Proposed changes to the UK’s immigration system

This week, in an attempt to “slash migration levels and curb abuse of the immigration system”, the Home Secretary announced proposals which set out a number of reforms to the UK’s immigration rules and visa procedures. The majority of proposals are set to come into force in early Spring 2024, with the exception of the Immigration Health Surcharge increase, which will take effect on 16 January 2024.

In this Law-Now we consider some of the proposed upcoming changes and the potential impact of these on recruitment practices going forward.

Skilled Worker visas – minimum annual salary threshold

In order to meet the eligibility criteria for a Skilled Worker visa, an applicant’s job offer must meet a minimum salary requirement. As it stands, this is the higher of: (a) £26,200 per year; (b) £10.75 per hour; or (c) the “going rate” for their job, which depends on the particular job in question.

In accordance with the proposals (which do not affect health and care workers – but note that these are affected by other proposals in relation to dependants), the minimum annual salary threshold for eligibility for a Skilled Worker visa is set to rise by nearly 50% to £38,700. This increase surpasses the existing average income for full-time employees in the UK, which is currently £34,963.

The government’s position is that by increasing the base annual salary this will encourage employers to prioritise British talent and tackle over-reliance on migrant workers.  

From a practical perspective, we understand that the salary threshold will not impact those currently working in the UK on a Skilled Worker visa and who earn below £38,700. However, we await further detailed guidance from the government in relation to the impact of these proposals on migrant workers looking to extend their existing Skilled Worker visas, after the changes have come into force.

Removal of the salary discount for shortage occupation list

Currently, jobs on the shortage occupation list can be paid at 80% of the standard going rate for the role. At present, the occupations on the list are predominantly in either the healthcare, teaching, construction and engineering sectors, and are considered by the government to be subject to a skills shortage. The aim of the discount is to help employers to recruit migrants into roles where there is a clear shortage of workers in the UK to fill the positions, by reducing the minimum salary that needs to be paid.

However, the 20% discount currently available is set to be removed and replaced by a new Immigration Salary List, which will retain a general threshold discount. We understand that the number of occupations on the list is also set to be reduced but await further guidance from the government as to which roles will be impacted.

Health Surcharge

Those applying for Skilled Worker visas, and their dependants, are required to pay a one-off Immigration Health Surcharge (IHS) for each year of their visa. This payment grants them access to NHS services throughout the duration of their time in the UK.

The IHS is set to increase by 66% from £624 to £1,035, which will significantly increase the upfront costs of applying for a Skilled Worker visa.

Crucially, this particular change is time sensitive as the revised surcharge is scheduled to take effect on 16 January 2024. As such, where possible, applicants should consider submitting their visa applications before the changes are expected to take effect to avoid the substantial increase in costs.   Sponsors should keep the increased costs in mind when considering whether to offer reimbursement of the costs as part of the remuneration package being offered to migrant workers. Where this is offered, sponsors may wish to consider implementing or amending repayment policies to mitigate the impact.

Key practical implications

The proposed changes are likely to have come as a surprise to many employers, especially those who rely heavily on foreign migrants. They will no doubt have a significant impact on many businesses, especially on sponsors who choose to bear the expenses associated with employee visa applications. Industries heavily dependent on skilled migrant labour, including construction, retail, and hospitality, are expected to be particularly affected, given their already fine margins between pay levels and the existing salary threshold.

Industries that depend on foreign workers to address staffing shortages should factor in these changes, and additional costs in particular, when evaluating their recruitment strategies.

Co-authored by Klaudia Dybas