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IMPACT – HIGH
The Migration Advisory Committee has published a report on Tier 2 salary thresholds and their impact on the U.K. labor market in advance of a larger study to be completed by the end of the year.
The committee, a nongovernmental body of economists and migration experts, was asked to advise the U.K. government on whether salary thresholds for Tier 2 categories should be raised from their current levels of £20,800 (General), £24,800 (Short-term ICT) and £41,500 (Long-term ICT), and whether occupation-specific salary thresholds should also be hiked.
The report’s initial finding is that Tier 2 salary thresholds do not appear to undercut the U.K. labor market, based on a comparison of Tier 2 salaries against domestic salaries.
“Our analysis suggests that if there is undercutting within Tier 2 it is isolated rather than widespread practice,” the report said. However, the group cautioned that this finding is “preliminary and tentative” and it will be conducting more research in the coming months.
The committee made several findings on the impact that raising the thresholds to various salary levels would have on business and workers. It also reported on the competing policy interests of reducing non-EU skilled migration, putting upward pressure on wages, and managing business costs. The report, however, did not make any recommendations.
On raising the Tier 2 (General) salary threshold, the committee said that if the same principles used to set the current salary threshold at £20,800 were applied today, based on skill requirements, the Tier 2 salary threshold would be raised to between £31,000 and £39,000. However, the report noted that “there is little doubt that an immediate introduction of a salary threshold at this level would be strongly opposed by many employers and would cause serious problems in certain sectors.” It added that under the current prioritization system, Tier 2 (General) restricted CoS salaries already fall within that range.
An increase in the threshold to £25,000 would impact approximately 7 percent of all Tier 2 applicants, with a larger impact on in-country Tier 2 (General) applicants and a negligible impact on ICTs. However, a bigger jump in the Tier 2 threshold to £40,000 would affect 44 percent of all Tier 2 applicants, with the largest impact hitting 65 percent of Tier 2 (General) in-country applicants and 55 percent of short-term ICTs. In order to have an impact on long-term ICTs, the threshold would have to be increased to £50,000, which would affect 27 percent of the category.
New entrants to the labor market would feel the biggest impact of a higher Tier 2 salary threshold: The report concluded that a £40,000 threshold would affect 77 percent of new entrants through Tier 2 (General) and 57 percent of new entrants through the short-term ICT category. Business stakeholders have expressed concern that an increase would impact graduate schemes and international students.
An increase to the occupation-specific salary thresholds would have a significant impact across Tier 2 categories. If set at the median salary level for each occupation, 40 percent of all Tier 2 applications would be affected. A threshold set at a higher level at the 75th percentile of occupation-specific salaries would affect 60 percent of all Tier 2 applicants.
BAL Analysis: The initial findings of the MAC indicate that salary levels for skilled Tier 2 workers should not be raised because, overall, they are in line or higher than local labor market salaries and confirm that hikes to Tier 2 salary thresholds would have a significant impact on 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.
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.
IMPACT – MEDIUM
What is the change? The U.K. is rolling out requirements that long-term visa applicants obtain police clearances for every country they have lived in during the 10 years prior to application.
What does the change mean? The initial test phase beginning Sept. 1, applies to applicants applying for Tier 1 (Investor, Entrepreneur) visas. If this phase is successful, employers sponsoring workers should expect the rule to apply to Tier 2 categories by 2016-2017.
Background: The Home Office is imposing increased documentary requirements for visa applicants in order to prevent criminal elements from entering the country.
In the first phase, Tier 1 investors and entrepreneurs and their adult dependents applying from overseas must produce police clearance certificates from every country where they lived for 12 months or more in the previous 10 years. The certificates must have been issued within six months before submission of the visa application and must be translated into English. The requirement will also apply to visa-waived nationals, including U.S. nationals.
The Home Office has said that if the first phase is successful, the requirements will be rolled out to other visa categories in 2016-17.
BAL Analysis: The lengthy process of obtaining police clearances, in some cases from multiple countries, will add significant inconvenience, time and cost to the visa process.
What is the change? A sophisticated scam by individuals posing as Home Office officials is targeting foreign nationals in the U.K. The phone calls appear genuine because the callers possess personal details of the targeted immigrant, including passport numbers, mobile phone numbers, visa numbers and other private data.
What does the change mean? Foreign nationals should be suspicious of any calls that claim to be from U.K. authorities threatening deportation and demanding payment. The Home Office does not call customers to collect immigration fees by phone.
Background: In recent days, foreign employees and their family members new to the U.K. have been phoned by individuals claiming to be from the Home Office, citing the immigrant’s private data and saying they are investigating claims that the individual’s immigration status is illegal. The callers have then asked for payment via phone to look into the matter.
Similar scams against immigrants have been reported globally, most recently in Australia, Canada and Singapore, and have been on the rise globally since 2013. Other permutations of these scams include fraudulent websites that mimic government sites, and emails and phone calls that spoof legitimate government emails and phone numbers.
BAL Analysis: Unfortunately, scams targeting immigrants are becoming more common and more sophisticated in their ability to access and misuse personal data. Anyone receiving calls demanding payment should report them to the police and Home Office.
What is the change? The monthly cap for Tier 2 Restrictive Certificates of Sponsorship for July 2015 has been exceeded and only applicants with 45 points were successful in being granted an RCoS in this round.
What does the change mean? A backlog may develop in the coming months, creating longer wait times for Tier 2 candidates earning lower salaries.
Background: The Tier 2 (General) visa is subject to an annual quota, which is broken down into monthly allocations. Historically, there have always been sufficient CoS’s available from the allocation to meet demand. However, since April the cap has been exceeded each month, meaning certain applications roll over to the next month. The allocation was exceeded again in July, despite certificates having been rolled over from the previous month and more than 2,000 certificates made available this month.
In July’s allocation, only applications scoring more than 45 points were successful. In June, which was also oversubscribed, 50 points were required for successful applications. Under the points-based system, applicants must meet the minimum of 32 points. When the allocation is reached, all applications are ranked by number of points, and applicants will gain points for having higher salaries, shortage skills or Ph.D. level roles.
BAL Analysis: Employers should work closely with their BAL attorney to understand the likely waiting time for each individual application, or for a broader class of applicants. Employers should anticipate longer onboarding times for Tier 2 migrants with lower salaries.
What is the change? Under new Immigration Rules announced July 13 and enforceable beginning Aug. 3, new non-European students studying at publicly funded further-education (FE) colleges in Britain will lose their right to work, which under current rules allows up to 10 hours per week. Further, the maximum term available for visas to study at FE colleges will be cut from three years to two, and students at these colleges will no longer be allowed to switch to a Tier 2 work visa or extend their Tier 4 study visa while in the U.K., and must leave at the end of their study.
What does the change mean? Employers should be aware that many of these new rules will take force starting Aug. 3 and will potentially impact their ability to recruit foreign students, graduates and interns.
Background: The latest Statement of Changes to the U.K.’s Immigration Rules introduces numerous limitations to the Tier 4 student category for foreign students from outside the European Union. (Tier 4 students apparently accounted for 121,000 immigrants to the U.K. in 2014, a net influx of 70,000 and an area of considerable immigration abuse.)
The changes apply to FE colleges – educational institutions offering a range of vocational and access courses, typically for students ages 16 to 19, either prior to or at a lower level than undergraduate or post-graduate study at universities. In recent years there has been a focus on preventing abuse at privately funded and often “bogus” colleges (where English language courses were the predominant course of study), and these rules extend the work restriction to non-EU students at publicly funded FE colleges and to those studying for A-levels, international baccalaureates or vocational qualifications prior to or instead of university entry level.
Crucially, this rule does not apply to university students who will continue to be able to work 20 hours a week during their school term and full-time during official holidays, during which period they typically undertake internships.
In particular, the changes mean:
The changes will also:
BAL Analysis: Despite the contributions of foreign students to the U.K. economy, the overall political will favoring reduced net migration has spurred ever stronger reforms to the student category. The new rules are part of an overall strategy to tighten the student routes and prevent “career students” from studying successive unrelated courses while also accessing the U.K. labor market. The changes are designed to crack down on visa fraud and ensure that foreign students come to the U.K. purely to study and have a clear intention to depart, rather than to seek entry into the U.K. labor force.
“Immigration offenders want to sell illegal access to the U.K. jobs market, and there are plenty of people willing to buy,” Home Office Minister James Brokenshire has said. “Hardworking taxpayers who are helping to pay for publicly funded colleges expect them to be providing top-class education, not a backdoor to a British work visa.”
These restrictions will impact employers, particularly in service industries and the retail sector who frequently rely on student labor, and those offering graduate programs and summer or Easter internships for students as a precursor to U.K. employment where school leavers are a potential target. The loss of a right to work in the U.K. can only be seen as a disincentive for international students choosing where to study and a further restriction (albeit not fatal) on employers looking for the “best and brightest” from a global talent pool.
Another repercussion of the new rules is that Tier 4’s will be subject to employers’ restricted certificates of sponsorship, putting additional pressure on quotas during the summer months.
What is the change? Berry Appleman & Leiden’s London office has been registered as an alternative collection location (ACL) to allow migrants to collect their biometric residence permits with greater ease.
What does the change mean? The U.K. now requires that successful overseas visa applicants collect their biometric residence permits within 10 days of arrival in the U.K. by attending an appointment at the post office nearest to the their home or workplace. The fact that BAL has been granted ACL status as the representative of premium/high volume employers allows BAL clients an additional option to have biometric residence permits delivered directly to BAL, which may prove more convenient and lessen the administrative burden on employees and assignees.
Background: The new requirement that new migrants and assignees to the U.K. collect biometric residence permits in person within 10 days of arrival from a designated post office has introduced an inconvenient additional step into the relocation process.
While representatives are generally not permitted to collect and deliver biometric residence permits, BAL has been recognized as qualified to receive the permits on behalf of clients and so can act as an alternative collection location in lieu of a post office.
BAL Analysis: The Home Office is currently taking great care to ensure that biometric residence permits, which authorize employment, are not vulnerable to misuse, and has established strict controls over their safe storage and distribution. While the permits must still be delivered directly to the individual by a registered person, BAL’s ACL status means our clients will have greater flexibility to select a collection or delivery method that best suits their migrant work force and service standards.
What is the change? After the requested number of restricted certificates of sponsorship (RCoS) exceeded the number available by almost twice, the points basis of the RCoS system came into play. As such, in June’s panel a salary of £46,000 (scoring 50 points) was required for approval. However, due to RCoS policy, and despite a record number of refusals, 394 RCoS remained unallocated and will be rolled over to July, according to figures released today.
What does the change mean? In July, 2,049 RCoS will be available for employers applying for skilled workers under the Tier 2 (General) stream. This number is the result of the unallocated RCoS from June’s panel being added to the normal monthly quota of 1,650. This means it is possible that the RCoS will not be as oversubscribed in July and, as a consequence, the minimum points required for approval may be lower than last month’s threshold, meaning that salaries of £32,000 could result in approval. However, there are no guarantees and the situation remains frustrating for businesses seeking to plan their recruitment in the UK.
Background: On June 11, for the first time, the quota for the number of restricted Tier 2 (General) workers was reached. When reached, the quota requires that applications be ranked by number of points obtained, with points gained for shortage occupations, certain PhD level roles, and for higher salary levels. Employers whose applications were rejected must reapply in July.
The minimum salary for successful applications in June was £46,000. Theoretically, the minimum salary level for successful applications in July may only have to meet the next lower bracket of annual salaries ranging £32,000 to £45,999. However, BAL anticipates that the minimum salary to obtain approval is likely to be on par with June’s minimum salary level of £46,000. In June, applications with salaries under £46,000 resulted in refusal.
BAL Analysis: The additional allocation of quota numbers for next month is positive news for companies, in light of the recent exhaustion of quotas and the previous expectation that it would lead to more rejections in coming months. Companies should remain aware that the coming months are peak season for recruitment of new graduates and could cause quotas to be reached again.
What is the change? The allocated quota of restricted certificates of sponsorship (RCoS) for employers hiring skilled foreign workers has been met for the month of June. This comes at a time when the British government is committed to maintaining the quota at the current level. In fact, Home Office sources have hinted that a reduction may even be implemented.
What does the change mean? When reached, the quota demands that all applications are ranked by number of points obtained, with points gained for shortage of skills in the U.K., for certain PhD level roles and for salary. Therefore, employers should expect a lower number of Tier 2 RCoS approvals, especially in the coming summer months, a peak period for recruitment of new graduates. Only high-earning foreign skilled workers are likely to be approved, as more points are awarded for higher salaries. In June, it appears that salaries under £46,000 resulted in refusal.
Background: The annual quota for certificates of sponsorship is 20,700 allotted on a monthly basis, with 2,250 in April and 1,650 for all other months. Under the points-based system, applications must meet the minimum 32 points. In June, however, applications with 32 points would still have been rejected; moreover, the Home Office is likely to confirm that 50 points were required for success in June. Applications that did not meet June’s points requirement will not automatically be considered when slots become available the following month, and companies must resubmit rejected applications.
BAL Analysis: Companies should anticipate lower numbers of RCoSs issued in the next few months and may want to budget for higher salaries above the minimum levels to stand a better chance of approval.
What is the change? Effective immediately, U.S. visa applicants applying for British visas for stays longer than six months are now covered by new procedures for obtaining a biometric residence permit upon arrival in the U.K.
What does the change mean? Applicants in the U.S. should note the strict new 30-day time frame for traveling after visa issuance and the 10-day window after arrival in the U.K., during which applicants must pick up their biometric residence permit from their nearest post office.
Background: Under the new procedures, U.K. consulates will issue a temporary visa valid for 30 days instead of the full visa covering the whole stay. Applicants will enter the U.K. with this visa and then have 10 days from the date of arrival to collect their biometric residence permit. The permit gives the dates of their full permission to stay in line with any certificate of sponsorship.
It is important to note that the dates of validity of the 30-day temporary visa are determined by the date that the applicant sets as the “intended travel date” on the visa application, and the visa will generally be valid from the intended travel date up to 30 days thereafter. Thus, any changes to travel plans after applicants designate their intended travel date may require resubmission of a new application.
Additionally, applicants must designate a U.K. address and postal code to determine the nearest post office where they will collect the biometric residence permit on arrival. BAL recommends designating the U.K. office address as a best practice. Any changes to the pick-up location will incur delays.
The changes are part of the U.K.’s transition to biometric residence permits for overseas applicants worldwide, having already been in operation for in-country applicants for some time. Applicants in the U.S., Canada and Australia are among the latest to be phased in; biometric permits for overseas applicants from countries including India and China have been in operation since April. By the end of July, all overseas applicants from all countries will be covered by the procedures.
BAL Analysis: Employers and U.S. nationals should work closely with their BAL representatives to ensure that the information supporting their application is as accurate as possible to minimize delays and business disruption.
What is the change? Newly re-elected Prime Minister David Cameron wasted little time in proposing a tough immigration bill that aims to stem immigration to the U.K. on several fronts, including “significantly reducing the level of economic migration from outside the EU” and limiting the number migrants from within the EU. In addition, today’s Queen’s Speech included plans for a bill to pave the way for an in/out referendum to decide Britain’s ongoing membership in the EU, potentially putting at risk the free movement of EU workers and their families into the U.K.
What does the change mean? Among the business-related proposals, the bill would reinforce the cap on non-EU skilled migration, require companies to transition foreign skills to British workers, make it illegal for employment agencies not to test the U.K. labor market before recruiting overseas, establish a new government enforcement agency to deal with abuse, and renegotiate EU membership to allow fewer European migrants into the U.K.
Background: In a speech last week, Cameron outlined the immigration bill, saying it would “control” immigration and make the system “tougher, fairer and faster.” Today’s Queen’s Speech confirms the bill aims to root out illegal immigration and reduce the demand for skilled foreign labor while curbing abuse of low-skilled workers.
Of interest to the business community, the measures to reduce skilled foreign labor would have the government embark on a “massive skills drive” to train British citizens to transition into jobs currently occupied by foreign workers. The creation of 3 million apprenticeships would be financed by imposing a new visa levy on companies that employ foreign workers, Cameron said in the speech.
“We should be getting to a place where we only bring in workers from outside Europe where we have genuine skills shortages or require highly specialist experts,” Cameron said. “So sectors that have become over-reliant on migrant workers will be encouraged to train Brits instead. What’s more, we’ll make it illegal for employment agencies to recruit solely from abroad without advertising those jobs in Britain and in English.”
Other proposed provisions include establishing a new government enforcement agency to monitor companies and make sure they are paying minimum wages, conducting tougher English language testing of students, requiring banks to trace accounts of foreign visitors who do not have authorization to stay, mandating licensing of landlords, and tracking deportees by satellite.
BAL Analysis: Cameron’s Conservative Party remains committed to making good on its stated goal of reducing net immigration to the U.K. to “tens of thousands” of migrants. With a majority government, Cameron stands a good chance of passing an immigration bill and the EU referendum bill. If passed as is, the measures will significantly curtail immigration, including skilled categories, and add stricter rules for companies that rely on foreign workers.