The Home Office announced a number of immigration-related changes in December 2023, including a significant increase in minimum salary thresholds for Skilled Worker visas. The finer detail, in the form of new Immigration Rules, will be published on 14 March with most of the changes coming into effect on 4 April 2024. In the meantime, this is what employers should plan for in the lead up to ‘massive-hike’ day:
Increase in going rate salary thresholds for individual occupations
Attention has largely been focused on the increase in the general salary threshold for Skilled Worker visas from £26,200 (based on the 25th percentile under ONS Annual Survey of Hours and Earnings (ASHE) data from 2021 to £38,700 (based on the 50th percentile under ONS ASHE data from 2023). However, at the same time, the going rate salary thresholds for individual occupations (excluding Health and Care worker roles) will also increase from the 25th percentile to the 50th percentile to match median full-time salary data for equivalent jobs in 2023. In consequence, depending on the role, the minimum salary payable for a Skilled Worker visa may be significantly higher than £38,700. At the same time, the Home Office said it will be converting from the SOC 2010 to SOC 2020 occupational coding system from April 2024 in order to be able to update the going salary rates for occupations to the latest data.
For example, the occupation code for Programmers and Software Development Professionals (SOC 2010 code 2136) currently specifies a minimum salary of £34,000 (reduced to £27,200 because it is on the Shortage Occupation List). The estimated 50th percentile rate for the same occupation code is £49,430 (SOC 2020 code 2134) (based on provisional ONS ASHE 2023 data found here), which means that anyone applying under the Skilled Worker route for this type of role on or after 4 April will need to be paid in the region of £49,430 per annum unless they are covered by a transitional arrangement.
Transitional arrangements
The Home Office has said that those already sponsored under the Skilled Worker route before the new Immigration Rules come into force on 4 April should be exempt from the increased thresholds. This should mean that existing sponsored employees under the Skilled Worker route can continue to be sponsored on the current 25th percentile salary threshold (or above) even if they need to apply to change their role or sponsor, extend their permission to stay or apply for indefinite leave to remain in the UK on or after 4 April. Their salary rates are, however, likely to increase at the same rate as resident workers so they will therefore be subject to the updated 25th percentile rate (usually a relatively modest increase) using the latest pay data (ASHE 2023) when they next make a Skilled Worker visa application (this is in line with current practice).
New Immigration Salary List (ISL)
The Migration Advisory Committee (MAC) has published its rapid review of recommendations to the Home Office on occupations to be included in an interim ISL which is due to replace the Shortage Occupation List from 4 April. The headlines from that review are:
- Only 21 occupations eligible under the Skilled Worker route have been recommended for inclusion on the ISL, which means that a number of roles on the current Shortage Occupation List (various engineering and IT occupations as well as vets, architects and actuaries) will not be included and will therefore no longer be eligible for salary threshold discounts or reduced application fees. The roles recommended for inclusion on the new ISL are so limited that it is unlikely to be of interest to most businesses outside the construction and healthcare sectors. The full list of recommend occupations can be found here.
- If a role is included on the ISL, then rather than the previous 20% discount applied to the going rate salary threshold, the minimum salary payable for Skilled Worker sponsorship will be £30,960 (except for Health and Care Worker roles which will have a lower threshold at £23,200) or the going rate for that role (to be renamed the “occupation-specific threshold”), whichever is higher.
- If a role is not on the ISL, the minimum salary payable for Skilled Worker sponsorship is £38,700 (£29,000 for Health and Care worker roles) or the occupation-specific threshold for the role being sponsored, whichever is higher.
- As the occupation-specific thresholds are increasing from the 25th percentile to the 50th percentile (excluding Health and Care Worker roles which remain at the 25th percentile), the MAC has recommended excluding from the ISL all roles where the occupation-specific threshold will be above the general salary threshold of £38,700 (as these roles must still meet the occupation-specific threshold, even if included the ISL). For example, electrical engineers (SOC 2020 code 2123) are on the Shortage Occupation List and therefore have a discounted going rate threshold of £31,440 (25th percentile). However, the increase to the 50th percentile means that their occupation-specific threshold will be at least £53,500 (based on ASHE 2023 data). As £53,500 is higher than the new general salary threshold of £38,700 (and being included on the ISL no longer provides a discount against the occupation-specific threshold), there is no benefit to electrical engineers (or similarly paid roles) being included on the ISL.
- The new general salary threshold will mean that the Skilled Worker route becomes unavailable for many occupations, particularly those at the RQF 3 to 5 level, because even the ISL-reduced threshold of £30,960 will be above the salaries paid for the vast majority of workers in that occupation. By way of example, veterinary nurses (SOC 2020 code 3240), have a median salary of £24,400 but even if that role were to be placed on the ISL, the ISL-reduced threshold to sponsor that role would still be £30,960, and so in most cases the role would not qualify for sponsorship.
- In perhaps the only piece of positive news, the MAC has recommended that asylum seekers who have been granted permission to work should now be allowed to work in any job eligible under the Skilled Worker route rather than being restricted to roles on the current Shortage Occupation List. This will give employers a slightly larger pool of candidates to choose from given the recruitment challenges that are likely to follow the salary threshold increases under the Skilled Worker route.
- The MAC continues to make no recommendations for salary discounts for employers in the regions or outside London. These employers are therefore likely to be hit hardest by the salary threshold increases if they are dependent on sponsoring non-British/Irish workers to fill labour shortages in the UK.
We will need to wait until the new Immigration Rules are published on 14 March to see if the Home Office adopts the MAC’s recommendations (although it usually does). The MAC has said that the interim ISL will be replaced following a fuller review later in 2024, as part of which it intends to carry out extensive stakeholder consultation, including a call for evidence, stakeholder roundtables, and a renewed assessment of labour market conditions against the new salary thresholds.
New entrant reduced salary rate
Under the current Immigration Rules, those under the age of 26 or holding Graduate or Student visas (amongst others) at the time of their Skilled Worker visa application can benefit from a significantly lower salary rate of £20,960 or 70% of the going rate in the relevant occupational code, whichever is higher. The MAC review appears to confirm the Home Office’s previous intention to maintain a new entrant salary discount for those at the start of their careers but we do not yet know whether the level of discount will be of any practical benefit or whether it will apply to the new general salary threshold (£38,700) or the (often higher) occupation-specific threshold. In any event, even if a lower new entrant rate can be used for Skilled Worker visa applications on or after 4 April, it can only be relied upon for a limited period (up to two years in the case of those switching from the Graduate visa route). After that period, the higher salary rates in place from 4 April will apply to any extended period of sponsorship without the benefit of any transitional arrangement. Employers should still therefore consider sponsoring eligible employees at the start of their careers (particularly those currently on Graduate and Student visas) under the Skilled Worker route before 4 April, where possible.
Planning ahead for those switching into the Skilled Worker route:
Employers should assess the immigration status and salaries of current employees and any candidates on non-Skilled Worker visas (for example Graduate, Youth Mobility, Student, Dependant, Spouse/Partner or Ukraine Scheme visas) as soon as possible. If there is a need for these individuals to switch into the Skilled Worker route at any point (even if their current visa expiries are not imminent) and they will be employed on medium to lower range salaries, it is highly likely that they will not qualify for sponsorship under the planned higher salary thresholds and employers should therefore consider whether they can be sponsored under the Skilled Worker route before 4 April. If their applications are submitted before 4 April, it will also mean that future extensions of their visas will only need to meet the lower salary thresholds under the current Immigration Rules.
Any employers looking to sponsor employees or candidates before 4 April from within the UK should urgently review their Certificate of Sponsorship in-country allocations. If a request for a further allocation is needed, this may take some time to process and demand for the limited priority service slots to expedite such requests is higher than ever.
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