed university. Given that minimum salaries are often set for each occupational role according to Standard Occupation Codes, this will impact certain sectors more than others.
  • A new Tier 2 (ICT) route for third-party contracting. A separate category for ICTs servicing third-party contractors should be introduced with a salary threshold of £41,500 in order to ensure that this route is only used by highly specialized migrants and benefiting the U.K. economy as a whole. This sector can expect further scrutiny once it is placed under a separate route to ensure there is no undue displacement of resident labor.
  • Immigration Skills Charge. Employers who use migrant labor should pay a skills levy, which would help fund training of resident labor and reduce the need for foreign workers. The committee suggests an upfront levy of £1,000 per year for each Tier 2 migrant, except for ICTs in the Graduate Trainee and Skills Transfer sub-routes.
  • Criteria for Tier 2 (ICT) route. Tier 2 ICTs (Long-Term and Short-Term Staff) should be required to have two years of experience (instead of one year under current rules) and employers should be required to provide a more detailed description of the role to ensure that it is used only for specialists. All ICTs should be required to pay the Immigration Health Surcharge from which they are currently exempt.
  • In-country conversions. Employers should be required to conduct resident labor market testing when hiring Tier 4 students and others who are switching to Tier 2 (General) in-country. Further, in-country switchers to Tier 2 (General) should be included in the annual limit on Tier 2 migration.
  • Shortage Occupation List. Tier 2 (General) should not be restricted only to occupations on an expanded shortage occupation list, nor should the jobs on the list automatically sunset. However, employers should provide evidence of upskilling the resident labor force for jobs to remain on the list.
  • Family dependents. The automatic right to work of family members of skilled migrants should not be restricted.

BAL Analysis: The Migration Advisory Committee took the approach that the best way to stem skilled migration is through price. If the committee recommendations are adopted, employers will face higher costs in the form of increased Tier 2 salaries and a new Immigration Skills Charge for most Tier 2 workers as incentives to reduce the reliance on migrant labor. Tier 2 ICTs servicing third-party contractors will have to meet higher salary thresholds in order to limit this route to senior managers and specialists, although the committee recommended further research on skills shortages specifically within the information technology (IT) sector. On the positive side, the committee did not recommend absolute time limits on jobs listed as shortage occupations or eliminating the automatic right to work for spouses of skilled migrants.

This alert has been provided by the BAL Global Practice group in the United Kingdom. For additional information, please contact uk@bal.com.

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