The substantial changes to the UK immigration system that came into force on 4 April 2024 brought with them an increase to minimum salaries sponsored workers must be paid to be able to obtain a skilled worker visa. Denise Osterwald highlights the challenges employers need to be aware of.
Employers that sponsor skilled workers from overseas are seeing an increase in salaries, but there are other potential consequences of the increase which businesses need to be alert to.
Skilled Worker visa requirements and salaries
The Skilled Worker visa requires an international worker to have a job offer from a UK employer that holds a government-approved immigration sponsor licence. Any job offered must be on the government’s approved list of sponsorable jobs and meet both minimum salary and skill requirements. Candidates must also speak a requisite level of English and, in some instances, undergo medical and security clearances.
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The increase to minimum salary thresholds from £26,200 to £38,700 has significantly restricted the viability of the skilled worker visa route. Workers either have to be paid at least this minimum salary threshold or the specific salary dictated by their position, whichever is the higher. This has impacted SMEs heavily and some larger FTSE100 companies have cut their graduate programmes as a result.
Each job on the government’s list is assigned a specific minimum salary. Until recently, this was calculated by reference to the 25th percentile of all wages paid in a particular profession. The new calculation is based on the 50th percentile of all wages paid in a particular profession, so a marked increase.
For example, software developers must now be paid £49,400 for a 37.5 hour week (previously £27,200 per annum), finance and investment analysts £40,600 (previously £28,600). Laboratory technicians have a salary of £30,960 as per the list, so they will need to be paid £38,700.
The UK government has introduced transitional arrangements for those who are already in the UK in the skilled worker category. However, even these visa holders have not escaped an increase in minimum salary requirements (albeit that it is less steep than the increase introduced for employees new to this visa category).
These transitional arrangements will end on 3 April 2030.
Problems that can arise
Many employers will not be able to pay new job applicants an eligible salary under the new regime – reducing their recruitment talent pool.
Equally, many existing employees also do not meet the increased transitional salary and therefore will not be eligible when they next need to apply for their immigration permission to remain in the UK.
Such scenarios could mean employers have to face the possibility of having to let employees go.
Another consequence of the salary increases is that by paying more to a skilled worker visa employee to meet the new thresholds is likely to amount to unlawful discrimination against someone not requiring a sponsored visa in the same position on a lower salary. As well as resulting in potential discrimination (or equal pay) claims, this may also lead to a two-tier workforce and significant industrial relations issues.
It is very likely that in future, visa minimum salary levels will be adjusted much more regularly than they have been previously”
There is also a risk for employers that adopt a policy or practice of not hiring workers or dismissing existing workers requiring an increased salary to comply with the skilled worker visa thresholds. This could, if not managed properly, open an employer up to discrimination and unfair dismissal claims.
Should businesses go down this route, they will need to follow a careful and thorough procedure, including consulting with the employee and giving full consideration to alternatives to dismissal.
Next steps for employers
Employers affected by the changes will need to take a different approach for those employees in the transitional cohort, and those who have been, and will be, recruited since 4 April 2024.
Businesses that hold a skilled worker sponsor licence and sponsor employees in the transitional cohort could undertake a salary audit to establish whether their employees are likely to encounter shortfalls in salary when they apply for their visa extension or Indefinite Leave to Remain.
Where there is a shortfall, salaries should be reviewed in a way that is consistent and does not open the business up to discrimination claims.
In relation to employees who will be recruited since 4 April 2024, employers could consider identifying whether vacancies can be filled from the local/national pool of workers. This will reduce the need for sponsored workers.
Alternatives
Employers could make use of the ‘new entrant’ category, which allows employers to pay a reduced salary to, for example, student and graduate visa holders. However, the employer needs to bear in mind that an employee can only be a new entrant for a maximum of four years (time spent on a graduate visa is included in those four years). Once they have exhausted this period they will have to be paid the full salary required at the time.
If there are not enough UK skilled workers to fill all available vacancies, employers may need to assess their salary structures and raise them to the levels required by the skilled worker visa category in such a way that does not run the risk of discrimination against existing employees with no sponsorship requirements.
As a last resort, employers could consider remote working arrangements, which would mean employees do not need to enter the UK to work. However, this is often only feasible for more experienced members of staff. It is, however, worth remembering that if the employment contract is in the UK employees cannot come to the UK as visitors, even if they would technically stick to the permitted activities as per the UK immigration rules for visitors.
Looking ahead
It is very likely that in future, visa minimum salary levels will be adjusted much more regularly than they have been previously. Salaries can be ‘locked in’ for the duration of an employee’s visa, but the new UK government will decide whether they will continue to allow employers to pay existing sponsored employees less, or whether at some point salary increases will apply to all employees at the point of their next visa application.
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