Employers face challenges as a result of changes to UK immigration

Denise Osterwald highlights some of the challenges that employers should be aware.

Businesses that sponsor skilled foreign workers will see an increase in their salaries. However, there are also other possible consequences.

Salary and visa requirements for skilled workers

For the Skilled Worker Visa, an international worker must have a job offered by a UK employer who holds a government approved immigration sponsor license. The job must be listed on the government-approved list of sponsorable positions and meet minimum salary and skills requirements. Candidates must also have a certain level of English, and in some cases, they may need to undergo medical or security clearances.

The increased minimum salary thresholds of PS26,200 up to PS38.700 have significantly reduced the viability for skilled workers visas. The minimum salary threshold must be met or the salary based on the position. The impact on SMEs has been severe, and many FTSE100 companies cut their graduate programs as a consequence.

The minimum salary for each job listed by the government is set at a certain amount. This was calculated until recently by referring to the 25th per centile of all salaries paid in a specific profession. The new calculation uses the 50th percentile for all wages in a profession. This is a significant increase.

Software developers, for example, must be paid PS49.400 per 37.5-hour week (previously PS27.200), and finance and investment analysts PS40.600 (previously PS28.600). According to the list, laboratory technicians earn PS30,960, which means they need to receive PS38,700.

The UK government introduced transitional arrangements to those already living in the UK who fall under the category of skilled workers. Even these visa holders are not exempt from an increase in the minimum salary requirements.

The transitional arrangements will expire on April 3, 2030.

There are many problems that can occur

The new regime will make it difficult for many employers to offer new employees a salary that is eligible under the new rules. This will reduce their pool of talent.

Many existing employees do not qualify for the higher transitional salary, and will therefore not be eligible to apply when they need to renew their immigration permission in the UK.

Employers may be forced to terminate employees in such scenarios.

A second consequence of salary increases is the likelihood that paying more to an employee with a visa to meet new thresholds will amount to illegal discrimination against someone in the same job who does not require a sponsored visa and is paid less. This could lead to discrimination claims (or equal-pay issues) as well as creating a two tier workforce.

Employers who adopt a practice or policy of refusing to hire workers or letting go existing employees because they require a higher salary in order to meet the visa thresholds for skilled workers are also at risk. If not handled properly, this could expose an employer to unfair dismissal and discrimination claims.

If a business chooses this path, it will need to be thorough and follow a carefully crafted procedure. This includes consulting the employee, and considering all alternatives to dismissal.

Employers: Next steps

Employers who are affected by these changes will have to adopt a different approach when it comes to employees recruited before and after 4 April 2024, as well as those in the transitional group.

Businesses who hold a licence to sponsor skilled workers and employ employees from the transitional cohort can conduct a salary audit in order to determine if their employees will face salary shortfalls when they apply for a visa extension or leave to remain indefinitely.

When there is a shortage, the salaries should be reviewed consistently and in a manner that does not expose the business to discrimination allegations.

Employers could identify if vacancies are filled by local/national workers for employees hired after 4 April 2024. This will reduce sponsorship of workers.

Alternatives

Employers can use the “new entrant” category to offer a reduced wage to visa holders, such as students and graduates. Employers should be aware that an employee is only eligible to be a ‘new entrant’ for up to four years. This includes time spent on a student visa. After this period, they must be paid their full salary.

Employers may have to raise their salaries to meet the requirements of the skilled worker visa. This will not discriminate against employees who do not require sponsorship.

Employers could, as a last resort consider remote working arrangements. This would allow employees to avoid entering the UK in order to work. This is usually only possible for experienced staff. Remember that even if employees are technically allowed to do the activities permitted by UK immigration laws, they cannot enter the UK as a visitor if their employment contract is in UK.

Look ahead

In the future, it is likely that visa minimum salaries will be updated more frequently than in the past. Salary levels can be “locked in” for the duration an employee’s visa. However, the new UK government is likely to decide if they want to continue allowing employers to pay sponsored employees less or if salary increases are to apply to all employees when their next visa application comes up.

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