Business immigration: A year of change
Government reforms to tier 2 transfers will make it difficult for companies to make international hires, write Claire Nilson and Katie Newman
On 6 April 2017 the government’s statement of changes to the immigration rules, announced on 16 March 2017, took effect. But what do these changes entail?
Many of these changes are to the tier 2 intra-company transfer (ICT) category, which allows multinational companies to transfer workers, and thereby skills, from international to UK operations. Most notably for business, the short-term staff subcategory has been closed. The minimum salary threshold has also risen to whichever is higher of £41,500 or the appropriate code of practice rate. The salary threshold for these visas has been reduced to £120,000 (from £155,300) for senior transferees who wish to extend their total stay in the category from the standard five years up to nine years. The requirement to have at least one year’s experience working for the sponsor’s linked entity overseas has now been removed for those paid £73,900 or higher.
Changes have also been made to the types of allowances which can be considered against salary requirements (for example, accommodation allowances can form a maximum of 30 per cent rather than 40 per cent of the total salary package for all ICT workers, except graduate trainees). Notably from a costs perspective, applicants and their dependants will now be required to pay an immigration health surcharge (IHS) of £200 per person per year (previously limited to tier 2 (general) applicants).
Alongside these changes are those made to the tier 2 (general) category, which applies to those offered a skilled job in the UK from outside the European Economic Area and Switzerland. These changes are numerous and include an increase of the salary threshold for experienced workers to £30,000 (although for new entrants it remains at £20,800 and there is an exemption for nurses, radiographers, paramedics, and secondary school teachers of maths, physics, chemistry, computer science, and Mandarin until July 2019) or the appropriate code of practice rate.
Changes are also being made to support posts associated with the relocation of a high-value business to the UK or a significant new inward investment project where the sponsor is a newly registered (within the last three years) branch or subsidiary of an overseas business and the investment involves new capital expenditure of £27m or the creation of at least 21 new UK jobs.
Sponsors in such cases will be exempt from carrying out a resident labour market test (RLMT) and from the requirement to assign a restricted certificate of sponsorship (CoS) under the tier 2 (general) limit. The high earner salary threshold for exemption from the requirements of an RLMT and restricted CoS has increased to £159,600 (from £155,300). Additionally, minor technical amendments are being made to the RLMT for the permitted websites in milkround recruitment.
Both categories of tier 2 transfer – general and ICT – will face an immigration skills charge (ISC) per employee of £1,000 annually (reduced to £364 for small or charitable sponsors). In addition, a CoS may be considered invalid if any charge applies to it which is not paid in full.
Although not all of the measures proposed initially by the Migration Advisory Committee in January 2016 have been adopted, these changes will, for the most part, result in increased administrative and time burdens as well as additional costs for those businesses looking to hire migrant workers, for example, through the additional ISC payment required per employee. Companies which have not done so previously may wish to consider inserting ‘claw back’ provisions into their employment contracts where they are permitted to do so for migrants to enable them to recoup certain expenses on termination of their employment (however, it should be noted that this must be consistent across all employees).
Although increased costs should not be a significant issue for large multinational organisations, this is expected to make international hires harder for smaller businesses. These costs will need to be factored in to any price plans for proposed hires and mobility requirements for prospective employees may need to be reviewed.
Following a year of uncertainty around immigration and backlash against an increasingly global work force, these changes to some degree further the difficulties in making international hires.
Claire Nilson, pictured, is counsel in the immigration and global mobility team and Katie Newman is a trainee solicitor in the employment team at Faegre Baker Daniels