How are the upcoming UK immigration changes going to affect the tech sector?
If you missed her webinar for techUK on what tech firms, employees and families need to know about upcoming immigration measures and how to mitigate them, you can watch our recording below:
This spring will see the start of measures designed to reverse a recent rise in net UK migration figures. The rise is partly fuelled by skills gaps – with the biggest increase in work visas in the healthcare sector. However, it is private sector firms that will bear the brunt - having to pay higher salaries to hire non-resident staff. The main changes to look out for are detailed below.
We are experiencing a rush of Skilled Worker visa applications from firms that will face hikes in the minimum salary they will have to pay from 4 April, so advise acting swiftly if making upcoming applications that may be affected.
Skilled Worker salary thresholds increase
Employers sponsoring anyone on the most common route, a Skilled Worker visa, must ensure the position pays whichever is the highest figure out of the general salary threshold for the Skilled Worker visa, whatever the UK government determines is the occupation-specific threshold (or “going rate”) for a particular occupation, or usually the hourly rate of £10.75.
The minimum general salary threshold to sponsor a new Skilled Worker is set to increase from £26,200 to £38,700 on 4 April. So, for example, an employer sponsoring a public relations professional from that date would have to pay a minimum of the new salary threshold which will be £38,700, rather than £26,300 – the current going rate for that occupation code.
As £38,700 is higher than the nation’s median wage this change will affect certain sectors more than others, especially in regions outside the capital where salaries tend to be lower.
Skilled Worker going rates go up
Occupation-specific going rates of pay to sponsor new Skilled Workers will also rise in April. The UK government currently prescribes minimum going rates for occupations using the 25th percentile of salaries for that role according to the Annual Survey of Hours and Earnings (ASHE) carried out by the Office of National Statistics. From 4 April, the Home Office has said that the 50th percentile (median) of the 2023 ASHE will be used to set going rates for occupation codes.
Effectively, to sponsor talent on a Skilled Worker visa, organisations will have to pay more than the survey has determined half the people in Great Britain doing such a job are earning. So, for example, IT Project Managers would currently have to be paid £39,100 – the present going rate, but a going rate based on the median wage in the provisional ASHE 2023 survey would be £51,933 (which we expect the Home Office to round up to the nearest hundred).
Shortage Occupation List scrapped
The Shortage Occupation List of jobs facing dire skills shortages is set to be scrapped on 4 April, along with the 20% discount on going rates of pay it afforded those sponsoring non-resident Skilled Workers on the list. It will be rebranded as the Immigration Salary List (ISL).
All the above measures announced by the Government will be formally brought into the UK’s Immigration Rules in a Statement of Changes due to be published on 14 March.
Here are two examples which give you an idea why we are keen to see whether the Government’s announcements so far will be tempered in any way. A new mechanical engineer can currently be sponsored on a salary of £26,400 or over as such roles are on the SOL. The new median going rate with no more 20% discount would be £42,463 – a significantly higher minimum salary (probably rounded up to the nearest hundred pounds.) Or, for another example, there is also a current shortage of programmers and software developers in the UK. As they are on the SOL, they can be sponsored as Skilled Workers if they earn £27,200. From 4 April, a going rate based on the 2023 ASHE survey median salary for this occupation with no 20% discount would be around £49,430.
The loss of the 20% going rate discount at the same time as the other changes above will increase the cost of sponsoring staff for some sectors facing UK skills shortages, especially in regions where wages tend to be lower. They may find themselves choosing to sponsor more senior staff and increasing the hours sponsored staff work to offset higher salaries which will have to be paid. Other firms, for instance those in high tech sectors in hubs like London, will probably already be paying new hires a salary above April’s new thresholds and are not as likely to be affected.
Call for evidence
The Home Office (with a lot of caveats) has estimated that all the above changes to the cost of sponsoring workers would have deterred only around 13% of all Skilled Worker visas granted this year. There is no estimate in their impact assessment of the cost to businesses.
The Migration Advisory Committee has asked the Government to reconsider removing the 20% going rate discount for shortage occupations at the same time as hiking them up to the 50th percentile. Even with a 20% discount on the general threshold of £38,700, the committee has said there is no point in many shortage occupations remaining on the new ISL as going rates would be above £38,700, reporting that just 21 of the 55 occupations on the Shortage Occupation List would still benefit from remaining on the new list. Programmers, for instance, are not among these as they would have to be paid way over £38,700 now.
Of the 21 occupations the committee has recommended for the rebranded shortage list, the only science and technology roles left appear to be Laboratory technicians, Pharmaceutical technicians, Chemical scientists – in the nuclear industry (Scotland only), Biological scientists, Graphic and multimedia designers.
After the changes take effect in April, the committee will be undertaking a full review of how the new ISL might work and what occupations should be on it, including taking submissions from sectors and industry bodies affected, so there should be an opportunity at some point this year for employers to submit evidence.
Who is exempt from these Skilled Worker changes?
Those already on the Skilled Worker route should be exempt from the above salary thresholds when it comes to extending their visa, changing sponsoring employer or applying for settlement. The Home Office say that they would, however, “expect their pay to progress at the same rate as resident workers; therefore, they would be subject to the updated 25th percentiles using the latest pay data when they next make an application.” In other words, their salary should progress at the same rate as resident workers’ earnings may rise over the years.
Teacher / NHS type public sector roles with national pay scales will have a smaller general threshold rise from £20,960 to £23,200. New health and care workers not on a pay scale (such as care workers and senior care workers) will have a general threshold increase to £29,000. Unlike other Skilled Worker visas, the occupation-based going rate for those sponsoring new health and care workers will stay at the 25th percentile and pay scale workers need to be paid according to the national pay scale.
Family visa minimum income requirement changes
Another change that may affect British and settled workers who want to live with partners from abroad, is the Home Secretary’s announcement that the minimum income they will have to earn to sponsor a partner on a family visa would practically double from £18,600 to £38,700.
Following a massive outcry, this will now be implemented in stages: initially the minimum income requirement will rise to £29,000 from 11 April 2024, then again in the Autumn to £34,500 and then in Spring 2025 to £38,700.
Those who already have a family visa on the five-year partner route, or who apply before the minimum income requirement is raised, will continue to have their applications assessed against the current income requirement of £18,600 and will not need to meet the increased threshold. Even with the first increase from £18,600 to £29,000, all else being constant, the Home Office admit that 40 to 50% of the UK working population would not be able to meet the threshold based on earnings alone, so firms should be aware that these higher thresholds may well impact more junior British hires with partners abroad.
What about other immigration routes the tech sector may use?
The government have not mentioned changing any of the following work visa routes that can also be used to hire tech talent, apart for requesting that the Migration Advisory Committee also review the Graduate visa this year.
Graduate visas and High Potential Individuals
Graduate visas allow international graduates of UK universities to stay and work in the UK without sponsorship and its bureaucratic and salary requirements. The Home Secretary has called for a review of the route, but for now this is a handy option for employers. Graduates who have graduated from a list of around 40 top universities in other countries in the past five years can apply to come and work in the UK without having to be sponsored on the High Potential Individual (HPI) visa. Graduate visas and HPI visas allow working in the UK unsponsored for up to two years (three for postgrads).
New Entrants
The UK Government also intends that for now the New Entrant discount available for sponsoring those aged 26, plus some other graduate and postgraduate categories will remain. Currently New Entrants may be sponsored as Skilled Workers for up to four years with a 30% discount on the occupation-specific threshold and a 20% discount on the general salary threshold, the higher of which must be paid.
Creative Worker visa
Creative Workers can be sponsored without considering the salary levels of the UK’s resident labour market on a temporary visa of up to 12 months (renewable) as a concession to the creative industries and a boost to UK productions.
Scale-up visa
Championed by Rishi Sunak as part of his government’s aim to make the UK a global innovation hub, the Scale-up sponsor licence is a flexible, fast-track sponsor licence for firms that qualify with annualised growth in either turnover or staff of at least 20% for the previous three-year period and a minimum of 10 employees at the start of the period. Firms without the HMRC records to evidence such growth yet can now be endorsed by the same endorsing bodies approved to endorse innovators’ business plans for the new Innovator Founder visa.
Innovator Founder visa
The Innovator Founder route replaced the Start-up and Innovator visas as a route for founding teams to launch businesses in the UK. One of the government’s approved endorsing bodies will need to endorse a business plan first as being innovative, viable and scalable.
Global Talent visa
This prestigious route offers a path to citizenship without any need of a job offer for those at the top of their game in certain sectors including digital technology. Like the High Potential Individual visa, it allows successful applicants the ability to be employed, self-employed or both.
However, there is a high threshold to qualify: applicants need to satisfy the UK Government’s appointed endorser, Tech Nation, that they are internationally recognised as a leading talent in the digital technology sector.
Anyone keen to discuss any of the above changes or with any UK immigration matters can contact Anushka Sinha on 0207 033 9527 or at [email protected]. If it is regarding an application to be made before April, we would advise moving swiftly on it.
Authors
Anushka Sinha
Anushka is a well-respected and familiar face in UK immigration law. She is a Senior Associate at Vanessa Ganguin Immigration Law, a leading UK immigration boutique based near London’s Silicon Roundabout and a co-convenor of the Immigration Law Practitioners Association (ILPA) Economic Migration Working Group. She trains ILPA lawyers on the Global Talent visa for tech founders and leaders. Anushka often writes and presents on UK work immigration options and challenges for the tech sector. She has regularly contributed to the Legal 500 UK Fintech Guide.