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on April 29, 2024
Read Time: 7 Minutes
The last few months have seen the UK Government place a high emphasis on immigration in its policy announcements, certainly since Home Secretary James Cleverly’s unveiling of a plan to cut net migration back in December. It is understandable, then, that for many stakeholders – including employers – some implications of the recent welter of changes might have gone overlooked.
With the Skilled Worker visa being one of the most popular routes for overseas nationals to come to the UK and work – some 69,421 of these visas having been granted to main applicants in the year ending June 2023 – any changes to this category should always be noted by UK employers.
So, what should employers in the UK be making of the UK Government’s recent decision to massively hike the minimum required salary for this visa? As we will explore, some of the implications for employers in the UK are perhaps less predictable than others.
For Skilled Worker visa applications on or after 4th April 2024, the minimum salary threshold has been set at £38,700, rather than the previous £26,200. That lower figure had, itself, only been in place since March 2023, the salary requirement prior to this having been £25,600.
This means that if a given worker from outside the UK wishes to get approved for the Skilled Worker visa, they will need to earn at least £38,700, or the relevant “going rate” for the job they will be doing – whichever is higher.
It is worth bearing in mind, however, that applicants for the Health and Care Worker visa still have a lower salary amount to satisfy, of £29,000. It may be possible for an applicant for the Skilled Worker visa to rely on a lower salary threshold if they have “tradeable points”. In the event, for example, that they have an offer for a job on the Immigration Salary List (previously the Shortage Occupation List, or SOL), or they hold a relevant PhD qualification, it may be permissible for them to be paid as little as £30,960 a year.
To understand the beliefs of the UK Government that have seemingly motivated such a big jump in the Skilled Worker visa salary threshold, it is instructive to look back at how the latest changes were framed in the Home Office’s initial announcement of its net migration plan.
The Government’s news release, on 4th December 2024, indicated that the rise in the salary requirement was implemented with the aim of “encouraging businesses to look to British talent first and invest in their workforce, helping us to deter employers from over-relying on migration”.
Setting out that the Government also intended to abolish the 20% going-rate salary discount for shortage occupations, alongside the introduction of the Immigration Salary List (which retains a general threshold discount), the press story indicated that such moves were meant to “crack down on cut-price labour from overseas”.
However, it is a matter of debate whether businesses in the UK were “over-relying” on the recruitment of overseas talent – and using the previous, less onerous salary requirements under the Skilled Worker visa route to undercut UK workers in the process – or they have merely been forced to look abroad for the personnel they require.
The Confederation of British Industry (CBI), for example, has said that the nearly 50% increase in the Skilled Worker salary threshold “will do nothing to address the shortages that are currently holding back business investment and growth.” Referring to the demise of the 20% going-rate salary discount for shortage occupations, and the suggestions by both the Conservatives and Labour (as well as the Migration Advisory Committee) that this rule allowed for UK workers to be undercut, the business interest group said it hadn’t “seen evidence of it being used in this way – businesses usually turn to the immigration [system] out of necessity above anything else.”
In news that might be heartening for many employers still grappling with the heightened salary threshold and other requirements, the Government has confirmed that, for the time being, the new entrant discount for migrants aged 26 and under will remain in place.
In its present form, this discount effectively lowers the occupation-specific threshold by 30%, and the general salary threshold by 20%. It is the higher of these two that must be paid.
Since 4th April 2024, those applying for the Skilled Worker visa as a “new entrant” – and who are therefore eligible for this salary discount – have needed a salary of at least £30,960 per year (discounted from £38,700), or 70% of the “going rate” for their occupation.
The UK Government has sought over the last few months to intensify an impression of toughness on immigration. The combination of a fast-approaching general election – which must be held by January 2025 – and recent highs in net migration, amounting to an estimated 672,000 people over the 12 months ending June 2023, may make this unsurprising.
However, questions have been asked about the pragmatism of some of the Government’s recent stances on migration, amid a risk of unintended consequences. After all, sponsoring someone to come over to the UK from abroad is already a very expensive endeavour for many employers. With the new required salary amount being higher than the UK’s median wage, there are many sectors in which it may no longer be realistic to recruit non-UK nationals.
Even before a UK employer has hired someone from overseas, it is likely that they will need to have a sponsor licence from the Home Office in order to do so (although there are some groups of non-UK nationals that a UK organisation can employ without needing to hold a sponsor licence first, such as Irish citizens, those with settled or pre-settled status under the EU Settlement Scheme, and those with indefinite leave to remain in the UK).
For medium-sized or large sponsors that wish to apply for a Worker sponsor licence, for instance, the Home Office’s fee for this is £1,476. The same fee applies to medium or large sponsors seeking to apply for a Worker and Temporary Worker sponsor licence, and if such an employer is looking to add a Worker licence to an existing Temporary Worker licence, they will be expected to pay £940 for this.
This is before one considers the various other costs to UK employers related to the Skilled Worker visa route, both at the hiring stage and on an ongoing basis. These include the cost of assigning a Certificate of Sponsorship (CoS) to a sponsored worker – £239 each time the organisation recruits someone from overseas – as well as the Immigration Skills Charge, which amounts to £1,000 per year for each sponsored worker under the Skilled Worker visa.
The Skilled Worker visa application itself, as well as the immigration health surcharge (IHS) and any premium and fast-tracked services that may be taken advantage of, are all further sources of expenditure associated with this in-demand visa.
Yes, there is one recent change that might help relieve some of the financial burden on UK businesses that are seeking to recruit foreign nationals on the Skilled Worker route. This relates to sponsor licence renewals.
Prior to January 2024, a sponsor licence was granted for a four-year period, irrespective of the route. The licence then expired once this period elapsed, in the absence of the sponsor taking action to renew it.
Early this year, however, the Home Office announced that in the case of sponsor licences set to expire on or after 6th April 2024, there would no longer be any need for them to be manually extended. Instead, these sponsor licences will be given an initial automatic 10-year extension.
If your organisation’s sponsor licence is subject to this change, you will likely be thankful for the money you will save as a result of not needing to apply for sponsor licence renewals so often. On the other hand, employers with sponsor licences expiring prior to 6th April 2024 were still required to apply to renew their licence.
You might be wondering: why have we been referring to the various other costs that recruiting a worker on the Skilled Worker visa can incur?
The point we are seeking to make here, is that with businesses already being left significantly out of pocket when they go through the process of hiring an overseas national, if the Government wished to use cost as a means of “deterring” employers from doing so, there are already many potential sources of such deterrence.
If UK employers are still often looking to the immigration system anyway despite such barriers, it should be considered whether the Government’s reasoning for an almost 50% increase in the Skilled Worker visa salary threshold is well-founded.
Is your organisation in need of help to navigate the UK immigration system in ways that support its skills and growth requirements? If so, please do not hesitate to contact our award-winning specialists in UK immigration law here at Cranbrook Legal, whether by calling 0208 215 0053 or using our online form to ask for a free consultation.
When you do, we will be able to advise and guide you in relation to your own organisation’s situation.
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