IMPACT – HIGH

What is the change? The annual statement of changes to the Immigration Rules has been published.

What does the change mean? The statement of changes confirms anticipated structural changes for Tier 2 visas and increased costs for employers via the Immigration Skills Charge and Immigration Health Surcharge beginning in April.

  • Implementation time frame: April 6, 2017.
  • Visas/permits affected: Tier 2 Skilled Workers.
  • Who is affected: Employers sponsoring workers under Tier 2 categories.
  • Business impact: Businesses should plan for significant increases in cost due to introduction of the Immigration Skills Charge, among other restrictions.

Key changes: The changes represent the second phase of planned reforms first announced March 24, 2016, arising from the Migration Advisory Committee report of that year. Summary of key changes for employers:

  • Immigration Skills Charge. Tier 2 sponsors must pay an additional Immigration Skills Charge of £1,000 per year per migrant, to be paid upfront at the time of certificate of sponsor issuance, for the funding of government training and upskilling initiatives. Exemptions include Ph.D. occupations and Tier 4 students switching to Tier 2. Small businesses (less than £10.2 million turnover or fewer than 50 employees) and charities are subject to a reduced skills charge of £364. Companies that fail to pay the charge within a set 10-day period risk invalidation of their CoS and refusal of a visa application.
  • Criminal record certificates. Tier 2 skilled workers in education, health and social care sectors (and their adult dependants) must produce overseas criminal record certificates for each country they have lived in – a scheme that will eventually roll out to all Tier 2 workers, adding a considerable additional administrative burden.
  • Salaries. There have been updates to the codes of practice for all skilled worker roles to ensure that salary levels reflect the latest government figures.
  • Tier 2 (General) only:
    • The salary threshold will be increase to £30,000 for experienced hires. The threshold for new graduates will remain at £20,800.
    • The Shortage Occupation List has been amended for teaching professions.
    • The salary threshold for high earners who are exempt from carrying out a Resident Labour Market Test and from the restricted CoS process has been updated to £159,600.
    • Tweaks to the Resident Labour Market Test include changing the websites that may be used for graduate recruitment from a specified list of four to any freely available, prominent, graduate recruitment website.
    • Tier 4 students must have satisfied certain study requirements during their continuous stay in the U.K. to switch to Tier 2 (General) in the U.K.
    • New rules will incentivize “high value businesses” to relocate to the U.K. or invest in a significant new project. Sponsors will be exempt from carrying out a resident labor market test and from the Tier 2 quota where the sponsor is a newly registered (within the last three years) branch or subsidiary of an overseas business and the investment either involves new capital expenditure of £27 million or creates at least 21 new U.K. jobs.
  • Tier 2 (ICT) only:
    • The Skills Transfer route was closed last year, and the Short Term Staff route will close April 5.
    • The Long-Term staff route will have a minimum salary threshold of £41,500.
    • The threshold at which intracompany transferees are deemed sufficiently senior to be able to remain in the U.K. for nine years in total, rather than five years, before needing to cool off will be lowered from £155,300 to £120,000.
    • ICTs paid more than £73,900 will no longer be required to have one year of experience.
    • The Graduate Trainee route will remain in place, having already been reformed to offer 20, rather than five, places per year for qualifying trainees and with a £23,000 minimum salary.

Significant changes outside the Tier 2 scheme include but are not limited to:

  • Re-entry ban: The 12-month re-entry ban may be imposed for overstays of 30 days (instead of the current 90 days), a significant tightening of the rules.
  • Tier 1 (Entrepreneur): Technical changes to drafting and certain evidential requirements have been changed, including an amended definition of “invested funds.”
  • Tier 1 (Graduate Entrepreneur): Remaining places may be allocated to endorsing bodies throughout the year rather than on the fixed date of Sept 30.
  • Tier 1 (Exceptional Talent): Changes requested by the Arts Council England and Tech City UK have been adopted.
  • Tier 1 (General): Applicants responding to further information requests will have 28 working days (instead of 28 calendar days) to respond.

BAL Analysis: The majority of these changes have been on employers’ radar for some time, but it is helpful to now have confirmation that there are no major last-minute changes. The business community had hoped that the “high value business” provision would allow greater exemption from the RLMT, but the provision clearly does not benefit existing high value multinationals who have been registered for three years or more in the U.K., nor smaller start-ups that cannot match the investment level or prove job creation with sufficient certainty. The major impact will be felt by imposition of the Immigration Skills Charge, both to overall business costs and short-term administrative burdens.

BAL is holding a webinar March 23 on “Making Sense of Brexit and Tier 2 Skilled Worker Reforms for U.K. Employers.” Registration and details are available here. We will also be sharing a Backgrounder on the changes which looks at wider reforms in detail.

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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