Is your firm ready for skilled worker visa changes?

The Home Office’s five-point plan to reduce net migration, which includes raising minimum salary thresholds and overhauling the Shortage Occupation List, is taking shape, with most changes taking effect from 4 April 2024.

The skilled worker visa route – the primary option available to employers, which allows companies to sponsor individuals to work in the UK – will be most affected.

To sponsor a skilled worker in the UK, the minimum salary will now need to be the higher of £38,700 (increased from the current £26,200) or the ‘going rate’ for the particular role.

Going rates are set out against each occupation code and are determined by national pay data. The annual going rate assumes a 37.5-hour working week and should be prorated where the employee’s contractual hours will deviate from the standard.

For most jobs, the going rate will also see a significant hike. For example, a construction project manager applying under the current rules must be paid at least £29,500. Beginning on 4 April, this increases to £40,500.

Although the Home Office has been clear about its aim to reduce migration, and changing pay thresholds may achieve that, the slightly more objective explanation of the increases is that going rates are now based on 2023 pay data, and therefore more accurately reflect the current market.

In addition, there has been a shift in the way the data is used: previously, salary thresholds were based on the 25^th percentile of earnings and instead, they now reflect the median pay across occupations.

The basic principle is that overseas workers should be paid in line with the current, median, market rate.

In addition to the implications of potentially needing to raise wages or facing sponsorship limitations, the recent changes significantly complicate the process of understanding and meeting the legal requirements regarding salary thresholds.

It is therefore more crucial than ever for businesses to thoroughly understand immigration rules to effectively utilise the exceptions for lower salary thresholds outlined here.

First, jobs on the Immigration Salary List (ISL), which will replace the Shortage Occupation List (SOL), will benefit from a reduced general salary requirement. The minimum salary for these applications will be the higher of £30,960 or the going rate.

A bricklayer, for example, will need to be paid £30,960, as the going rate for bricklayers is lower than that (£25,800).

The key distinction between the SOL and the new ISL is that there will no longer be any reduction to the going rate.

The new ISL is much shorter than the previous SOL, with most roles outside of the construction sector having been removed altogether (notably in engineering and IT).

Fortunately, the Home Office has continued to implement the recommendations of the Migration Advisory Committee (MAC) to continue to cater to shortages in the construction industry.

The following jobs will be on the ISL:

Second, allowances are also made for those considered ‘new entrants’ to the labour market, which will typically include any applicant under 26 years old or switching from student or graduate visas (among some others less likely to apply in this sector).

It is this cohort to whom a reduction to the going rate would apply – they would need to be paid the higher of £30,960 or 70% of the going rate.

Third, where employees are already sponsored under the skilled worker route, they will not need to meet the new thresholds if their visas are extended before 2030.

Instead, their applications will be subject to their own thresholds, somewhere between the current rates and the new rates from 4 April.

For example, if a construction project manager with a skilled worker visa under the current scheme extends that visa this summer, their salary will need to be the higher of £29,000 or the going rate (which for those extending in this role would be £34,200).

The MAC will be commissioned once again to conduct a full review of the new ISL during 2024, which will include a public call for evidence.

This creates a new opportunity for construction firms to put their needs forward, which have so far been attributed proper weight by the MAC and the Home Office, given the sector’s wider, strategic importance in the UK.

Kirsty Moore is a manager and solicitor at Fragomen.