Reforms to Tier 2 categories announced

IMPACT – HIGH

What is the change? The Home Office has announced major reforms to the Tier 2 skilled worker categories in a response to the Migration Advisory Committee’s January recommendations.

What does the change mean? The reforms will raise costs for employers sponsoring employees and intracompany transfers under the Tier 2 route. Among the changes, minimum salaries will be increased and an immigration skills charge of £1,000 per year per migrant will be imposed on Tier 2 employers beginning April 2017.

• Implementation time frame: The reforms will be implemented in autumn 2016 and April 2017 to give businesses time to prepare.
• Visas/permits affected: Tier 2 (General) and Tier 2 (ICT).
• Who is affected: Employers sponsoring non-EEA employees and assignees.    
• Business impact: The reforms aim to limit migration primarily by raising costs in the form of higher minimum salaries, a new immigration skills charge and extending the immigration health surcharge to ICTs.
• Next steps: Next steps: Government officials have said they will review the extent to which allowances may be counted toward salary requirements in order to ensure that the resident labor market is not undercut. They also said they will weigh how best to move forward with the committee’s proposal for a review of the skills in the IT sector.

Summary of changes:

• Tier 2 (General) salary threshold will be increased to £25,000 in autumn 2016 and to £30,000 in April 2017; the threshold for new graduates will remain at £20,800.
• Tier 2 (ICT) category. The intracompany transfer route will be simplified into a single visa category with a minimum salary threshold of £41,500 (except ICT graduate trainees, whose threshold will be lowered to £23,000). For ICTs working in the U.K. between five and nine years, the minimum salary will be lowered from £155,300 to £120,000. Beginning April 2017, ICTs paid more than £73,900 will no longer be required to have one year of experience. The Skills Transfer sub-category will be phased out in autumn 2016. The Short-Term ICT sub-category salary threshold will be raised to £30,000 in autumn 2016 and will be phased out in April 2017. Beginning in autumn 2016, all ICTs must pay the immigration health surcharge.
• Immigration Skills Charge. Beginning April 2017, Tier 2 sponsors must pay an immigration skills charge of £1,000 per year per certificate of sponsor, which will go toward training and upskilling the resident labor force. Ph.D. occupations and Tier 4 students switching to Tier 2 are exempt. Small businesses and charities are subject to a skills charge of £364.
• Nurses. Nurses will remain on the shortage occupations list but employers sponsoring non-EEA nurses must carry out resident labor market testing.
• Tier 2 (General) limits. The Tier 2 (General) annual quota will remain at £20,700 and beginning autumn 2016 extra weight will be given within the quota to businesses sponsoring overseas graduates. Also, graduates will be allowed to switch roles within a company after securing a permanent job at the end of their training program.
• High-value business. Beginning April 2017, there will be extra weight given within the Tier 2 (General) quota to high-value businesses relocating to the U.K. and labor market testing will be waived for them.

BAL Analysis: The Home Office has adopted many of the measures recommended by the Migration Advisory Committee. Employers should work with their BAL team to prepare for the changes in the coming year.

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

Copyright © 2016 Berry Appleman & Leiden LLP. All rights reserved. Reprinting or digital redistribution to the public is permitted only with the express written permission of Berry Appleman & Leiden LLP. For inquiries please contact copyright@bal.com.