Migration Advisory Committee publishes its Tier 2 review findings

On 19 January, the Migration Advisory Committee (MAC) published its long awaited findings, following its wide ranging review of the Tier 2 route over the summer of 2015. This blog outlines the key recommendations and our thoughts on these.  

Commentary

Kingsley Napley has mixed feelings about the MAC’s Tier 2 report.

Many of the recommendations will come as no surprise to anyone involved in the consultation – for instance, the increase in the overall minimum salary to £30,000 and the extension of the Immigration Health Surcharge to intra-company transferees.

There are some welcome points in the report, such as the statements that the occupation-specific thresholds should not be changed and that the automatic work rights of Tier 2 dependants should not be restricted. We and others argued in favour of these in our submissions to the MAC and we are pleased that the MAC has listened.

But there are several recommendations which concern us.

The report states that an Immigration Skills Charge of £1,000 per year – in other words, £5,000 for a five-year visa – would have a significant impact on employer behaviour. This may be true, but the impact might not be as expected. Employers might decide to pay the charge and cut expenditure in other areas of their workforce.

The proposed new route for intra-company transferees working on third-party contracts is not unexpected, but the recommended salary threshold of £41,500 will have huge implications for IT outsourcing companies, as this is much higher than the salaries currently paid to many of their assignees. It will be interesting to see how the government responds to this recommendation, given that it relies on these companies for many of its own IT projects.

The recommended extension of the qualifying period for all intra-company transfers from 12 months to 2 years is unwelcome and will put yet more pressure on the Tier 2 (General) route.

We strongly oppose the recommendation that all people switching into Tier 2 (General) within the UK be subject to the resident labour market test. This is particularly bad news for international students, and therefore for British universities, who are likely to see a further drop in applications from overseas if this recommendation is adopted. If the numbers of international students fall, universities will have less money and will have to turn to other sources – including British students – to make up the shortfall.

MAC report - main recommendations and findings

Minimum salary thresholds

• Minimum salary thresholds for Tier 2 (General) applicants should continue to be based on the 10th percentile for new entrants and the 30th percentile for experienced workers
• Minimum salary thresholds applicable for the 10th and 30th percentiles should be raised to £23,000 and £30,000 respectively. It should be noted that this is the first time that a minimum salary for the experienced worker category has been considered as until now the actual 30th percentile salary figure has been dictated by the salary rates applicable for each job role as set out in the SOC codes and therefore has varied, dependant on the job sector.
• Minimum salary for Tier 2 (Intra-company transfer) short-term category should be raised to £30,000
• Minimum salary for Tier 2 (Intra-company transfer) graduate trainee route should be reduced from the current £24,800 down to £23,000
• There should be no regional variation in the salary thresholds as it is felt that the 10th and 30th percentiles better reflect prevailing wages in lower paying regions
• Public sector should be given time to transition to the new salary thresholds
• Exemptions from these minimum salary thresholds should be considered for certain creative occupations

Immigration skills charge

• Immigration skills charge (skills levy) should be introduced to provide a source of funding to help with training and up-skilling of the resident labour market
• Skills charge should be set at £1,000 per annum per Tier 2 migrant

Tier 2 (Intra-company transfer)

• Qualifying period should be increased from 12 months to 24 months
• More detailed job description should be included on the Certificate of Sponsorship (CoS) to ensure the role is sufficiently specialist
• Immigration health charge should be introduced to bring this category in line with the charge already imposed on Tier 2 (General) applicants
• HMRC and the Home Office should work together to consider whether the current tax provisions made available for allowances and the exemption of NI contributions are working in the interests of the UK
• New third party contracting route should be introduced with a minimum salary threshold of £41,500 – this will bring it in line with the minimum salary threshold applicable for the Tier 2 (Intra-company transfer) route long term category
• Consideration should be given to making the third party contracting route subject to the resident labour market test (RLMT) and also limiting the proportion of these Tier 2 migrants in each organisation

Tier 2 (General)

• RLMT should be improved to ensure it works as intended
• Tier 2 annual limits prioritisation method should remain
• Consideration should be given to providing temporary priority to low paid public sector jobs, for example health workers and teachers, when allocating CoS under the Tier 2 limits
• £7,000 uplift should be applied for graduate scheme applicants under the Tier 2 limits, so that they can compete more fairly for a CoS allocation under the Tier 2 limits
• Tier 2 switching applicants should be subject to the RLMT and be included within an extended Tier 2 annual limit – at present those switching from Tier 4 are exempt from the RLMT

Sunset clause

• No automatic sunset clause, but Sponsors will be required to submit more comprehensive evidence on what they are doing to address the skills shortage, in order to be retained on the shortage occupation list (SOL)

Automatic work rights for dependants

• Dependants should continue to have the automatic right to work in the UK – it is felt that the total number of dependant workers is too small to significantly impact the UK labour market

Although a lot of these recommendations were widely anticipated, in particular the imposition of a skills charge and the introduction of a new third party ICT category, other measures such as introducing the RLMT for Tier 2 switching applicants and including all Tier 2 in country applicants within an extended Tier 2 limits allocation were not predicted. On the positive side, it is to be welcomed that the MAC are recommending carve outs for graduate recruitment programme applicants and those in the public sector (albeit on a temporary basis) and it is a relief that the status quo is being maintained in respect of Tier 2 dependants  and those working in roles on the shortage occupation list. We must now await the government’s response to these recommendations, most of which are likely to be implemented, based on past experience.

Click HERE for a link to the MAC’s findings. 

Further information

For further information on the issues raised in this blog post please contact a member of the immigration team.