Important changes to Tier 2 sponsorship

Attorney Generals opinion could mean large historic liabilities for Gig economy workers holiday pay

A recent set of changes to the Immigration Rules means from 6 April 2017 it will become far more expensive to sponsor migrants from outside the EEA under Tier 2 of the Points-Based System.

These changes will affect all Tier 2 sponsors but are likely to have the greatest impact on those companies that regularly transfer non-EEA nationals from overseas offices to the UK under the Intra-Company Transfer (ICT) route.  

The key changes are set out below.

Immigration Skills Charge
Employers sponsoring non-EEA workers in the UK under Tier 2 will have to pay a new Immigration Skills Charge of £364 for small or charitable employers or £1,000 for large employers.  The Home Office regards an organisation as a large employer if its annual turnover is in excess of £10.2 million or if it has more than 50 employees.

This skills charge is payable upfront in respect of each year of the visa or leave to remain required for the main applicant.  This means that if a large employer sponsors an employee under Tier 2 for five years, the employer will have to pay £5,000.   Applications for PhD roles and applications under the Tier 2 ICT Graduate Trainee route will be exempt from the charge.

Minimum salary threshold increases
The minimum salary threshold for Tier 2 (General) sponsored workers over the age of 26 will increase to £30,000 per year (up from £25,000), subject to a few exemptions.

This category is for migrant workers with an offer of a skilled job from a licensed employer which cannot be filled by a resident or EEA worker.  The minimum salary threshold for new entrants will however remain at £20,800 per annum.

Resident labour market test 
In most cases, before sponsoring an employee under Tier 2 (General), the employer must carry out the resident labour market test.  This requires the employer to advertise the position for at least 28 days in accordance with strict Home Office requirements.  The employer is then only able to sponsor the non EEA individual if there is no suitable resident or EEA applicant.  

At the moment, if the non EEA national will earn over £155,300 per annum, the employer is exempt from carrying out the resident labour market test. However, from April 2017 the employee will have to earn at least £159,600 per annum in order for the exemption to apply.

Another change means that where a role supports the relocation of high-value business to the UK (capital expenditure of £27 million or creating at least 21 new UK jobs), employers will also not have to conduct the resident labour market test before hiring a Tier 2 migrant. This may be of benefit to a small number of employers.

Closure of the ICT (Short Term Staff) route
The minimum salary threshold for migrants coming to the UK from an overseas office of the same group of companies under the ICT route will increase to £41,500 per annum.

This is likely to have a significant impact on employers that currently transfer a large number of employees from overseas offices to the UK for periods of less than 12 months.  Previously, individuals coming to the UK for less than 12 months would have applied under the ICT (Short-Term Staff) category and the minimum salary threshold that applied would have been £30,000 per annum.

However, the Tier 2 (ICT Short-Term Staff) category will close to new applicants in April and individuals will instead have to apply under the ICT (Long-Term Staff) category, which has a far higher minimum salary threshold.

The closure of this sub-category also means that, from April, accommodation allowances may only form a maximum of 30% (rather than 40%) of the total salary package for all ICT workers, meaning employers may have to increase salaries in some cases.

Immigration Health Surcharge
From April 2017 ICT migrants will also no longer benefit from the current exemption from the Immigration Health Surcharge.

Both the main applicant and their dependants will have to pay £200 per year of their visa or leave to remain.  This is payable upfront and would cost a family of four on five-year visas £4,000. 

Other ICT changes
The salary threshold for senior employees coming to the UK under the ICT route who are able to extend their total stay in the UK under this category to up to nine years (instead of the usual five years) is being reduced, from £155,300 to £120,000 per annum.

Another useful change is that the current requirement for employees from overseas offices transferring under the ICT route to have at least one year’s employment with the overseas office is being removed, provided that the individual is paid £73,900 per annum or more.

This means employers could potentially transfer senior employees recruited overseas to the UK shortly after their employment begins.

Contact our experts for further advice

Kerry Garcia, Jackie Penlington

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