Perspectives

GES NewsFlash

United Kingdom - Government response to Migration Advisory Committee Tier 2 report

Overview

A written statement by the Minister of State for Immigration was published on 30th March 2016 in response to the Migration Advisory Committee (MAC) Tier 2 report that was published in January 2016. It is stated that the government intends to accept the majority of the MAC’s recommendations, which we have summarised in this note. The changes will be implemented in phases, with the first reforms taking place from Autumn 2016 and completing the implementation of reforms by April 2017.

Tier 2 Intra Company Transfer (ICT)

Reduction in number of ICT categories

  • Short-term ICT categories will be gradually closed:
    • In Autumn 2016, the skills transfer category will be closed;
    • Between Autumn 2016 and April 2017, the salary threshold for short-term transfer will be increased to £30,000; and
    • From April 2017, the short-term category will be closed for all new applications.
  • Graduate trainee category will remain in place, and see a reduction in salary threshold from £24,800 to £23,000 and an increase in the number of trainees an employer can sponsor from 5 to 20.
  • From April 2017, there will be one single ICT visa category, with a minimum salary threshold of £41,500

Other changes to the ICT category

  • ICT migrants will be required to pay the Immigration Health Surcharge from Autumn 2016.
  • The 12-month experience requirement will be removed for workers paid £73,900 and above.
  • The government will also lower the salary threshold for ICT migrants working in the UK between five to nine years, current salary threshold of £155,300 will be reduced to £120,000, allowing those migrants earning £120,000 or above to stay in the UK for up to nine years.
  • Further reviews will be carried out on what allowances will be allowed to be counted as salary and how to take forward the MAC’s proposal for a review of skills in the IT sector.

Tier 2 General

  • There will be a rise in the minimum salary threshold for experienced workers to £30,000. This will be gradually phased in with minimum threshold increasing to £25,000 in Autumn 2016 and to £30,000 in April 2017.
  • The minimum threshold for new entrants will remain at £20,800.
  • Employers will continue to be able to recruit non-EEA graduates of UK universities without first testing the resident labour market test and without being subject to the annual limit on Tier 2 (General) places.
  • The government will also give extra weighting within the Tier 2 (General) limit to business-sponsoring overseas graduates from Autumn 2016.
  • From Autumn 2016, graduates will be allowed to switch roles within a company once they have secured a permanent job at the end of their training programme.
  • From April 2017, there will be extra weighting within the Tier 2 (General) limit, where the allocation of places is associated with the relocation of a high-value business to the UK, or potentially supports an inward investment. There will also be no requirement for the resident labour market test.
  • Certain occupations, such as nurses and teachers, will be exempt from the new salary threshold. Where these occupations are not on the Shortage Occupation List, extra weighting within the Tier 2 (General) limit will be given to these occupations.

Dependants

  • Automatic work rights for dependents will continue.

Immigration Skills Charge (ISC)

  • As mentioned in our previous newsflash, it has been stated that the charge will be set at £1,000 per migrant per year.
  • There will be some exemptions to the charge as outlined below.
  • Graduates switching from the Tier 4 to Tier 2 category will also be exempt.
  • Small businesses and charities will get a much reduced rate of £364 per annum.
  • PhD level occupations will be exempt from the levy.

For the full response, please see the link.
https://www.gov.uk/government/news/migration-advisory-committee-reviews-of-tier-2

Deloitte’s view


It was expected for the government to accept most of the MAC recommendations, as it has previously done. It comes as no surprise to see the salary threshold being increased and the ICT category reduced to single visa category. All changes are being implemented in an attempt to reduce reliance on non-EEA skilled workers, and thus reducing net migration. On a positive note, there seems to be no change to the requirement to have 12-month experience to be able to use the Tier 2 ICT category.


Cost to employers will inevitably increase and it is yet to be seen how this will affect businesses hiring non-EEA workers. Both the skills levy and the IHS charge for ICT migrants will add significantly to the cost of sponsoring non-EEA workers. We can only hope that the government will be able to achieve the right balance and this will not reduce the competitiveness of the UK. We understand that the full operating model for the ISC is yet to be created.


The government has allowed more time, in most cases a year, for businesses to plan and prepare before the full implementation of the changes, as no doubt this time is necessary for the business, but also for the government to be able to work through the details.

Contact

Jurga McCluskey
London
Partner
+44 20 7007 7668
jmccluskey@deloitte.co.uk

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