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Tier 2 Visa Reforms: Update for Employers

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On 24 March 2016, in a written parliamentary statement, the Immigration Minister, James Brokenshire, announced a number of imminent Tier 2 visa reforms, aimed at restricting the number of Tier 2 visas that are granted.

“For too long we have had a shortage of workers in certain roles, and in the past, it has been too easy for employers to recruit overseas,” the Minister said.

The changes to the Tier 2 visa were announced in response to the Migration Advisory Committee’s (“MAC’s”) ‘Review of Tier 2’ report, published on 19 January 2016 and the separate ‘Partial Review of the Shortage Occupation List: Review of Nursing’ report, published 24 March 2016.

The Minister advised that over the next year the Government would implement nearly all of MAC’s recommendations.

Outside of EEA immigration, approximately half of all work visas are granted through the Tier 2 visa system. In 2014, there were 52,478 successful Tier 2 applications.

What are the Tier 2 visa reforms that UK employers need to be aware of?

  1. New Immigration Skills Levy

From April 2017, employers will be required to pay a fee of £1000 per Certificate of Sponsorship, per year.

Small organisations and charities will pay a reduced fee of £364.

PhD level occupations, Intra Company Transfer Graduate Trainees and employees switching from a Tier 4 student visa to a Tier 2 Visa are exempt.

According to MAC, the levy ensures that organisations have an incentive to train domestic workers, rather than rely on immigrant employees.

  1. Increase to Tier 2 (General) Visa Minimum Salary

In accordance with the recommendations of MAC, the Tier 2 salary threshold for all roles will be raised to £30,000.

At present, the minimum salary threshold is £20,800, although some specific occupations have higher thresholds.

The changes are to be phased in, with an initial increase to £25,000 in autumn 2016 and the final increase to £30,000 taking place in April 2017.

  1. Exemptions

The Tier 2 visa reforms have taken into account the recruitment challenges that specific public sector organisations face.

Nurses, medical radiographers, paramedics and secondary school teachers in mathematics, physics, chemistry, computer science and Mandarin have a temporary reprieve from the new salary thresholds, until July 2019.

This will allow recruiters of those occupations to develop workers from the domestic market.

The threshold for ‘new entrants’ (recent graduates and those employees aged 25 and under) will also remain at £20,800 indefinitely.

  1. Non-EEA UK Graduates Prioritised

Any non-EEA citizen currently studying in the UK on a Tier 4 Student Visa and intending to transfer to a Tier 2 (General) Visa will be exempt from the new salary threshold under the ‘new entrant’ exemption.

Non-EEA graduates from UK universities will also benefit from an exemption to the Resident Labour Market Test and will not be subject to the annual limit on restricted Tier 2 (General) visas (currently about 20,700 per year). 

  1. Extra Weighting for Overseas Graduates and Public Sector Roles

From Autumn 2016, extra weighting will be provided within the Tier 2 (General) Visa limit to businesses sponsoring overseas graduates. Graduates will also be permitted to switch roles within a company if they have secured a job at the end of their training program.

Extra weighting will also be given to those public sector occupations that are exempt from the new salary threshold until July 2019, even if those occupations do not currently appear on the Shortage Occupation List. 

  1. Extra Weighting for High-Value Business

From April 2017, there will also be extra weighting within the Tier 2 (General) limit where the role is associated with a “high-value business” in the UK or the placement supports “inward investment.”

The specific criteria has not yet been detailed.

The Government has advised that if the role is classified as such, there won’t be a requirement to complete the Resident Labour Market Test before hiring an employee.

  1. Nurses remain on the Shortage Occupation List

The Government will carry out the recommendations of MAC and ensure that nurses remain on the Shortage Occupation List.

Employers will nevertheless still be required to carry out a Resident Labour Market Test before recruiting any non-EEA nurse. 

  1. Streamlined Tier 2 (Intra-Company Transfer) Visas

Presently, unrestricted Tier 2 Intra-Company Transfer Visas, which permit multi-national businesses to transfer employees, are divided into four categories:

  • Short term staff (up to 12 months);
  • Graduate trainees (up to 12 months);
  • Skills transfers (up to six months)
  • Long term staff (more than 12 months).

There is currently an annual salary threshold of £24,800 which applies to all categories, and a higher annual salary requirement of £41,500 for any long-term transferees.

The new Tier 2 visa reforms “simplify and streamline” this system into a single category with a minimum salary of £41,5000.

This change will take place incrementally. In August 2016, the Skills Transfer category will be closed to new applicants and the minimum salary for the Short Term category will increase to £30,000.

From April 2017, the Short Term category will also be closed for all new applicants.

  1. Graduates under the New Tier 2 (Intra Company Transfers) System

Employees under the Graduate Trainee category stand to benefit from the new reforms.

The current salary threshold for graduate trainees will be reduced from £24,800 to £23,000 and the number of trainees that an employer may bring to the UK will increase from five to 20.

  1. Additional Requirements for Tier 2 (Intra-Company Transfers) Visas

Presently, Tier 2 (ICT) Long Term visa holders can stay in the UK for a maximum of five years, unless they are paid in excess of £155,300 per annum, in which case the visa can be extended for up to nine years.

The newly-announced reforms lower this annual salary requirement from £155,300 to £120,000.

Where a worker is paid a salary in excess of £73,900, a further reform removes the requirement for an employee to have worked for the company for 12 months before transfer.

  1. Work Rights of Dependants Remain

Controversially, when the Government requested this Report from MAC, it specifically asked MAC to consider the merits of removing the work rights of dependants of sponsored employees.

MAC advised against implementing these reforms and the Government has followed those recommendations.

For more information about how the Tier 2 visa reforms will affect your organisation, please get in touch.

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